paragon AG: Significant Increase in Earnings Continues in First Three Quarters

paragon AG / Quarter Results Release of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. ---------------------------------------------------------------------- · EBIT rises by 9.0%, net income for the period climbs by 71.0% · Growth in sales with own products develops as expected · Orders on hand increase by 26.0% Delbrück, November 8, 2007 – In the third quarter of 2007, paragon AG (ISIN DE0005558696) was able to increase its earnings at an above-average rate. Net income for the period increased significantly to €1.7 million from the prior year (€1.0 million). paragon, a direct supplier to the automotive industry, improved Group sales by 4.1% to €81.3 million in the first nine months of 2007 (Q1-Q3 2006: €78.1 million). The currency-adjusted growth in sales was 4.7%. The third quarter remained at the same level as in the prior year at €27.2 million due to seasonal customer plant closedowns. This means that paragon is on target for fiscal 2007, especially since the fourth quarter is expected to be the strongest of the year based on past experience. The orders on hand suggest that paragon has further potential for growth. As of the September 30 closing date, the company had 26.0% more scheduled orders in 2007 than in the year before. Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased at an above-average rate of 7.4% in proportion to sales to €14.1 million (Q1-Q3 2006: € 13.2 million). In addition to the favorable performance of business, the reduction of the ratio of the cost of materials to total output from 61.7% to 57.4% also played a role in this development. Accordingly, the EBITDA margin improved to 17.4% (Q1-Q3 2006: 16.8%). Earnings before interest and taxes (EBIT) grew at a pronounced rate. The operating result increased by 9.0% to €5.5 million (Q1-Q3 2006: €5.0 million). As a consequence, the EBIT margin rose by 6.8% (Q1-Q3 2006: 6.5%). Despite special effects related to shifts in financing in the second quarter, paragon increased its period result by 71.0% to €1.7 million (Q1-Q3 2006: €1.0 million). This growth was not only a result of measures to boost efficiency, but was also supported by the proceeds from the dissolution of deferred taxes. At the end of the first nine months, the earnings per share were €0.40 (Q1-Q3 2006: €0.23). The projected growth in sales for 2007 of 5 to 10% compared to the year before includes revenue targets for the company’s own products (€110 million to 112 million, up from €106.6 million in 2006) and for trading goods (€7 million to €10 million, up from €4.2 million in 2006). The Managing Board is considering canceling most of the trading goods business originally planned for the holiday shopping season for the purpose of risk avoidance. It will be possible to realize sales of the company’s own products in line with the projection. The above-average growth in earnings should continue in the same range as in the first three quarters in the fourth quarter of 2007. It is conceivable that paragon could sell all or part of the Electronic Solutions business as early as the first quarter of 2008; there are already several serious prospective buyers. The company plans to use the proceeds from the sale to continue to reduce its gearing ratio. On the whole, the principal focus in 2008 will be on the automotive business. In order to catapult paragon to the ranks of recognized Tier 1 suppliers of state-of-the-art interior systems, the company is looking at potential opportunities for additional acquisitions. But even if an acquisition should be made, the gearing ratio should not increase again; alternative forms of financing are being reviewed. 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 Christine Schulte-Beckhausen Tel.: +49 (0) 2 11 - 3 01 26-0 Fax: +49 (0) 2 11 - 3 01 26-5111 E-Mail: c.schulte-beckhausen@haubrok.de 08.11.2007 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 ---------------------------------------------------------------------------