Paragon Care : Appendix 4D & Half Year Report (FEB2019)

Name of Entity:

Appendix 4D

ABN:

PARAGON CARE LIMITED 76 064 551 426

Reporting Period:

Financial Half Year ended 31 December 2018

Previous corresponding Period:

Financial Half Year ended 31 December 2017

Dividends

Paragon Care Limited ("the Company") has declared a fully franked interim dividend of 1.1 cents per ordinary share, which represents the same payout as last year. This will be paid on 26 April 2019 in respect of the financial half year ended 31 December 2018. The dividend will be paid to all shareholders on the register of members as at the Record Date of 22 March 2019.

A final dividend for the year ended 30 June 2018 of 2 cents per share fully franked was paid in October 2018. The record date was 8 September 2018 with the payment date of 6 October 2018.

Dividend Reinvestment Plan

The Company operates a dividend reinvestment plan (DRP) that enables shareholders to elect to reinvest all, or up to a portion of, their dividends into additional shares in Paragon. The DRP will be available for the final dividend. Shares will be issued at a discount of 2.5% to the volume weighted average market price of shares sold on the ASX over the 5 trading days immediately preceding the record date.

Name of Entity:

ABN:PARAGON CARE LIMITED 76 064 551 426

Consolidated Financial Statements

This report is based on the attached financial report which has been independently reviewed. The attached financial report is not subject to a qualified review statement.

PARAGON CARE LIMITED

AND CONTROLLED ENTITIES

ABN: 76 064 551 426

FINANCIAL REPORT FOR THE HALF-YEAR

ENDED 31 DECEMBER 2018

Paragon Care Limited ABN: 76 064 551 426

Directors' Report

For the Half-Year Ended 31 December 2018

The Paragon Care Board of Directors present this report on the consolidated entity consisting of Paragon Care Limited and the entities it controlled during and at the end of the half year ended 31 December 2018.

DIRECTORS

The names of the Directors of Paragon Care Limited ("Paragon Care" or "the Company") in office during the half year and until the date of this report are as below. The Directors were in office for the entire period unless otherwise stated.

Mr. Shane Tanner (Non-Executive Chairman)

Mr. Andrew Just (Managing Director)

Mr. Michael Newton (Non-Executive Director)

Mr. Geoff Sam OAM (Non-Executive Director)

Mr. Brent Stewart (Non-Executive Director)

PRINCIPAL ACTIVITY

The principal continuing activity of the consolidated entity is the supply of medical equipment and consumables for the Diagnostic, Capital and Consumables, Specialty Devices, Eye care and Service and Technology markets of the health care industry.

Revenue and Earnings

The Company's revenue was $130.0m for the six months ended 31 December 2018 (up 148% over the prior corresponding period). EBITDA for the half year was $9.5m (up 73% over the prior corresponding period) and NPAT was $4.2m loss (down 246% over the prior corresponding period). This result is reflective of both continuing and discontinuing operations.

Earnings for 1H19 have been impacted by greater costs from legacy businesses (compared to 1H18) and non-recurring costs associated with integration, together with a provision for impairment of goodwill of the discontinuing operations of $5.2m, which led to a $7.0m decline in NPAT this half compared with the comparable period in 2018.

The Company's gross profit margin of 38% remains stable which contributed to $5.8m increase in EBITDA.

Operating expenses increased by $21.3m as a result of:

• • Acquisitions of multiple businesses through the course of 2018.

• • Strategic headcount improvement to reduce future operating expenses.

• • Investment into products, quality control procedures and new service markets.

An early adoption of AASB16 Leases which provided a re-classification of Rental Expense and its respective Commercial Lease contractual terms and its values to be treated as Assets and Liabilities.

On the 29 November 2018, the Company announced an impending strategic review of the traditional Capital and Consumable business as part of the group wide transformation program.

On the 12 February 2019, the Company advised that the continuing business had developed strong organic growth, stabilised gross profit margins, and was pursuing an improvement in Operating Expenses and efficiencies in reporting through a single IT ERP platform across the multiple businesses.

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