PEL.L Regulatory News (PEL)

PARAGON ENTERTAINMENT LIMITED

Unaudited interim results for the six months ended 30 June 2016.

Paragon Entertainment Limited (AIM: PEL), the AIM-listed design and build, proprietary attractions and licensing & distribution company ("Paragon" or "the Group"), is pleased to announce its unaudited interim results for the six months ended 30 June 2016.

Highlights

- Revenue £5.5m (2015: £4.5m) representing a 22% increase on 2015

- EBITDA increased to £0.3m representing a margin of 5.1%

- Gross Margin of £1.4m (25.8%) continues to improve (2015 £1m (21.1%))

- Committed pipeline of £16.5m throughout 2016 and 2017

- Successful completion of projects including Hamleys Prague, Land of the Lions at London Zoo, The Rolling Stones Exhibitionism at the Saatchi Gallery, Centre for Life at Newcastle, Ninja at Portsmouth Boathouse, Drayton - Thomas the Tank Engine and Chatham Dockyard Interactives

- Net debt of £246,000 as at 30 June 2016. Post period end a debtor payment of £753,000 was received in early July 2016

Financial Summary

5(1) EBITDA is defined as earnings before depreciation, amortisation, interest, share based payments, exceptional items and tax.

(2) Underlying operating profit/(loss) is EBITDA plus depreciation and other amortisation.

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

Mark Taylor, Executive Chairman, commented:

"I remain satisfied with Paragon's solid progress which is both a reflection of the hard work of the team and is also a clear indication that we have now turned the corner. We remain confident about the outlook for the rest of the year. The current uncertainty in global markets and the UK economy is a concern but we are cautiously optimistic for 2017 and we are preparing for steady and sustainable growth."

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

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 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;

- Licensing and distribution installations at Gullivers, Milton Keynes and Art Mall, Ukraine.

 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

Through 2016 we continued to grow our revenue profitably so that we can continue to attract the best team, capital and resources.

Our future strategic growth will focus on:

- Our core Design and Build business

- Growing our Licensing and Distribution business to add Design and Build as a sales option

- Building long-term strategic alliances to secure repeatable projects

- Continuously improving margin management through internal as well as external controls

We will also continue to reduce risk by:

- Reducing dependence on our bank overdraft, thus improving our debt to equity ratio

- Ensure employee development occurs through strong human resources management

Management update

The first half of 2016 has seen our turnover increase by 22% to £5.5m (H1 2015 = £4.5m). This has resulted in an increase in EBITDA to £0.3m (H1 2015 = £0.1m). Both KPIs are in line with our expectations and we remain on target to achieve our full year forecast for 2016 of £11m in revenue and £0.5m in EBITDA.

The second half of 2016 will be focused on:

- Delivering existing projects, mainly in the Middle East

- Continued investment in manufacturing capability

- Continued development of our team in line with our 2020 revenue target of £20m

Major Projects

We continue to see considerable demand for our talents. We have a current committed pipeline for 2016/17 of £16.5m. This position, coupled with the continued development of the relationships we have with key business partners, means we are confident of the continued growth of Paragon.

In 2016 we worked on several UK-originated projects. These include:

- Hamleys Prague, one of the largest experiential toy stores in the world

- Land of the Lions at London Zoo, a landmark project for Paragon's rock work technology and team

- The Rolling Stones "Exhibitionism" at the Saatchi Gallery, yet again shows the creativity of our in-house art department

- Centre for Life at Newcastle, through which we continue to develop our long term relationship with a key client

- Thomas the Tank Engine and Chatham Dockyard, again show off the abilities of our interactive capability

We have also seen continued sales in the Middle East. We will continue to work on the following projects throughout 2016 and into 2017:

- Dubai Parks & Resorts, including:

- Kung Fu Panda

- Madagascar Mad Pursuits

- Cloudy with a Chance of Meatballs

- Hunger Games

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

- Dubai Marina Mall

- Mall of Egypt

- Faisaliah

- Dubai Mirdif

Licensing & Distribution

Licensing & Distribution 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.

Financial Performance

As discussed above, the Group is in line to achieve its 2016 targets. As at 30 June 2016, the Group had net debt of £246,000. This however did not include a debtor payment received in early July 2016 of £753,000. The Board is therefore confident that the Group's cash position is in line with our expectations. The Group remains in active discussion with HSBC which has indicated that they will renew the Group's banking facilities for another year beyond 9 July 2016 and the Group's forecasts take this into account.

Mark Pyrah

Chief Executive Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2016

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 2016

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2016

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2016

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 2015 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 2015 is derived from the non-statutory accounts for that financial period.

The non-statutory accounts for the year ended 31 December 2015 were approved on 13 June 2015 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 20 July 2016.

Basis of preparation

The condensed consolidated interim financial information for the period ended 30 June 2016 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 2015 which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

Going concern

The Group had net debt at 30 June 2016 of £0.2 million. The Group's strategy is to grow Creative ('Design and Build') into new market segments and expand its Licensing & Distribution business. This will necessarily require a level of cash resource. However, the Group's forecasts and projections, taking account of sensitivity analysis of changes in trading performance, show the Group is well placed to operate within this level of cash resource for the foreseeable future being a period of at least 12 months from the date of this report. Note that the bank has indicated that they will renew the Group's banking facilities for another year beyond 9 July 2016 and the Group's forecasts take this into account.

Therefore, after making enquires, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.

2. Accounting policies

The principal accounting policies of the Group are consistent with those set out in the Group's 2015 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 2016

Six months to 30 June 2015

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 2.9 million employee EMI options (2015: 3.1 million) and further Management Participation Arrangements and Marwyn Participation Option which vary in number. The latter two options have been included in the calculation of diluted EPS, whereas the EMI Option has not been included because their exercise is dependent upon the share price, which has not been met and therefore has an anti-dilutive effect. 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 2015.

Normalised earnings per share

Normalised earnings per share has been calculated by dividing the profit or loss attributable to shareholders before amortisation, charges for share options and exceptional items including impairment charge on property, plant and equipment 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

1.

7. Cash used in operations