paragon Starts Fiscal 2008 with New Strength

paragon AG / Final Results Release of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer / publisher is solely responsible for the content of this announcement. ---------------------------------------------------------------------- paragon Starts Fiscal 2008 with New Strength · Automotive products post 6.7% growth in sales in 2007 · Net income up 11.7% in 2007 · Cash flow from operating activities increases 47.2% · Positive start to fiscal year 2008 Delbrück, April 1, 2008 – In the year recently ended, the Automotive business segment was once again the growth driver in the paragon Group. Among other performance indicators, the direct supplier to the automotive industry increased its sales of own products by 6.7% to €88.5 million. 'We’ve grown at a faster rate than the European automotive industry. This is clear proof of our innovative strength and the quality of our products,' says CEO Klaus Dieter Frers. Due to robust growth in the Automotive business segment (80% share of sales), the company was nearly able to compensate for the fact that it refrained from merchandise sales. Total sales in 2007 remained at the level of the prior year at €108.9 million. Currency-adjusted gross Group sales amounted to €110.4 million and met the Managing Board’s expectations for 2007. paragon took advantage of fiscal 2007 to invest in the future. Research and development expenditures were roughly as high as in the prior year at €10.7 million and represented 9.8% of sales. Earnings were also impacted by the replacement of high-interest profit-sharing rights with profit-sharing rights with a lower interest rate in 2007. However, interest payments will be significantly lower in the future as a consequence. Due to the fact that other operating expenditures were 12.5% higher on the whole, earnings before interest and taxes (EBIT) dropped from €8.4 million to €6.8 million. Net income, on the other hand, grew significantly. As a result of tax effects, it rose 11.7% to €2.5 million (2006: €2.2 million). Earnings per share are now €0.60, up from €0.54 in the previous year. paragon’s financial power remains strong. Cash flow from operating activities increased 47.2% to €6.2 million (2006: €4.2 million) and substantially improved the company’s internal financing strength. The Supervisory Board and Managing Board intend to propose a dividend of €0.10 per share for fiscal 2007 at the Annual General Meeting on May 14, 2008 (2006: €0.30). The Electronic Solutions business segment recorded an 8.8% rise in sales in Europe. 'The current business trend at paragon firstronic GmbH in Germany is very encouraging. So for moment we will continue to observe the market and will not make a final decision on selling the Electronic Solutions business until the time appears right,' explained Frers. In 2007, the company had reported that it would review all options in connection with this core business segment. In the USA the consolidation of the Electronic Solutions business was successfully continued. The streamlining of the product portfolio, follow-up contracts that will not start in the immediate future, and the change in the dollar exchange rate led to a significant reduction in revenues in the USA. But the measures implemented greatly minimized the negative contribution to earnings. paragon expects to reach a break-even point in this market in 2008. In the past fiscal year, paragon made important advances in moving up the supply chain and positioning itself as a system supplier. The company will resolutely continue to pursue this trend in 2008 by increasing its focus on the growing cockpit systems market to take advantage of additional sales and margin potential. In only two to three years, suppliers will be generating 75% of the added value of a vehicle; paragon is ideally positioned and prepared for this trend, not least due to the Artega project. In 2006, paragon had initiated the construction of the new German sports car Artega GT to have a platform for its cockpit systems. The first successes in using Artega interior components in mass production are already apparent. The Artega project was also instrumental in the 15.3% increase in orders scheduled for completion by December 31, 2007. In the current fiscal year, the Managing Board anticipates a 5.0 to 10.0% rise in sales along with disproportionately high growth in the operating result. The good start in 2008 confirms this projection. As early as mid-March, paragon had increased its order level to €314.9 million. Of this total, some €104 million relate to orders placed for 2008; this means nearly the entire projected sales of the current year have already been covered. The company also reported a major order for Media Device Interface (MDI), a technology that can be used to operate MP3 players like CD changers. The volume of orders for MDI technology alone is more than €25 million for the next three years. 'MDI gives us a clear competitive advantage,' says Frers. 'We are confident that the cost-intensive measures we implemented in 2007 have created a solid base for future growth and strengthened shareholder value.' About paragon: paragon AG, a company listed in the Prime Standard segment of the Stock Exchange in Frankfurt, Germany, develops, produces, and distributes cutting-edge system solutions in its business segments Automotive (Climate Systems/Car Media Systems/Instrumentation and Control Systems) and Electronic Solutions (including Building Technology). The product portfolio of this direct supplier to the automotive industry includes the clear market leader in air quality sensors (AQS), hands-free systems, and display instruments. In addition to its headquarters in Delbrück, North Rhine Westphalia, the company maintains facilities in Suhl, Thuringia (production), Cadolzburg, Bavaria (Car Media Systems), St. Georgen, Baden Württemberg (Instrumentation Systems), and Heidenheim, Baden-Württemberg (Electronic Solutions sales), all in Germany. Internationally, the paragon Group is represented by wholly owned subsidiaries in Grand Rapids, Michigan, USA (development, production, and sales) and Osaka, Japan (application, sales) and sales offices in Paris, France, and Turin, Italy. In fiscal year 2007, the paragon Group generated sales totaling €108.9 million with 594 employees. paragon AG Schwalbenweg 29 33129 Delbrück Tel.: +49 (0) 52 50 - 97 62-0 Fax: +49 (0) 52 50 - 97 62-60 Internet: www.paragon-online.de E-Mail: info@paragon-online.de Leitung Unternehmenskommunikation Matthias Hack Tel.: +49 (0) 52 50 - 97 62-141 Fax: +49 (0) 52 50 - 97 62-60 E-Mail: matthias.hack@paragon-online.de Investor Relations Haubrok Investor Relations GmbH Thomas Vormann Tel.: +49 (0) 52 50 - 97 62-140 E-Mail: t.vormann@haubrok.de 01.04.2008 Financial News transmitted by DGAP ---------------------------------------------------------------------- Language: English Issuer: paragon AG Schwalbenweg 29 33129 Delbrück Deutschland Phone: +49 (0)5250 97 62 - 0 Fax: +49 (0)5250 97 62 - 60 E-mail: investor@paragon-online.de Internet: www.paragon-online.de ISIN: DE0005558696 WKN: 555869 Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, München, Hamburg, Düsseldorf, Stuttgart End of News DGAP News-Service ---------------------------------------------------------------------------