15 Sep 2014 07:00
PARAGON ENTERTAINMENT LIMITED
Unaudited interim results for the six months ended 30 June 2014.
Paragon Entertainment Limited (AIM: PEL), the AIM-listed design and build, proprietary attractions and licensing and distribution company, is pleased to announce its unaudited interim results for the six months ended 30 June 2014.
Highlights
- Record contracted order book of nearly £12 million for H2 2014 and into 2015
- Enquiries and tender requests at record levels with project visibility significantly in excess of previous years
- Successful completion of large projects including Museum of Kazakhstan, Olympic Museum Lausanne and Imperial War Museum London
- Revenue £4.0m (H1 2013: 4.5m) representing a small decline due to the impact of previously stated contract delays
- Cash balance of £630,000 and renewal of banking facilities of £800,000
- Further contract delays significantly impacting expectations for the rest of 2014
Post Period-End events
- Mark Pyrah to step down from role of CEO to focus on Group-wide sales activities as Sales and Marketing Director
- Mark Taylor, Vice Chairman, appointed Executive Chairman with immediate effect
- Search initiated for replacement CEO
Financial Summary
Unaudited Six months to June 2014 £000s | Unaudited Six months to June 2013 £000s | Audited Year to December 2013 £000s | ||
Revenue | 3,976 | 4,563 | 10,049 | |
Underlying EBITDA (1) | (88) | 106 | 601 | |
Underlying operating loss (2) | (202) | (28) | 358 | |
Cash balance | 636 | 308 | 930 | |
Basic earnings per share | (0.37) | (0.68) | (0.53) | |
Normalised earnings per share (3) | (0.12) | (0.38) | 0.15 |
(1) Underlying EBITDA is defined as earnings before depreciation, amortisation, interest, share based payments, exceptional items and tax.
(2) Underlying operating loss is Underlying 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 Pyrah, Chief Executive Officer, commented:
"Paragon's 'Design and Build' division remains the most profitable segment of the business and continues to have a record contracted order book. However, further delays on certain Paragon Creative contracts will cause a delay in recognising the revenue from these contracts, which will now move into 2015. The Group continues to focus on our strategy of diversifying into Attractions and Licensing, both of which should generate more predictable revenue and are showing encouraging signs of progress.
"The Group's strategic focus remains on the allocation of resources, sales and the execution of our five year plan. The Board is satisfied with the progress made across all divisions of the business which has created solid opportunities for a return to growth."
Mark Taylor, Executive Chairman, commented:
"I would like to take the opportunity on behalf of the Board to thank Mark Pyrah for the commitment, skill and enthusiasm that he has brought to Paragon and the role of CEO. We are delighted that Mark will continue to focus his significant sector and industry expertise on driving the Group's growth."
ENDS
For further information:
Paragon Entertainment Limited Mark Pyrah / Richard Arden
finnCap Limited Julian Blunt/Simon Hicks (Nomad) |
Via Redleaf Polhill
020 7220 0500 |
Redleaf Polhill Dwight Burden/Jenny Bahr/ Rachael Brown |
paragon@redleafpr.com 020 7382 4730 |
Notes to Editors:
Paragon Entertainment Limited (AIM:PEL) is an award-winning company which designs and builds world-class visitor attractions for third parties, develops proprietary attractions, and licenses and distributes related offerings.
It is the holding company for:
§ Paragon Creative, a business with a long history of designing and building museums, visitor centres and attractions for third parties
§ Paragon Attractions, which develops, owns and operates proprietary attractions
§ Paragon Licensing, a company which licenses and distributes attractions-related intellectual property and products
The Group's current and recent projects include:
§ The design and build of The Olympic Museum for the IOC in Lausanne, Switzerland
§ The design and build of Titanic Belfast
§ The build of the Wallace and Gromit ride at Blackpool Pleasure Beach
§ A Licensing agreement to develop Nerf-branded attractions and distribution agreements with Yu Kids and HiLo
The Group listed on AIM in 2011.
Further information can be found at: http://www.paragonent.com/
CHIEF EXECUTIVE'S REPORT
Strategic Update
The Group's strategic vision is to use its unique mix of skills and expertise to create, develop and operate world class visitor attractions, to enrich and entertain its customers and deliver sustainable growth to stakeholders.
The second half of 2014 will be focused on the allocation of financial and human resources, delivery of sales and the execution of our five year plan to diversify into proprietary attractions and licensing and distribution. Nonetheless, the second half revenues will be lower than expected and will lead to an EBITDA breakeven position for the second half of 2014 which will translate into an overall EBITDA loss for the year of approximately £0.1m. Our 'Design and Build' division remains profitable. The sector has seen a large increase in projects, opportunities and tendering in 2014 and Paragon Creative has a record contracted order book.
Board Changes
Today Paragon Entertainment announces that Mark Pyrah, Chief Executive Officer, has informed the Board of his intention to step down from the role of CEO.
Mark, an original founder of Paragon, who guided the business through its listing on AIM in 2011, will now be focused on Paragon's group-wide sales activities as Group Sales and Marketing Director. He will use his considerable experience to drive the Group's organic growth.
Mark will continue to fulfil the role of CEO while the Board conducts a search for a new CEO.
Mark Taylor, Vice Chairman of Paragon, has been appointed Executive Chairman with immediate effect.
Creative ('Design and Build')
Creative, the Group's largest division, is currently working on a number of high profile projects including the National Museum of Kazakhstan, Dubai Dreamworks Hotel, Glasgow Science Centre, Harrods Zaha Hadid, Kapsaic Aramco and new Olympic Museum works.
Confirmed project orders for the second half of the year amount to circa £4m, with a further £8m anticipated in 2015. Orders include Glasgow Science Centre, Manchester Safety Centre, Olympic Museum work in Monaco, Trafford Centre, work for Lamda in Athens and the Malta Heritage Centre. The pipeline of potential new projects continues to increase and is now significantly in excess of previous years.
Focus on margins, and the improvement thereof, remains a key focus within Paragon Creative. The division reports external revenues of £3.5m and gross margins have been successfully sustained. In addition, the division has experienced two years of over 50% growth, illustrating its sustained ability to deliver larger contracts on a repeatable basis.
The Group continues to invest in the development of workshop facilities so as to extend the Company's capacity for future projects.
Attractions
The Attractions division is focused on the development and operation of a portfolio of proprietary and licensed branded attractions. Progress has been made during the period in the development of new attractions opportunities and concepts.
The Attractions business was launched in 2012 with QuestatWestfield Merry Hill. The site has been instrumental as a 'show room' for significant new and potential business, and as a valuable test market for the Group to explore and develop a number of concepts, including concepts for some of our licensing partners. The Group has continued to address the performance and profitability of Quest, and loss margins were successfully narrowed in the first half of 2014. Performance continues to be challenging, and Management has impaired the value of this asset by a further £420,000 to a book value of £150,000. The performance of Quest Merry Hill is under regular review and Management continues to consider all its options, including possible closure.
The cost of entry into the attractions market is high and the Group is therefore also exploring options with third parties to deliver and operate third party owned attractions. This will reduce capital investment and returns in the short term but it will underpin the Company's longer term strategic objectives of diversifying its revenue streams.
Licensing
The Licensing Division has made pleasing progress since the commencement of operations at the start of 2014, and is performing in line with expectations. A pipeline of enquiries is now growing. Operational highlights include first sales in both Yukids and HiLo products, and transactions with In the Night Garden and KidSteam.
Financial Performance
The Group has made a small loss at the EBITDA level of £88,000 during the period. Design and Build generated EBITDA of £171,000 and Licensing generated EBITDA of £24,000. Attractions and Head Office contributed a loss of £97,000 and £188,000 respectively.
At the end of June, the cash balance was £630,000. The Group also finalised the terms of the renewal of its £800,000 overdraft facility for a further 12 months until July 2015.
Outlook Paragon's 'Design and Build' division remains the most profitable segment of the business and continues to have a record contracted order book. However, delays on certain Paragon Creative contracts have continued. There will be a delay in recognising the revenue from these contracts, which will now move into 2015. This signicantly impacts on the board's expectations for the rest of 2014.
Mark PyrahChief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2014
Note | Six months to June 2014 £000s | Six months to June 2013 £000s | Year to December 2013 £000s | ||
Revenue | 3 | 3,976 | 4,563 | 10,049 | |
Cost of sales | (2,959) | (3,460) | (7,448) | ||
Gross Profit | 1,017 | 1,103 | 2,601 | ||
Administrative and other operating expenses | (1,717) | (2,338) | (3,574) | ||
Analysed as: | |||||
EBITDA before share based payments and exceptional and other items | (88) | 106 | 601 | ||
Equity settled share based payment charges | - | (15) | (34) | ||
Exceptional and other items | 4 | 23 | (24) | (29) | |
Amortisation of acquired intangibles | (101) | (562) | (665) | ||
Impairment of property, plant and equipment | (420) | (606) | (603) | ||
Depreciation and other amortisation | (114) | (134) | (243) | ||
Operating loss | (700) | (1,235) | (973) | ||
Finance costs | (20) | (26) | (44) | ||
Loss before income tax | (720) | (1,261) | (1,017) | ||
Income tax credit | 20 | 158 | 97 | ||
Loss and total comprehensive income for the period | (700) | (1,103) | (920) | ||
Loss and total comprehensive income attributable to the owners of the parent | (700) | (1,103) | (920) | ||
Earnings per share from continuing operations attributable to the equity holders of the Company during the period (expressed in pence per share) | |||||
Basic earnings per share | 5 | (0.37) | (0.68) | (0.53) | |
Diluted earnings per share | 5 | (0.37) | (0.68) | (0.53) | |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
Note | June 2014 £000s | June 2013 £000s | December 2013 £000s | |
Non-current assets | ||||
Intangible assets | 2,096 | 2,298 | 2,197 | |
Property, plant and equipment | 1,292 | 1,737 | 1,651 | |
Deferred income tax asset | - | 44 | - | |
Total non-current assets | 3,388 | 4,079 | 3,848 | |
Current assets | ||||
Inventories | 26 | 6 | 18 | |
Deferred income tax asset | 160 | 185 | 160 | |
Trade and other receivables | 2,421 | 2,421 | 2,455 | |
Cash and cash equivalents | 6 | 636 | 308 | 930 |
Total current assets | 3,243 | 2,920 | 3,563 | |
Total assets | 6,631 | 6,999 | 7,411 | |
Current liabilities | ||||
Trade and other payables | 2,983 | 3,441 | 2,997 | |
Deferred income | - | 125 | 81 | |
Borrowings | 7 | 100 | 84 | 68 |
Financial liabilities | 100 | 100 | 100 | |
Total current liabilities | 3,183 | 3,750 | 3,563 | |
Non-current liabilities | ||||
Borrowings | 7 | 300 | 327 | 297 |
Provisions | - | 20 | - | |
Deferred income tax liabilities | 151 | 187 | 171 | |
Total non-current liabilities | 451 | 534 | 468 | |
Net liabilities | 3,634 | 4,284 | 3,714 | |
Equity attributable to the owners of the parent | ||||
Share capital | 8 | 188 | 162 | 188 |
Share premium | 8 | 9,638 | 8,884 | 9,638 |
Retained earnings | (6,829) | (6,331) | (6,129) | |
Total equity | 2,997 | 2,715 | 3,697 | |
Total equity and liabilities | 6,631 | 6,999 | 7,411 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2014
Share capital £000s | Share premium £000s | Accumulated Losses £000s | Total £000s | |
Balance at 1 January 2013 | 162 | 8,884 | (5,243) | 3,803 |
Comprehensive income | ||||
Loss for the period | - | - | (1,103) | (1,103) |
Total comprehensive income | - | - | (1,103) | (1,103) |
Transactions with owners | ||||
Equity-settled share based payment transactions | - | - | 15 | 15 |
Transactions with owners | - | - | 15 | 15 |
Balance at 30 June 2013 | 162 | 8,884 | (6,331) | 2,715 |
Balance at 1 January 2014 | 188 | 9,638 | (6,129) | 3,697 |
Comprehensive income | ||||
Loss for the period | - | - | (700) | (700) |
Total comprehensive income | - | - | (700) | (700) |
Transactions with owners | ||||
Equity-settled share based payment transactions | - | - | - | - |
Transactions with owners | - | - | - | - |
Balance at 30 June 2014 | 188 | 9,638 | (6,829) | 2,997 |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2014
Note |
Six months to June 2014 £000s |
Six months to June 2013 £000s | Year to December 2013 £000s | |
Cash flows from operating activities | ||||
Cash (used in)/from operations | 9 | (133) | 264 | 179 |
Net cash (used in)/from operating activities before interest and taxes | (133) | 264 | (23) | |
Interest paid | (20) | (17) | 3 | |
Income taxes refunded | - | 4 | - | |
Net cash generated from /(used by) operating activities | (153) | 250 | 159 | |
Cash flows from investing activities | ||||
Purchase of property, plant and equipment | (176) | (472) | (492) | |
Net cash used in investing activities | (176) | (472) | (492) | |
Cash flows from financing activities | ||||
Proceeds of issuance of ordinary shares | - | - | 780 | |
Repayments of borrowings | (9) | (9) | (56) | |
Proceeds from borrowings | 44 | - | - | |
Net cash (used in)/ from financing activities | 35 | (9) | 724 | |
Net (decrease)/increase in cash and cash equivalents | (294) | (231) | 391 | |
Cash and cash equivalents and bank overdrafts at beginning of period | 930 | 539 | 539 | |
Cash and cash equivalents at end of period | 6 | 636 | 308 | 930 |
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 2013 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 2013 is derived from the non-statutory accounts for that financial period.
The non-statutory accounts for the year ended 31 December 2013 were approved on 25 March 2014 and have been 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.
Basis of preparation
The condensed consolidated interim financial information for the period ended 30 June 2014 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 2013 which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Going concern
The Group has net cash at 30 June 2014 of £0.6 million. In addition, the Group renewed its overdraft facility of £800,000 with HSBC Bank plc in August 2014 for a period of 12 months. As with all business, there is a certain degree of uncertainty over the future demand for the Group's services. The Group's forecasts and projections, after taking account of sensitivity analysis of changes in trading performance, show that the Group is well placed to operate within this level of cash resource for the foreseeable future.
Therefore, the Directors confirm that they have a reasonable expectation that the Group has adequate resources to enable it to continue in existence for the foreseeable future and, accordingly, the consolidated interim financial information has been prepared on a going concern basis.
2. Accounting policies
The principal accounting policies of the Group are consistent with those set out in the Group's 2013 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's three operating segments. These operating segments are monitored by the Group's chief operating decision maker and strategic decisions are made on the basis of adjustment segment operating results.
Performance is measured based on EBITDA before 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, and Statements of Financial Position and Cash Flows and other financial and non-financial information used to manage the business on a consolidated basis.
The "Head Office" segment comprises the corporate activities which are unrelated to the specific individual segments and the elimination of inter-segmental transactions.
Segment information for the reporting periods is as follows:
Period to 31 June 2014
Design and Build £000s | Attractions
£000s | Licensing
£000s | Head Office
£000s | Total
£000s | |
Total Revenues | 3,601 | 224 | 217 | 240 | 4,282 |
Of which from external customers | 3,535 | 224 | 217 | - | 3,976 |
Segment revenues | 3,601 | 224 | 217 | 240 | 4,282 |
EBITDA before share based payments, exceptional items and head office recharges | 171 | (97) | 24 | (188) | (88) |
Period to 31 June 2013
Design and Build£000s | Attractions
£000s | Licensing
£000s | Head Office £000s | Total
£000s | |
Total Revenues | 4,691 | 255 | - | 630 | 5,576 |
Of which from external customers | 4,308 | 255 | - | - | 4,563 |
Segment revenues | 4,691 | 255 | - | 630 | 5,576 |
EBITDA before share based payments, exceptional items and head office recharges | 454 | (130) | - | (218) | 106 |
4. Exceptional and other items
Six months to June 2014 £000s | Six months to June 2013 £000s | Year to December 2013 £000s | ||
Other non-trading Income | (57) | - | - | |
Group restructuring costs | 34 | - | - | |
Costs of the disposal of Drinkall Dean Limited | - | 11 | 11 | |
Costs associated with equity fundraising | - | 13 | 18 | |
Total Exceptional and other items | (23) | 24 | 29 | |
Amortisation on acquired intangibles | 101 | 562 | 665 | |
Impairment of tangible asset | 420 | 606 | 603 | |
Equity settled share based payment charges | - | 15 | 34 | |
498 | 1,207 | 1,331 |
5. Earnings per share
Six months to June 2014 Pence per share | Six months to June 2013 Pence per share | Year to December 2013 Pence per share | ||
Basic | (0.37) | (0.68) | (0.53) | |
Diluted | (0.37) | (0.68) | (0.53) |
Earnings per share have been calculated by dividing the loss attributable to shareholders by the weighted average number of ordinary shares in issued during the period. As basic earnings per share is a loss, a dilution does not take place.
The calculations of basic and diluted loss per share are:
Six months to June 2014 £000s | Six months to June 2013 £000s | Year to December 2013 £000s | ||
Loss for year attributable to shareholders | (700) | (1,103) | (920) |
Weighted number of shares in issue: |
Six months to June 2014 Number |
Six months to June 2013 Number | Year to December 2013 Number | |
Basic | 187,680,550 | 161,680,550 | 173,505,318 |
Normalised earnings per share:
|
Six months to June 2014 Pence per share | Six months to June 2013 Pence per share | Year to December 2013 Pence per share | |
Basic normalised earnings/(loss) per share | (0.12) | (0.38) | 0.15 |
Normalised earnings per share have been calculated by dividing the loss attributable before amortisation, charges for share options and exceptional items by the weighted average number of ordinary shares in issue during the period. The numbers used in calculating the basic normalised earnings per share are reconciled below:
Six months to June 2014 £000s | Six months to June 2013 £000s | Year to December 2013 £000s | ||
Loss before tax | (720) | (1,235) | (1,017) | |
Amortisation | 101 | 562 | 665 | |
Charges for share options | - | 15 | 34 | |
Exceptional items | (23) | 24 | 29 | |
Impairment charge | 420 | - | 603 | |
Normalised (loss)/earnings attributable to shareholders | (222) | (634) | 314 | |
Current year tax (charge)/credit excluding the tax effect of the above items | - | 26 | (55) | |
Normalised (loss)/earnings | (222) | (608) | 259 |
6. Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise the following:
June 2014 £000s | June 2013 £000s | December 2013 £000s | |
Cash at bank | 636 | 308 | 930 |
Cash and cash equivalents (excluding overdrafts) | 636 | 308 | 930 |
Cash and cash equivalents include the following for the purposes of the statement of cash flows:
June 2014 £000s | June 2013 £000s | December 2013 £000s | |
Cash and cash equivalents (excluding overdrafts) | 636 | 308 | 930 |
Bank overdrafts | - | - | - |
Cash and cash equivalents | 636 | 308 | 930 |
7. Borrowings
June 2014 £000s | June 2013 £000s | December 2013 £000s | |
Current liabilities | |||
Bank loans | 36 | 36 | 36 |
Hire purchase liabilities | 64 | 48 | 32 |
100 | 84 | 68 | |
Non-current liabilities | |||
Bank loans | 264 | 300 | 282 |
Hire purchase liabilities | 36 | 27 | 15 |
300 | 327 | 297 | |
Total borrowings | 400 | 411 | 365 |
8. Share capital and share premium
Issued and fully paid | Number of shares | Ordinary Shares £000s | Share premium £000s | Total £000s |
At 1 January 2013 | 161,680,550 | 162 | 8,884 | 9,046 |
At 30 June 2013 | 161,680,550 | 162 | 8,884 | 9,046 |
At 1 January 2014 | 187,680,550 | 188 | 9,638 | 9,826 |
At 30 June 2014 | 187,680,550 | 188 | 9,638 | 9,826 |
The share capital of Paragon Entertainment Limited consists only of Ordinary shares. The Ordinary shares carry one vote per share and carry the right to receive dividends when declared. They rank pari passu with each other in all respects including receipt of dividends and proceeds in the winding up of the company.
9. Cash used in operations
Six months to June 2014 £000s |
Six months to June 2013 £000s | Year to December 2013 £000s | |
Loss before taxation | (720) | (1,261) | (1,017) |
Adjustments for: | |||
- finance costs | 20 | 26 | 44 |
- depreciation | 114 | 134 | 243 |
- impairment of tangible assets | 420 | 606 | 603 |
- amortisation | 101 | 562 | 665 |
- share based payments | - | 15 | 34 |
- inventories | (6) | - | (12) |
- trade and other receivables | 33 | (539) | (573) |
- trade and other payables | (95) | 721 | 192 |
Cash (used in)/from operations | (133) | 264 | 179 |
10. Availability of Interim Results
Copies of these interim results are now available on Paragon's website at www.paragonent.com.