PEL.L Regulatory News (PEL)

RNS Number : 2279P

Paragon Entertainment Limited

30 August 2017

 

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

		Unaudited Six months to June 2017 £000s	Unaudited Six months to June2016 £000s	Audited Year to December 2016 £000s
Revenue		8,001	5,536	14,424
Gross profit		2,174	1,429	3,762
EBITDA (1)		595	282	1,188
Underlying operating profit (2)		584	106	1,924
Profit for the year		331	106	311
Cash balance		(538)	(246)	1,428
Basic earnings per share		0.18	0.05	0.17
Normalised earnings per share (3)		0.18	0.12	0.48

(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.

For further information:   Paragon Entertainment Limited Mark Taylor (Chairman)   finnCap Ltd Julian Blunt / Simon Hicks (corporate finance) Alice Lane (corporate broking)

01904 680020     020 7220 0500

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

		Note	Six months to June 2017 £000s	Six months to June 2016 £000s	Year to December 2016 £000s
Revenue		3	8,001	5,536	14,424
Cost of sales			(5,827)	(4,107)	(10,662)
Gross Profit			2,174	1,429	3,762
Administrative and other operating expenses			(1,726)	(1,333)	(3,363)
Analysed as:
EBITDA		3	595	282	1,188
Share based payment charges			-	-	(8)
Exceptional and other items			(11)	(10)	(45)
Amortisation of acquired intangibles			-	(101)	(197)
Impairment of goodwill			-	-	(314)
Depreciation and other amortisation			(136)	(75)	(225)
Operating profit from operations			448	95	399
Finance costs			(10)	(9)	(25)
Profit before income tax			438	87	374
Income tax (charge)/credit			(107)	20	(63)
Profit from continuing operations			331	106	311
Total comprehensive income attributable to the owners of the parent			331	106	311

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

Basic earnings per share	4	0.18	0.05	0.17
Diluted earnings per share	4	0.18	0.05	0.17

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2017

	Note	June 2017   £000s	June 2016   £000s	December 2016 £000s
Non-current assets
Intangible assets		1,282	1,692	1,282
Property, plant and equipment		1,192	1,115	1,183
Deferred income tax asset		55	126	55
Total non-current assets		2,529	2,932	2,520
Current assets
Inventories		32	35	32
Trade and other receivables		4,785	3,630	2,710
Cash and cash equivalents	5	-	29	1,428
Total current assets		4,817	3,694	4,170
Total assets		7,346	6,626	6,690
Current liabilities
Trade and other payables		1,686	1,205	1,569
Deferred income		735	1,136	838
Borrowings	6	764	543	461
Total current liabilities		3,185	2,884	2,868
Non-current liabilities
Borrowings	6	113	49	118
Deferred income tax liabilities		65	192	52
Total non-current liabilities		178	241	170
Total liabilities		3,363	3,125	3,038
Equity attributable to the owners of the parent
Share capital		188	188	188
Share premium		9,638	9,638	9,638
Retained earnings		(5,843)	(6,324)	(6,174)
Total equity		3,983	3,502	3,652
Total equity and liabilities		7,346	6,626	6,690

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2017

			Share capital £000s	Share premium £000s	Accumulated Losses £000s	Total   £000s
Balance at 1 January 2016			188	9,638	(6,430)	3,396
Comprehensive income
Profit for the period			-	-	106	106
Total comprehensive income			-	-	106	106
Transactions with owners			-	-	-	-
Equity-settled share based payment transactions			-	-	-	-
Transactions with owners			-	-	-	-
Balance at 30 June 2016			188	9,638	(6,324)	3,502
Balance at 1 January 2017			188	9,638	(6,174)	3,652
Comprehensive income
Profit for the period			-	-	331	331
Total comprehensive income			-	-	331	331
Transactions with owners			-	-	-	-
Equity-settled share based payment transactions			-	-	-	-
Transactions with owners			-	-	-	-
Balance at 30 June 2017			188	9,638	(5,843)	3,983

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2017

	Note	Six months to June 2017 £000s	Six months to June 2016 £000s	Year to December 2016 £000s
Cash flows from operating activities
Net cash (used in)/generated by operating activities before interest	7	(1,571)	86	1,769
Interest paid		(10)	(9)	(25)
Net cash (used in)/generated by operating activities		(1,581)	77	1,744
Cash flows from investing activities
Purchase of property, plant and equipment		(146)	(177)	(231)
Net cash used in investing activities		(146)	(177)	(231)
Cash flows from financing activities
Proceeds from borrowings		-	-	-
Repayments of borrowings		(54)	(36)	(88)
Net cash used in financing activities		(54)	(36)	(88)
Net decrease in cash and cash equivalents		(1,781)	(64)	1,425
Cash and cash equivalents and bank overdrafts at beginning of period		1,243	(182)	(182)
Cash and cash equivalents at end of period	5	(538)	(246)	1,243

 

 

 

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

	Projects £000s	Products £000s	Head Office £000s	Total £000s
Revenue
- External customers	7,543	458	-	8,001
- From other segments	-	-	-	-
Segment revenues	7,543	458	-	8,001
Segment EBITDA	548	47	-	595

 

Six months to 30 June 2016

	Projects £000s	Products £000s	Head Office £000s	Total £000s
Revenue
- External customers	5,495	41	-	5,536
- From other segments	-	-	255	255
Segment revenues	5,495	41	255	5,791
Segment EBITDA	163	30	89	282

 

 

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:

	Six months to June 2017 £000s	Six months to June 2016 £000s	Year to December 2016 £000s
Profit for the period attributable to shareholders	331	106	311

Weighted average number of ordinary shares in issue:

	June 2017 Number	June 2016 Number	December 2016 Number
Basic	187,680,550	187,680,550	187,680,550
Diluted	187,680,550	188,240,221	187,680,550

 

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.

Earnings per share:		June 2017 Pence per share	June 2016 Pence per share	December 2016 Pence per share
Earnings per share attributable to the equity holders of the Company
- Basic and diluted		0.18	0.05	0.17

 

 

 

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:

	Six months to June 2017 £000s	Six months to June 2016 £000s	Year to December 2016 £000s
Profit before income tax	438	87	374
Amortisation	-	101	197
Impairment of goodwill	-	-	314
Share based payment charges	-	-	8
Exceptional items	11	10	45
Adjusted profit attributable to shareholders	449	198	938
Current year tax (charge)/ credit excluding tax effect of above items	(109)	20	(39)
Normalised earnings	340	218	899
Normalised earnings per share	0.18	0.12	0.48

 

 

 

 

5. Cash and cash equivalents

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

	June 2017 £000s	June 2016 £000s	December 2016 £000s
Cash at bank	-	29	1,428
Cash and cash equivalents (excluding overdrafts)	-	29	1,428

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

	June 2017 £000s	June 2016 £000s	December 2016 £000s
Cash and cash equivalents (excluding overdrafts)	-	29	1,428
Bank overdrafts	(538)	(275)	(185)
Cash and cash equivalents	(538)	(246)	1,243

 

6. Borrowings

	June 2017 £000s	June 2016 £000s	December 2016 £000s
Current liabilities
Bank overdraft	538	275	185
Bank loans	193	229	211
Hire purchase liabilities	33	39	65
	764	543	461
Non-current liabilities
Hire purchase liabilities	113	49	118
	113	49	118
Total borrowings	877	592	579

 

7. Cash (used in)/generated by operations

	Six months to June 2017 £000s	Six months to June 2016 £000s	Year to December 2016 £000s
Profit before income tax	438	87	374
Adjustments for:
- finance costs	10	9	25
- depreciation	136	75	225
- profit on the sale of property, plant and equipment	-	-	35
- amortisation and impairment of intangibles	-	101	511
- share based payments	-	-	8
- inventories	-	-	4
- trade and other receivables	(2,075)	(455)	466
- trade and other payables and deferred income	(80)	269	121
Cash (used in)/generated by operations	(1,571)	86	1,769

 

 

This information is provided by RNS

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