Page 51 - Paragon Annual Report 2

Directors’ report
The directors present their report for the year ended 30 June 2017.
Directors of the Company
The directors of the Company are listed on page 46.
Results and dividends
The profit for the year after taxation amounted to €12,176,000 (2016: profit of €6,747,000). The EBITDA for the year amounted to €30,749,000 (2016: €20,133,000). No dividend was paid during the year (2016: €nil).
The directors are not recommending the payment of a dividend in respect of the financial year ended 30 June 2017 (2016: Nil).
Financial key performance indicators
Management uses a range of performance measures to monitor and manage the business. KPIs measure past performance and provide information to manage the business. Sales, EBITDA and Free Cashflow are the key indicators management use to measure performance. KPIs for the financial year ended 30 June 2017 are shown in the table below, along with prior year comparatives.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages this risk by ensuring that it maintains sufficient levels of committed borrowing facilities and cash and cash equivalents. The level of headroom needed is reviewed annually as part of the Group’s planning process.
A maturity analysis of the carrying amount of the Group’s borrowings is shown below in the reporting of financial risk section together with associated fair values.
Capital risk
The Group manages its capital risk to safeguard its ability to continue as a going concern and maintain an optimal capital structure to minimise the cost of capital. This is done through changes made to the underlying debt structures within the Group and, where appropriate, issuing shares or selling assets to reduce debt.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Commodity price risk
The Group is exposed to commodity price risk on paper as a result of its operations. However, given the size of the Group’s operations, the costs of continually managing exposure to commodity price risk exceeds any significant potential benefits. The risk is mitigated due to the ongoing centralisation of the Group procurement team and also certain inputs being rechargeable directly to clients. The directors will revisit the appropriateness of this policy should the Group’s operations change in size or nature.
Sales of goods and services
EBITDA
Free Cash Flow1
400,439 +11% 20,133 +53%
1 Defined as cash generated from operations on page 64
Future developments
442,187
30,749
The Group continues to evaluate new investment opportunities, acquisitions and product lines in order to enhance the scale and profitability of the Group.
Principal risks and uncertainties
The actions and measures that have been implemented in order to protect the Group against financial risks and uncertainties.
The Group’s Treasury function is responsible for managing the Group’s exposure to financial risk and operates within a defined set of policies and procedures reviewed and approved by the Board.
The Group’s financial risk management policies are established and reviewed regularly to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
2017
2016
€000
17,781
+2%
Change
| 47
€000
%
18,218
Paragon Group Limited – 05258175