Investors meeting - Actusnews Wire › documents › ACTUS-0-10004... · Paragon ID designs, ......

Investors meeting

November 5th, 2019

Solutions for eID, Transport, Track & Trace, Brand Protection & Payment

Speakers

2

Clement Garvey CEO

(B.Comm) University College DublinChartered Accountant

KPMG, Gestetner, Ricoh, Neopost, Escher

Joined Paragon ID in April 2018

Olivier DoyeFinancial Director

Master Dauphine - MBA ESG UQAMKPMG, Arthur Andersen, Legrand,

Paragon Group

Joined Paragon ID in January 2019

Secure Technology for a Connected World

▪ Mission statement: to be the European leader and a world leading provider of secure technologies in secure access control and mobility, tracked movement of objects, brand & document protection, specialty payment cards

▪ Paragon ID designs, develops and delivers solutions based on RFID technology, including the platforms and software required for their deployments.

▪ A dual expertise: technological and industrial, Paragon ID is unique in its combination of research capabilities, design, manufacturing, industrialisation and integration of solutions

▪ Our targets: manufacturers, integrators and operators, generally in B2B2C model mode, around the world

3Des technologies sécurisées pour un monde connecté

Strategic vision

Transforming customer connections www.paragon-id.com

e.IDIdentification documents

Transport & Smart CitiesTrack & Trace & Brand

ProtectionPayment

Our 4 key activities

Access control solutions for public transport in small,

medium and large cities

RFID applications aimed at the payment

sector

Ensuring producttraceability and fight

against counterfeiting

Contactlesstechnologies for

secure ID documents

Transport &Smart Cities

Objectives

• World leader in access control solutions

• Technological leadership

• Partnerships with leading integrators

• Digital migration

Today

• 5 billions magnetic & 150 millions contactless tickets & cards / year

• Strategic supplier of New York, British trains, Paris….

• 1st successful mobile ticketing applications

• 200+ cities worldwide use our solutions

• Contactless cards

• Magnetic tickets & contactlesstickets

• Secure services (personnalisation, etc.)

• Terminals

• Mobile ticketing applications

Traceability &Brand Protection

Today Objectives

• RFID expertise & industrial set up at the service of brands & supply chain processes

• Authentication platform incl. blockchain

• Complete asset management solution

• Track & trace solutions

• Authentication & consumer engagement

• A market reference

• RFID & traditional labels

• RFID and NFC tags

• Software

Transforming customer connections www.paragon-id.com

eIDSecure Identification

Today

• 100 million units of eCovers/inlays to 24 countries

• 1 million produced every month

• 3 manufacturing sites with eID capabilities

• Focus on innovation

Objectives

• Continue to enrich our product portfolio for e-passport products & other secure id documents

• Preferred and trusted eIDdocument supplier

• Inlays (chip + antenna) for passports, driving licences and ID cards)

• eDatapages & covers for passports

Payment

*Source: Reportlinker

Innovation

The world’s first metal inlays with the ability to activate contactless payment on both sides.

Objectives

• Offer a leading product

• Enhanced User experience

• Lead the metal card products market

• Inlays with double interface chip modules for contactless paymentcards

• Technology licensing

• Consulting services

• The contactless

payment market is

expected to experience

a CAGR of over 24%

by 2022 *

*Source: ReportlinkerTCAC: Taux de croissance annuel composé

eID Health & PharmaAutomotive

Loyalty Transport & Logistics Industry & Agro

Public Transport

Paris

Sydney

New York

Singapore

Milan

London

Retail

1500clients in key

strategic segments

200 major cities

40 countries

Our strenghts: our clients

▪ 4 secure units for complete control of the supply chain

• France (Argent sur Sauldre)

• United Kingdom (Hull)

• Romania (Bucarest)

• United States (Burlington)

▪ 2 R&D centres (France & Ireland)

▪ 1 software development site (Milton Keynes)

A worldwide organisation

Des technologies sécurisées pour un monde connecté 10

▪ Sales coverage organised in 3 regions:

• EMEA – Asia

• United Kingdom – Australia

• Americas

CO

MM

ER

CIA

LIN

DU

ST

RIA

L

108 M€turnover in 2018/2019

(+17% in H2)

600employees, including 30

in R&D

8.3 M€Of EBITDA1 in 2018/19

(margin of 7.6%

including 9.5% in H2)

+400 million

inlays produced in 2018/19

3 acquisitionsin 2018/19:

RFID Discovery, Amatech and airweb

+100patents filed worldwide

Secure Technology for a Connected World 11

Key figures

1 Operating income before depreciation, amortization and non-recurring items

Activity and highlightsFinancial year 2018/19

Finalisation of the reorganisation of the manufacturing base started in 2018 • Shutdown of industrial activities (Mouans-Sartoux, China and Boston (UK)) and rationalisation of the

manufacturing base

• Build-up of the production site in Romania

• Reconfiguration of the supply chain

• € 3 M realised in industrial savings

Key Achievements


Back to Business of Business• Return to growth in Q2 2018/2019

• Substantial acceleration of growth in H2 : +17%

Maintening focus on the acquisition policy• 2 acquisitions : Amatech in Payment & RFID, Discovery in healthcare

• 1 strategic equity investment: airweb in mobile ticketing

Strong acceleration of growth in 2018/19


27.4

24.6

23.3

25.624.9 25.2

27.2

30.6

10

15

20

25

30

35

Q1 Q2 Q3 Q4

2017/18 2018/19

▪ Q1 in decline with a high comparisonbase

• NFC card deliveries to Hasbro and cyclically higher volumes of passportdeliveries to the USA (impact -2 € M)

▪ Return to growth in Q2 (+3%) and growth acceleration in the second halfof 2018/2019 (+17%)

• First billings of the new payment activity: 1.7 € M

▪ Annual turnover: 108 €M + 7%

• +6% at constant exchange rates

(9)%

+3%

+17%

+20%

Evolution of quarterly turnoverData in €M

2018/19: a year full of positive moves

15

Paragon ID becomes a premium partner of

NXP MIFARE

July2018

Extension of the partnership with Biolog-id for the

traceability of health products

October 2018

Paragon ID invests in a Tagliner, an RFIDchip connection

tool

November 2018

Contract for the manufacture and

personalisation of 2.5M European health insurance cards

March 2019

Signature of the first significant contracts of

the payment activity

May 2019

100 millionth electronic passport featuring

Paragon ID technology delivered

May 2019

Partnership with Ingenico in payment

and ticketing

May 2019

IATA strategic partner: Paragon ID joins the RFID working group

May 2019

Contract with Air France for the supply of RFID

luggage tags

July 2019


16

Transport & Smart Cities

• Contract with Ingenico to incorporate Paragon ID’stechnology into the next generation of readers

• Signature of multiple new contracts, particularly in cardpersonalisation in the United States

• Strong growth in our secure services area (EuropeanInsurance Card, winning the tender for the Lille citizen cardetc.)


Traceability and Brand Protection

Payment

• Contract signed with Air France for its RFID luggage tags

• Extension of the partnership with Biolog-id

• Recruitment of Enu Waktola, in charge of Business Development in the United States

• First achievements in polycarbonate in Europe

• Testing of new techniques for the manufacture of e-Covers (passport)

• New project with a large chip maker with ‘C & M’ technology

• Signature of a contract with SPS for the commercialisation of AmaTech’s technology outside of metal payment cards

• Obtaining a permanent injunction in the US against a Korean company trying to exploit unlicensed AmaTechtechnology

Other events in 2018/19


Continuation of our external growth strategy

17

Completion of the merger with ASK

Mai 2017

Acquisition of assets and intellectual property of RFID

Discovery

Nov.2018

October 2018

Strategic equityinvestment in airweb

Nov.2018

Acquisition of the Irish company Amatech

Financial year 2018/19 Financial year 2019/20

Acquisition ofThames Technology

Nov.2019


Acquisition of AmaTech: The birth of Paragon ID payment activity

18

▪ AmaTech, a pioneer of RFID technologies serving the banking industry

• RFID technology solutions to enable contactless functions and to perform contactless transactions from a varied range of media and materials

• First player to develop contactless technology for EMV (Europay Mastercard Visa) metal smart cards

▪ Launch in October 2018 of the world’s first metal inlays with a dual interface chip module: contactless payment on each side of the metal card

▪ Multiple sources of revenue

• Sales of inlays and dual interface chip modules for metal payment cards

• License revenue from AmaTech’s patented contactless technology for card manufacturers

• Consulting services to major manufacturers and card issuers

▪ Initial revenues in H2 2018/19: €1.7 million in turnover


Acquisition of RFID Discovery : RFID and IoT applied to e-health

19

▪ Acquisition of assets and patents of RFID Discovery: RFID identification solutions for the healthcare sector

• For large organisations (National Health Service) and SMEs in the health sector

• Example of application: ‘tagging’ mobile health equipment (infusion pumps, syringe drivers, scanners, etc.) to improve its usage

▪ Acquisition of a reinforced technology platform for other sectors (industry, automotive, aeronautics) and other regions(Europe, North America)

▪ Since the acquisition, Paragon ID has already marketed RFID Discovery solutions to several international manufacturers (including Caterpillar, JCB and Technip)

▪ Strengthening Paragon ID’s offering in the healthcare and e-health sector and initiating negotiations for strategicpartnerships and/or acquisitions

• Partner of Biolog-id for several years for the traceability of therapeutic products (blood, red blood cells, platelets, plasma, etc.)

• The success of RFID Discovery in the United Kingdom opens the door for the creation of a specific activity in the field of health


Strategic equity investment in airweb

20

▪ Based in Paris, airweb is an expert in digital technologies that designs web applications and mobile ticketing solutions for public transport

• Comprehensive smartphone ticketing system for end-to-end travel with real-time traveller information

• Over 20 transport organisations opted ofr airweb, the most deployed mobile ticketing solution in France

• Acquisition by Paragon ID of up to 50% of airweb’s capital

▪ Ambition: Bring together airweb and Paragon ID solutions to deploy the most comprehensivemobile ticketing platform in the world

▪ First common references: CITURA (Reims), RTC (Quebec) and TEC bus (Belgium)

• Referencing in October 2019 with the Central Purchasing of Public Transport (CATP): Only mobile ticketingsolution referenced in France

▪ Launch in October 2019 of the new ‘Ticketing Platform as a Service’ (Paas) offer for small and medium-sized cities

• An all-in-one offer: equipment, software, physical and digital media and payment services


Financial ResultsFinancial year 2018/19

Consolidated income statement(1/2)

22

In M€ - IFRS standards data audited2017/18

(12 mths)2018/19

(12 mths)Var.

Turnover 100.9 108.0 +7%

Cost of buying sales 53.8 58.8 +9%

Staff costs 25.0 26.0 +4%

Other operating income and expenses 14.8 14.9 +1%

EBITDA1 7.3 8.3 +14%

EBITDA1 Margin 1 7.2% 7.6%

+7% growth in annual sales, sharplyaccelerating in the second half (+17%)

+14% growth in EBITDA1, with a record EBITDA1 margin in H2 at 9.5%

1 Operating income before depreciation, amortization, and non-recurring items


Latest restructuring costs and site closures

Consolidated income statement (2/2)

23

In M€ - IFRS standardsData audited

2017/18(12 mths)

2018/19(12 mths)

Var.

EBITDA1 7.3 8.3 +14%

Depreciation and amortization 6.0 5.7 (4)%

Other non-current income and expenses 3.4 2.3 (34)%

EBIT (2.2) 0.2 n.a.

Financial results (1.8) (2.0)

Proceeds from disposal of fixed assets 0.5 0.1

Share of joint ventures - (0.1)

Income tax expenses 0.6 0.3

Losses from discontinued operations (2.1) (0.2)

Net income (group share) (5.1) (1.8)

Positive EBIT in 2018/19

Impact of the shutdown of the Chineseindustrial site in 2017/18

Including 4 M€ in depreciation related to a sustained investment policy

Including 1.2 M€ bond interest

1 Operating income before depreciation, amortisation and non-recurring items


Consolidated cash flow

24


2017/18(12 mths)

2018/19(12 mths)

Cash Flow 1.9 5.2

Change in WCR 4.8 (4.0)

Net cash flow from operations 6.7 1.2

Net cash flow from investments (4.1) (6.2)

Of which acquisition of fixed assets (4.2) (3.9)

Of which acquisitions of subsidiaries (net of cash) 0 (2.0)

Net cash flow from financing operations 3.3 0.1

Of which issue of loans net of repayments 5.6 (0.8)

Of which borrowings from related parties - 3.3

Of which interest disbursed -2.1 (2.0)

Net change in cash and cash equivalents 5.9 (4.9)

Of which impact of stocks: (2.8)

Of which impact of accounts payable: (4.7)

Of which impact of trade receivables: +4.1

6.4 M€ in repayments and 5.5 M€ in new borrowings

Impact of external growth of the year


Consolidated results

25


30/062018

30/062019

Non-current assets 74.1 77.3

Of which goodwill 50.0 49.7

Of which immobilisation incorp. 12.1 11.5

Current assets 34.3 31.9

Of which stocks 11.5 14.4

Of which receivables 16.6 10.4

Cash and cash equivalents 11.4 8.6

TOTAL 119.7 117.8


30/062018

30/062019

Equity 28.7 26.2

Financial debts 15.4 16.3

Of which bank loans 5.7 9.1

Of which bank overdrafts 2.7 4.8

Of which factoring debts 4.5 0.1

Related party borrowing 34.2 38.8

Payables 25.5 23.1

Other liabilities 15.9 13.4

TOTAL 119.7 117.8

31 M€ related to BBP

18 M€ related to ASK

Increase in activity and Brexit anticipation


Financial debt breakdown

26


30/062018

30/062019

Treasury 11.4 8.6

Financial debts 15.4 16.3

Of which bank loans 5.7 9.1

Of which bank overdrafts 2.7 4.8

Of which factoring debts 4.5 0.1

Related party borrowing 34.2 38.8

Of which convertible bonds 10.0 10.0

Of which dry bonds 10.0 10.0

Of which borrowings 14.0 18.8

Net debt 38.1 46.5

Net debt (excluding related party loans) 4.0 7.7

Total: 8.4 M€ increase in net debt

▪ Of which Airweb: 2.3 M€

▪ Of which AmaTech: 1.9 M€

▪ Of which latest impacts of restructuring: 1.9 M€

▪ Of which stock build-up (Brexit): 1.0 M€

Of which 10.3 M€ repayable at the end of 7 years

4.6 M€ in additional cash advances net of the referenceshareholder in 2018/19

Subscribed at the time of the merger between Paragon ID and ASK


Shareholding & stock information

27

78,4%

4,0%

17,6%

1 665 337 actions

Breakdown of share capital

In number of actions – 30/06/2019

Grenadier Holdings Ltd.

LBO France Gestion

Flottant

Stock data

• Euronext Paris (comp. C)

• ISIN: FR0013318813 - Mnémo: PID

• Share price: 31.70 € (on the 04/11/19)

• Market capitalisation: 53 M€ (on the 04/11/19)

Financial agenda 2019/20

• Q2 Turnover 2019/20: 30/01/2020

• Half year results 2019/20: 30/03/2020

• Q3 Turnover 2019/20: 28/04/2020

• Annual turnover 2019/20: 23/07/2020

• Annual results 2019/20: 27/10/2020

Financial analysts

Sid Bachir

Baptiste de Leudeville


Strategy & Perspectives

Strategic lines (1/2)

29

Expand our ‘Ticketing Platform as a Service’ offer: propose a complete public transport solution to small and medium-sized cities

• ‘All-in-one’ offer that aggregates all the ticketing needs of a city

• Estimated number of potentially interested cities in Europe and the United States: 750

• Objective: to have 50 cities on-board within 5 years

Transport & Smart Cities

Traceability and Brand Protection

Take a unique position in the RFID luggage tag market

• Objective: between 10% and 20% ofmaket shares in this fast-growing market

• Estimated annual number of RFID luggage tags within 5 years: nearly 5 billion1

• Estimated annual market of RFID luggage tags at the end of 5 years: 250 – 400M1

Take advantage of the successes achieved with RFID Discovery in monitoring hospitalequipment to develop our activity in the management of logistics flows in the health sector

• Leadership position in asset tracking in UK hospitals

• Complementary acquisitions targeted to develop the commercial network

1 estimation Paragon ID


Strategic lines (2/2)

30

Pursue the improvement of the industrial process

• ‘Continuous’ passport inlays production project for e-covers

• Partnership launch of inductive coupling solution for passport data pages

Maintain our positions across the Atlantic: US passport (tender in progress) and driver’slicense with different US states

Capitalise on our intellectual property in contactless metal payment cards to secure licenserevenues from leading manufacturers in this area

• Estimated number of metal payment cards in the United States and Europe within 5 years: 300 million1

• Current market share of licensed manufacturers for our technology: >50%1


Payment

1 estimation Paragon ID


Objectives 2019/20

31

▪ Deliver in 2019/20 a sustained, double-digit, growththroughout the year

▪ Continue to improve profitability (EBITDA1)

▪ Make one or more acquisitions to strengthen ourtechnological or commercial positions

Growth

« +2 Digits% »

Increase in

EBITDA

margin1

+?

1 Operating income before depreciation, amortisation and non-recurring items


Acquisition of Thames Technology (1/2)

32

▪ Thames Technology designs, manufactures, customises and distributes credit

• Company based in Essex (United Kingdom)

• Accredited with Visa and Mastercard-security certifications for EMV® chip cards (EuropayMastercard Visa)

▪ More than 250 million cards a year in more than 60 countries

• Strong reputation in the UK

• Client sectors: retail and distribution, financial services (payment) and bank (fintech), leisureand tourism, government agencies

▪ New opportunities for Paragon ID in the retail and financial services sectors

• Strengthening our market share of Paragon ID in the UK card markets, complementingpositions in mass transit or education

• A complementary range of solutions in retail – distribution and banking-financial services

▪ The acquisition of Thames Technology, financed by Paragon ID equity, will berestated in the 2019/2020 annual accounts

Thames


Acquisition Thames Technology (2/2)

33

Distribution (52% of the activity 2018)

Top 3

clients

(28.5%)

Top 10

clients

(52.2%)

Others 37.3%

Finance (48% of the activity 2018)

Top 3

clients

(19.88%)

Top 10

clients

(49.8%)

Others. 38.9%


2019/20 : A start to the financial year ahead of the annual strategic plan

34

▪ Solid first trimester: +7%

• Rythm less sustained than in the second half of 2018/19 because of the seasonality of the activity

• Fewer production capacities available during the summer due to stops and slowdowns scheduledannually at the production sites

▪ A performance that positions the group aheadof its business plan for the 2019/20 financialyear

+7%

Evolution of the quarterly turnoverGiven in M€

24,9

26,8

Catégorie 1T1 2018/19

T1 2019/20


In conclusion: our assets

35Secure Technology for a Connected World

A track-record of

successful acquisitions

Our clients

Our Industrial know-how

Our technological

expertise

Our international

footprint

Questions & answers

Appendices

▪ Electronic R&D • Antenna design

• Product development RFID innovation

• Implementation of new manufacturing processes

▪ Software R & D• Operating systems

• Blockchain, algorithms, secure encryption

• Mobile apps and software

• Data management

RFID, NFC, IoT: contactless, our technological base

38Secure Technology for a Connected World

A dynamic external growth strategy

39

Track record of succesfulacquisitions


Thank you for your time

Solutions for eID, Transport, Track & Trace, Brand Protection and Payment

Investors meeting - Actusnews Wire › documents › ACTUS-0-10004... · Paragon ID designs, ......

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Transcript of Investors meeting - Actusnews Wire › documents › ACTUS-0-10004... · Paragon ID designs, ......