PEL.L Regulatory News (PEL)

PARAGON ENTERTAINMENT LIMITED

Unaudited interim results for the six months ended 30 June 2017

Paragon Entertainment Limited (AIM: PEL), the AIM-listed attractions design, production and fit-out business ("Paragon" or "the Group"), is pleased to announce its unaudited interim results for the six months ended 30 June 2017.

Highlights

- Revenue £8.0m (2016: £5.5m) representing a 45% increase on 2016.

- EBITDA increased to £0.6m representing a margin of 7.4% (2016: 5.1%).

- Gross Margin of £2.2m (27.2%) continues to improve (2016: £1.4m (25.8%)).

- Successful completion of projects including Madagascar, Kung Fu Panda, Cloudy with a Chance of Meatballs and Hunger Games in Dubai Parks & Resort, Cheshire and Manchester Fire Safety Centres and a Pirates of the Caribbean refurbishment for Euro Disney.

- Net debt of £877,000 as at 30 June 2017. Post period end a debtor payment of £1.7M was received in early August 2017.

Financial Summary

(1) EBITDA is defined as earnings before depreciation, amortisation, impairment, interest, share based payments, exceptional items and tax.

(2) Underlying operating profit is operating profit before amortisation, impairment, share based payments and exceptional items.

(3) Normalised earnings per share are earnings per share before amortisation, impairment, share based payments and exceptional items.

Mark Taylor, Chairman, commented:

"Paragon has again delivered a credible performance as we continue to do what we say we will do. The hard work required to achieve these results in spite of a volatile global environment should not be underestimated and, on behalf of the board, I wish to thank all our staff on the ground and in our workshops for the wonderful, world-class creative work which they produce."

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Notes to Editors:

Paragon Entertainment Limited (AIM: PEL) is an award-winning provider of attraction services from initial design production and consulting through to the fit out and installation of themed attractions, heritage exhibits, museums, aquariums and water parks, inter alia.

Paragon Entertainment is the holding company for Paragon Creative Limited

The Group's projects have included:

- The build of Rolling Stones Exhibitionism at the Saatchi Gallery, London;

- The design and build of Kidzania, London;

- The design and build of galleries at the Olympic Museum for the IOC in Lausanne, Switzerland;

- The design and build of the galleries at The National Museum of Kazakhstan;

- The design and build of Titanic Belfast;

- The thematic build of the Wallace and Gromit ride at Blackpool Pleasure Beach 

The Group listed on AIM in 2011.

 Further information can be found at: http://www.paragonent.com/

REPORT OF THE CHIEF EXECUTIVE OFFICER

Corporate Update

We have continued through 2017 developing our business with our core skill set which is the 'design & build' of attractions. The focus on our "3P" commercial strategy also continues to develop:

- Projects: Our traditional business of 'design & build.'

- Partnerships: We continue to develop stronger relationships with key partners like Hamleys, focusing on their global requirements for 'design & build.'

- Products: This segment is a small but growing part of our business and we are already rolling out FECs (Family Entertainment Centres) themed with quality third party brands for third party operators.

Management update

The first half of 2017 has seen our turnover increase by 45% to £8m (H1 2016: £5.5m). This has resulted in an increase in EBITDA to £0.6m (H1 2016: £0.3m). Both key performance indicators are in line with our expectations and we remain on target to achieve our full year expectations.

The second half of 2017 will be focused on:

- Delivering existing projects, mainly in the Middle East.

- Continued investment in manufacturing capability.

Major Projects

We continue to see considerable demand for our talents. Our current committed pipeline provides good forward visibility, both supporting our performance expectations and improving our quality of earnings. This position, coupled with the continued development of the relationships we have with key business partners, means we are confident of achieving our growth targets.

In 2017, we worked on several UK-originated projects. These include:

- Hamleys Warsaw and South Africa. Our relationship with Hamleys is progressing well.

- GMFRS and Cheshire Fire Safety Centre. We continue to explore and work on Safety Centres across the UK.

- SAASSC and SABIC. Two major Museum projects in Saudi Arabia and Kuwait.

- DXBE (Dubai Parks) including: Madagascar Mad Pursuit, Kung Fu Panda, Cloudy with a Chance of Meatballs and Hunger Games.

- Majid Al Futtaim Little Explorers Projects (via PCME Interiors):

- Little Explorers: Mirdif Dubai, Riyadh Park and Mall of Egypt Cairo.

- Max the Robot Riyadh Park.

- Astro Blasters in Kuwait and Bahrain.

Products

Products has developed significantly over the past 6 months with the recruitment of a dedicated team. This part of our business, although currently in its infancy, will become a steady contributor to our future growth. We are currently developing Products for JCB, DHX, Rubiks and Ninja Warriors.

We are seeing strong levels of opportunity in the market for 2018, however the market has become increasingly price sensitive and Brexit remains an uncertain challenge.

Financial Performance

As discussed above, the Group is in line to achieve its 2017 targets. As at 30 June 2017, the Group had net debt of £877,000. This however did not include a debtor payment received in early August 2017 of £1,700,000. The Board is therefore confident that the Group's cash position is in line with our expectations. The Group already has confirmation from HSBC that it will extend its banking facilities until July 2018.

John Dobson

Chief Executive Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2017

Earnings per share attributable to the equity holders of the Company during the year (expressed in pence per share)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2017

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2017

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2017

Notes to the Condensed Set of Financial Statements

1. General information

Paragon Entertainment Limited is a limited company incorporated in the Cayman Islands, company registration number MC-234241, and domiciled in the UK. The address of its registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The company has its primary listing on the Alternative Investment Market (AIM) on the London Stock Exchange. The company is registered with Companies House in the United Kingdom as a UK Establishment of an overseas company, company number FC030890.

The condensed consolidated interim financial information, including the financial information for the year ended 31 December 2016 set out in this interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The information for the period ended 30 June 2017 is derived from the unaudited non-statutory accounts for that financial period.

The non-statutory accounts for the year ended 31 December 2016 were approved on 5 June 2017 and shall be delivered to the Registrar of Companies. The Auditor's report on those accounts was unqualified and did not draw attention to any matters by way of emphasis of matter.

This condensed consolidated interim financial information is unaudited and was approved for issue by the Board on 30 August 2017.

Basis of preparation

The condensed consolidated interim financial information for the period ended 30 June 2017 has been prepared in accordance with applicable accounting standards.

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the period ended 31 December 2016 which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

Going concern

The financial information is prepared on a going concern basis and, based on the current level of sales and workshop activity, the directors are confident that the forecasts are achievable, and the Group will operate within the banking facilities. The bank has indicated that they will renew the facilities to the Group for another year beyond the date on which this report was signed.

2. Accounting policies

The principal accounting policies of the Group are consistent with those set out in the Group's 2016 Annual Report and Accounts.

A number of new and amended standards have become effective since the beginning of the previous financial year. None of the new standards and amendments are expected to materially affect the Group.

3. Segmental analysis

Management currently identifies the Group as having two active operating segments ("Design and Build" and "Licensing and Distribution"), and one historic operating segment that has been closed (Attractions). These operating segments are monitored by the Group's Chief Operating Decision Maker and used to make strategic decisions on the basis of adjusted segment operating results. The "Head Office" segment comprises the corporate activities which are unrelated to the individual operating segments and are only incidental to the activities of the Group as a whole.

Performance is measured based on EBITDA (as stated before share based payments and exceptional items and head office recharges) as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

Inter-segment pricing is determined on an arm's length basis. The information provided to the Board comprises the Statement of comprehensive income for each segment, the Statement of financial position and the Statement of cash flows and other financial and non-financial information used to manage the business on a consolidated basis.

Segment revenues comprise revenues made to external customers and made between segments.

Segment information for the reporting periods is as follows:

Six months to 30 June 2017

Six months to 30 June 2016

4. Earnings per share

Earnings per share have been calculated by dividing the profit or loss attributable to shareholders by the weighted average number of ordinary shares in issue during the six-month period/year.

The calculations of basic and diluted loss per share are:

Weighted average number of ordinary shares in issue:

There are 2.5 million employee EMI options and further Management Preference Options that vary in number and have been excluded in the calculation of diluted EPS. The total number of options and overview of the schemes is provided in note 8 of the published Annual Report and Accounts for the year ended 31 December 2016.

Normalised earnings per share

Normalised earnings per share has been calculated by dividing the profit or loss attributable to shareholders before amortisation, impairment of goodwill, share based payment charges and exceptional items by the weighted average number of ordinary shares in issue during the period. The numbers used in calculating the normalised basic earnings per share are reconciled below:

5. Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise the following:

Cash and cash equivalents include the following for the purposes of the statement of cash flows:

6. Borrowings

7. Cash (used in)/generated by operations