LONDON (Alliance News) - Paragon Entertainment Ltd Wednesday said its chief financial officer is to step down as the company disclosed that it is considering its long-term funding options after breaching a banking covenant due to a weaker-than-expected performance in 2014.
Chief Financial Officer Richard Arden is leaving the business from July 31, with a "suitable replacement" to be made in due course.
Paragon Entertainment, which designs, builds and operates attractions such as theme parks and museums, said that HSBC, its bank, remains supportive of the company.
"HSBC have advised us that they do not intend calling in the overdraft or loan facility and continue to work with us constructively. We are nevertheless monitoring this matter closely and are looking at options to improve the group's long term funding position," Paragon Entertainment said in a statement.
Having reported earnings before interest, tax, depreciation and amortisation of GBP0.8 million in 2013, the company swung to an EBITDA loss of GBP0.1 million in 2014, resulting in a breach of the EBITDA coverage covenant with HSBC. It has a secured bank loan that had a carrying value of GBP281,000 at the end of 2014. Under the terms of the deal, the loan must be repaid over about seven years. The agreement contains an "interest cover covenant", meaning that at the end of each quarter EBITDA must exceed interest by three times.
Paragon Entertainment said its pretax loss widened to GBP427,000 in 2014 from GBP112,000 in the prior year. Revenue was down to GBP7.7 million from GBP9.5 million. Costs of sales fell to GBP6.2 million from GBP7.4 million, while operating expenses were down to GBP1.9 million from GBP2.3 million.
The company said it wants to consolidate its market position over the next five years after a loss-making 2014.
"Despite facing challenges in 2014, we have successfully retained our market leading position, and completed numerous UK and overseas projects including specialist design and build at the Museum of Kazakhstan, [Imperial War Museum] First World War Galleries, Harrods and Glasgow Hospital," interim Chief Executive Mark Pyrah said in a statement.
"We aim to consolidate our market leading position over the next five years by remaining focused on delivering extraordinary, enriching and exciting attractions experiences," Pyrah said.
Mark Pyrah remains interim chief executive until the company can find a permanent successor.
Shares in Paragon Entertainment were down 1.7% at 1.84 pence on Wednesday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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