Year end results 2016/17

• pro forma turnover of €111 M at constant exchange rates
  (€108 M at current exchange rates)

Confirmation of goals for 2021

• €250 M Turnover
• EBITDA in excess of 10%

Paragon ID (ASK - Euronext Paris - FR0011980077), the European leader for identification solutions, particularly for Transport & Smart Cities, e-ID, and Traceability & Brand Protection, has published its consolidated annual results for the FINANCIAL year 2016/2017 ending 30^th June 2017 and approved by the Board of Directors during their last meeting on the 26^th of October. The audit procedures for the accounts have been carried out and the audit report relating to their certification has been issued by the Statutory Auditors.

Preliminary notes:

• The scope of consolidation of ASK has been significantly modified following the acquisition of the Paragon Group Identification Division, completed on April 27^th 2017. From the legal point of view, this transaction constitutes an acquisition by ASK of the Identification division's shares. From the point of view of the financial statements, in accordance with ifrs 3 "Business Combinations", this transaction is considered a "reverse acquisition" of ASK by Paragon. In this respect, the consolidated financial statements must present, for all periods prior to May 1^st 2017 (effective date of the merger), the consolidated financial data of the Paragon Group Identification Division.
• In addition, on December 21^st 2016, ASK's general shareholders' meeting decided to move the financial year-end to align it with that of Paragon Group Ltd and in order to facilitate consolidation with the latter. The financial year beginning January 1^st 2016 has therefore been extended to June 30^th 2017, and accounts for a period of 18 months.

As a result of both points above, the 2016/17 consolidated financial statements, consist of:

• An 18-month financial year (1^st January 2016 – 30^th June 2017) in line with legal requirements; the last financial year being 2015 and ending 31 December 2015. The financial results include 18 months of the Identification division and 2 months from the former ASK business (from 1^st May 2017)
• A 12-month financial year (1^st July 2016 – 30^th June 2017), with a 12-month financial year ending 30th June 2016, to provide comparative financial information (1^st July 2015 – 30^th June 2016).

(1) January 1^st 2016 to June 30^th 2017, 18 months of the Paragon Group Identification division and 2 months of the former ASK scope (May / June 2017)
(2) July 1^st 2016 to June 30^th 2017, 12 months of the Paragon Group Identification division and 2 months of the former ASK scope (May / June 2017)
(3) July 1^st 2015 to June 30^th 2016, 12 months of the Paragon Group Identification division exclusively
(4) Operating income before depreciation, amortization and non-recurring items

Julien Zuccarelli, ceo at Paragon ID¹ (ASK), commented:

“ With pro forma sales of €111 million at constant exchange rates in 2016/17, we achieved our goal as set out in May and set within the scope of the merger between the identification and traceability activities of Paragon Group and ASK.

The new company is currently implementing synergies at an operational level and we will start to see the first positive results soon. Our industrial reorganisation, announced early September, is underway and will strengthen our operational and R&D units. Our new organisation provides the foundation for industrial efficiencies which are essential to achieve profitable growth and improve our competitiveness. We will deliver gains in the order of €3 million for the full year through margin gains and savings on our fixed costs.

The 2017/18 financial year will be the first step in our strategic plan, which should lead us, by 2021, to a target of €250 million in revenue and a double digit EBITDA margin.”

Main comments on year end results 2016/2017

At the end of the 2016/17 financial year (July 1^st, 2016 - June 30^th, 2017), Paragon ID¹ (ASK) achieved a consolidated turnover, consisting of the 12 months of activities of the Identification & Traceability Division of Paragon Group Ltd. and two months of activities of ASK, of €63.1 million, an increase of 28%.

On a consolidated basis, the underlying EBITDA amounted to €6.2 million in 2016/17, up 31% compared to 2015/16. The underlying EBITDA margin thus stands at 9.8%, against 9.6% a year earlier.

After taking into account amortization and provisions, recurring operating income amounted to €4.4 million, up 22%, representing a current operating margin of 7.0%.

During the 2016/17 financial year, Paragon ID¹ (ASK) recorded non-recurring expenses of €5.4 million. These non-recurring expenses consist mainly of (i) costs associated with the reorganisation plan for the industrial operations and the implementation of a social plan for €3.3 million (see press release dated September 7, 2017), (ii) management fees charged by Paragon Group Ltd. to its subsidiaries of €1.9 million, discontinued since the merger in accordance with the contribution agreement. After recording these non-current expenses, the operating result breaks even for the period.

Net loss amounted to €2.1 million in 2016/17, including financial income of € -0.5 million and income tax expense of €0.6 million.

Pro forma information 2016/17

On a pro forma basis, pro forma turnover amounted to € 108 million (€ 111 million at constant exchange rates.)

The reorganisation plan announced in early September, which is focused on the consolidation of Paragon ID¹ (ASK)'s European manufacturing facilities (ASK) and the strengthening of its R&D expertise, aims to improve the company's industrial competitiveness by around € 3 million for the full year, in order to achieve the operational performance in line with its goals. It will be fully effective as of June 2018.

Balance sheet situation at June 30^th, 2017 at the end of the 2016/17 financial year

As of June 30^th 2017, the equity of Paragon ID¹ (ASK) amounted to €34.3 million.

Financial debts amounted to €11.6 million, of which €8.3 million was from overdrafts and bank loans, €1.7 million for leasing debt relating to part of its production and finishing equipment and €0.8 million under conditional advance mechanisms and grants. Accounts receivable debt amounted to €11.9 million as of June 30^th.

In addition, as per the terms of the merger, Paragon Group Ltd. (Main shareholder with 78.4% of the share capital of the company) subscribed to two bonds issued by Paragon ID¹ (ASK) for a total amount of €20.0 million (€10 million in bonds convertible into shares and €10m non-convertible bonds).

Paragon ID¹ (ASK) had available cash of €6.9 million as of June 30^th 2017.

Goals

Following the merger, the objective in bringing the two entities together is to build a global leader for identification solutions, bringing solutions to the complex challenges for security and traceability faced by its worldwide customers, by relying on a unique technology platform and a global industrial base.

Geographically, Paragon ID¹ (ASK) intends to accelerate its development in the coming years in its target areas: Continental Europe, the United Kingdom and the United States.

These ambitions will be realised through medium-term financial objectives, combining organic growth, including a double-digit growth for contactless activities (RFID tags, NFC), and external growth, based on the Paragon Group's proven track record in acquisitions and integrations. By 2021, the group has set itself the following objectives:

• 250 M€ turnover;
• in excess of 10%

Financial Diary 2017/18

These dates are given for information only, they are likely to be modified if necessary.
All publications take place after the closing of the Euronext markets.