Twenty-four results announcement. For the duration of the presentation, participants are in a listen-only mode. I would like to hand over to our speaker, Paragon Care CEO, Mr. David Collins. Thank you, sir. Please go ahead.
Hello, my name is David Collins. I'm the Managing Director and CEO of Paragon Care. Welcome to our June twenty-four financial investor presentation. Since this is the first report that we've done with the CH2 and Paragon merger, we'd just like to just go overview, a view about who we are now, which has changed quite a lot from last year. So, since we merged with CH2 in June, the business has changed dramatically, and we've been working very hard to bring the two businesses together. You can see now the combined business with its high margin, low volume, and high volume and low margin business coming together is a really natural fit, and we now cover all aspects of the healthcare sector for product range, and that's going from pharmaceuticals, medical consumables, complementary medicines, equipment, devices, and logistics.
And so with that portfolio of products, we think we've got a very good opportunity to grow this business over the long term. And now we also cover Australia, New Zealand, Japan, Thailand, Vietnam, Korea, and Philippines. And we've got some aspirations to go to cover Malaysia, Singapore, Indonesia as well. The key thing about bringing the two businesses together, we really do wanna provide business and quality service pricing, and we are fully integrated that, integrated. I'll also talk our Immulab business and we've done here, and how we've revalued that and reset it going forward. So at high level, the numbers. And we've put here the statutory result and the pro forma result. So it's been quite a complex process on an accounting point of view, bringing the two businesses together.
Because CH2 was the larger entity of the combined business, it actually ended up being a reverse takeover, so all the numbers you'll see in the annual report will be twelve months of CH2 and one month of Paragon. And so to make some sense of the numbers, we've given you pro forma numbers as well, which shows CH2 for twelve months, Oborne, if we had ownership of Oborne for twelve months, and we bought Oborne at the end of February of this year, and also Paragon, and you can see from the combined business at a pro forma number, in FY 2024, we turned over AUD 3.3 billion and had an EBITDA of 91. That's an underlying result of AUD 91 million and an after-tax profit of AUD 28 million, so combined, we think it's a nice platform to move forward on.
The statutory result at AUD 45 million EBITDA includes about AUD 8 million of one-off costs that will come out in the next financial year, and so that still left an after-tax profit of AUD 8.4 million for the year. So this is now the new structure that we've put in place immediately in Paragon Care. So we have these six sales streams which cover our pharmacy business, our capital service and medical consumable business, our diagnostic business, surgical specialties, comprehensive medicines, and contract logistics. And you can see from there the variability in revenue number, but also then the variability in our gross margin dollars. And so we do really try to focus on the absolute gross margin dollar and what return we can get on that. So it is a very nice now mix of business going to like-for-like customers.
Our contract logistics business, where we service manufacturers who don't want to have a warehousing or infrastructure here. All those revenues and margin are included in those other five business units, and so we think that we can build on these business units and grow each of them. We think each of them have got their own pretty good growth profile, organically and inorganically, and as part of that, so that this structure was put in place on the first of July, and we have also each of those areas have a general manager. They have their own dedicated sales force, and they're out there selling today, trying to grow our business, and then we've set up the shared service, with the shared service now servicing all those sales units, and that'll be the model going forward for Paragon Care.
So with this merger, there's a lot of benefit around cost synergies, and we also think eventually some revenue synergies as well. But the key for it at the moment, and we're working hard, is consolidating all our warehouse locations in Australia. And so we have in every state where there's a CH2 site and a Paragon site, the Paragon site will go into the CH2 site, and that process has already started. And the only place that it's different is Victoria, with the Mount Waverley site, which is the manufacturing site for Immulab. We've now made that our head office, and we'll keep our Keysborough site and the Mount Waverley site. We've got a number of other just pure offices throughout Australia, and they will also go into the CH2 warehousing infrastructure.
As I mentioned before, we've put in place a shared service model, and we are now utilizing cross-functional resources, and we have already removed duplicate roles within our internal restructure. You know, we're working really hard and trying to go very fast of bringing these two businesses together. In the next 12 months, we will complete that. As you can see from here, the coverage for us is huge. We are all through Australia and New Zealand and currently through 5 sites in Asia. The plan is to roll out the CH2 business within New Zealand in the next 6-12 months and eventually pass that into Asia as well. As I mentioned before, we do plan to go into Singapore, Malaysia and Indonesia as well to complement our other Asian businesses.
Just on our Mount Waverley site, in our Immulab business. Now, when this project was started now some four or five years ago, the whole business case was around, one, making sure we had a modern manufacturing plant for the current Immulab business, which has a 70% market share in Australia. But also the driving factor was to export this product overseas. Now, unfortunately, COVID got away in the middle of that, and the original business case was using a whole lot of exports to China, and now unfortunately, that has fallen away, and so that business is not there.
We've done a full review of the Immulab business, and based on the current and medium-term outlook on profitability of that business, we've had to write down the assets of the Mount Waverley site. You know, there was an overinvestment in that site. It's unfortunate, but you know, we do really need to resize it to what the current revenues are and not for something that may be there in ten years' time. Saying that, you know, the short to medium term is challenging, but long term, you know, if we can secure some contract manufacturing opportunities to complement the manufacturing we do for our own product, then we will still hopefully make a return on that long term. But we've had to take the hard decision to write that asset down.
So on the integration plans, we have been working very fast, to try to bring these two businesses together. We from the old CH2 perspective, every time we buy a business, it is our view to integrate them, and we see Paragon as no different. And so we put a new organization structure in place on the first of July. We merged all the shared service teams on the same day. We've already put the Design for Vision Australian business, the Eye division, on JD Edwards, which is the CH2 ERP system, and we've got an e-platform up and running, and that business, that was all done in August. The SMS and LabGear business will be integrated in September, and that'll include an e-commerce platform as well.
The Obome business that we acquired in February will also be done by the end of October as well. We're going through the process at the moment of getting accreditation for ISO 14001, and that will be completed by end of October, and the REM Systems business will be integrated by the end of December. We are still confident that the balance of Australia, Asia, and New Zealand will be integrated onto JD Edwards, our ERP system, by June 2025. Of course, of all part of this process, we are having a lot of engagement with our customers and our agency partners and our suppliers, just to reassure them about our commitment and focus to this business in totality.
And so we are working hard and fast to try to get this business integrated, and then supplement it with some business development as well. We're still on track to deliver our expected synergies in FY 2025 and going into the FY 2026 period as well. Just with the merger, the board has been refreshed as well as the management team, myself, Carmen Riley, and Peter Lacaze, we're all from the CH2 side. Alan McCarthy was an independent director on the Paragon board previously and has kindly stayed on. And of course, John Walstab, who was the previous managing director and previous major shareholder of Paragon, has also stayed on, which I'm very grateful to.
John is heading up our Asian business, and, we're very confident that John, with focus in that area, will be able to grow that business as well. We've got a whole new management team as well, which is a mixture of Paragon and CH2 people, and we think we've got a really nice balance now to move this business forward. On this slide here, we've got our pro forma and our statutory results, and we really like to focus on the pro forma numbers. As we, as the business has changed quite a lot, and because of the way the reverse takeover works, we thought we'd better, focus on the pro forma numbers. It just shows you the sheer scale of the business going forward.
The revenue number for this business has actually increased quite a bit over the last twelve months. The actual CH2 business is up 31% on the prior year. That's partly the CHS acquisition, but also market share gains and also market growth. The Oborn business, since we've bought it, has been growing strongly compared to the previous year, and we've used the last four months under our ownership as the run rate, is up 22%. And the Paragon business is actually up 5.5% on the previous year. That's really driven by New Zealand and Thailand. The Australian business is still soft. You know, the underlying capital equipment market here in Australia for public and private hospitals is challenging at the moment, and everybody's aware of that.
So we just gotta keep focused on trying to get our piece of that market, and eventually, hopefully, that dynamic will change once they sort out the underlying funding issues into public and private hospitals. The Eye business also had a soft year. The previous year, they had a very strong year with the COVID effect of the instant tax write-off. And also, we've been waiting to launch a new robot into our orthopedic business. That has been delayed and will not now come until late this year. But once that robotic's in place, then we see good growth in our orthopedic business. Our gross margins, so even though our gross margins percentage on the CH2 side reduced year over year, that's fundamental of when our hospital business grows on the pharmacy side a lot, there's a lot of high-cost drugs in there.
So the CHS business we bought off Sigma was a low-margin business, and we knew that when we bought it. And it's just a nice add-on to our pharmacy business, but also we've had other high-cost drug growth at low margins. The Oborne gross profit has been up as well as a percentage with new products coming on board, which is driving that mix. And even the Paragon business gross margin % was up year over year, with very strong growth in the Thailand business. Overall, our expenses have been well managed. We put a lot of focus on expense management because, you know, we wanna be the lowest cost provider in the market and use that to our advantage when we're out there trying to win business.
However, there is wage pressures, there's been freight pressures with CPI increases, insurance is going up, plus of course, higher interest rates, so we've just got to keep growing to get that economy to scale, right. There is a number of one-off costs in the current statutory result relating to transaction costs around the Paragon merger and the Oborne acquisition, plus there's some other one-off costs, relating to other costs from the prior year, so they won't be repeated into the next year, so overall, the result, based on the investor presentation we put to the ASX in March, was pretty close to it. We're about AUD 400,000 below it, but overall, a really solid result, so we think going forward is a nice platform for us to go forward.
The net debt position at that end of financial year was right in line with our forecast, and so we think we've got pretty good facility there to keep on growing the business, so just on the balance sheet, we'd like to show our balance sheet in this format because we are very focused on our Net Working Capital of what we can control. We're a low-fixed assets business, and so our ultimate gain one day is to have that Net Working Capital figure at zero, you know, and as a wholesale business distributor, we don't wanna be funding that, and so we're trying always to maximize the investment that we have in that Net Working Capital, and we'll continue to try to leverage that.
So it has gone up year over year, but that's a reflection of our business has grown so much over that year. But we are very focused as management to try to reduce net working capital even while we're growing. So that's the long-term gain. The other long-term assets and liabilities in there is just a mixture of all the other assets, including the right-of-use assets and lease liabilities in there. The goodwill and intangible figure, so under the old and so the FY 2023 numbers is the old CH2 for statutory purposes, and that's how we had to report it, and we had not that much goodwill. When we went into this acquisition, we didn't know or we, we didn't understand that there was gonna be a reverse acquisition accounting come in place.
So if you refer back to the investor presentation, it does have quite a large goodwill because we thought you took the goodwill of Paragon and added on the goodwill for CH2, but that's not the way it works. Under the reverse acquisition accounting, all the previous goodwill that Paragon had got washed out through equity, and then we set the goodwill again based on what the value of and of course, we had Oborne and CHS in there, but also then Paragon. Now, on that Paragon goodwill, we were under the impression that we would be valuing the business on the day of announcement, which was back at the end of February.
Unfortunately, the accountants had a different story about that, and under the accounting standards, we had to use the share price on the day of completion, and of course, that share price was AUD 0.39, and therefore made a material impact on the goodwill being a larger number than we first hoped. But that's what it is, and that we have to accept on the accounting treatment. Our net debt at the end of the year was around AUD 180 million. But one of the things that CH2 does, and now we do with Paragon, we track our daily net debt every day. So we have quite a intra-month swing in our debt.
So for the whole of FY twenty-four, the average daily net debt for the group was AUD 169 million, and that's the true reflection of what our debt levels are for this business. And so, we think that's a pretty fair representation of the size of the business. With free cash, we'll bring that down over time or subject to other acquisitions we do. Okay. As you can see from the return on invested capital, CH2 has historically been running in the twenties with the revaluation of Paragon to that, goodwill number. It's not at a level we accept, and so we'll be working hard to bring that return on invested capital up to a more acceptable range of between 15% and 20%. But the way we're gonna do that, we have to make more money, and so that's what we're focused on.
Just on free cash, so we have, and here again, it's a statutory result. Our free cash is really being driven by our operating business. Year over year, it was an improvement from the previous year. We think going forward, it should just continue to be improved for us. There was this year investments into the CHS business and the Oborne acquisition, plus we also divested the Aero Travel Solutions investment we had on the CH2 side. Paragon also made a small investment in the Carestream business early in the year, and then the rest of it is around capital expenditure. So going forward, we're very focused on our integration plans. We are now also turning our mind to how we can cross-sell of our expanded product range and bundle some of our services within our different divisions.
And to take an example, we have put the CH2 medical consumable business into our capital consumable business because there are some like-for-like customers and like-for-like products that they could sell for each other. We are working hard on operational efficiencies and cost realizations. We see huge opportunity for bringing all these sites in every state together. And one of the big things we're doing in October is, CH2 does this every year, but we're also now gonna do it for Paragon, and this is Paragon business, that we're bringing all our team, all our sales team members, all our middle to senior managers together in one large annual conference, and it's around focusing on our one team way of doing business. You know, going forward, this business will be Paragon Care.
It won't be CH2, and it won't be REM, and it won't be Design for Vision, it won't be Immulab. It will be Paragon Care, and we are one team, and that's what we're focused on, and that conference is a really good place to start to reset our strategy and our focus around this one team. We've also been actively reviewing all our customers, our products, our agency partner pipeline, 'cause, you know, we really wanna embed organic growth in this business. The markets we operate in across all our sectors are huge, and so we see huge opportunity if we can continue to get organic growth, to grow value for our customers and our suppliers, but also for our shareholders as well. So the other thing, we've got an acquisition pipeline in place.
We are being proactive in trying to do some additional inorganic opportunities, and so look, but we will only do that if the investment is at the right level and it complements our current business. Our number one aim is organic, and then where we can complement that with organic, we will do that. We will at the AGM in November give you an update on the FY twenty-five trading and the outlook for the rest of the year. At the moment, we're just focused on getting these two businesses together and really going out there and bringing the teams together. Thank you very much for your time. I appreciate it, and thank you very much for your interest in Paragon Care. Thank you.
Thank you. That does conclude the presentation. You may now disconnect.