Unaudited interim results for the six months ended 30 June 2012.
Paragon Entertainment Limited (PEL) (the "Company" or the "Group"), the AIM listed attractions design, production and fit-out business is pleased to announce its unaudited interim results for the six months ended 30 June 2012.
Highlights
- Record contracted order book of £11.7 million for H2 2012 and into 2013 including a major contract of £4.8 million with The Olympic Museum, Lausanne, Switzerland
- Design and Build activity at record levels following significant new project wins and the successful completion of large projects including the Titanic Visitor Attractionin Belfast, Chocolate - York's Sweet Storyand Web Lab Chrome Experimentat the Science Museum in London
- Trading in H1 2012 in line with expectations
- Underlying EBITDA profit of £11,000
Financial Summary
Unaudited Six months to June 2012 £000s | Unaudited Six months to June 2011 (1) £000s | Audited Year to December 2011(1) £000s | ||
Revenue | 2,290 | - | - | |
Underlying EBITDA (2) | 11 | - | (361) | |
Underlying operating loss (2) | (19) | (881) | (362) | |
Cash balance | 1,578 | 3,305 | 2,420 | |
Basic earnings per share | (0.75) | (1.80) | (5.50) | |
Normalised earnings per share (3) | (0.02) | (1.80) | (0.69) |
(1) The Group traded as a cash shell until the 22 December 2011 when Paragon Creative Limited was acquired. Therefore the comparative results represent those of a cash shell.
(2) Underlying EBITDA is defined as earnings before depreciation, amortisation, interest, share based payments, exceptional items and tax. Underlying operating loss is Underlying EBITDA less Depreciation and other amortisation.
(3) Adjusted basic earnings per share are earnings per share before amortisation on acquired intangibles, share based payments and exceptional items.
CEO Comment
Mark Pyrah, Chief Executive Officer, commented: "We have made significant progress since our admission to AIM last December. Throughout this year, the 'Design and Build' segment has continued to deliver on existing projects and win substantial new contracts; in particular, we were delighted to announce winning a £4.8 million contract with The Olympic Museumin Lausanne, Switzerland. The successful conversion of our pipeline has created a record contracted order book for the Company going forwards. In addition, our prospective pipeline has doubled in size and we are confident of converting this into new contracts.
We have continued to progress the identification of suitable locations for the development of a range of proprietary attractions and we expect to open our first attractions before year end.
Overall the Group continues to trade in line with our expectations and the outlook for the year to 31 December remains consistent with our previous trading update."
ENDS
For further information please contact:
Paragon Entertainment Limited Mark Pyrah | Tel: +44 (0)1904 608020 |
Cenkos Securities plc | Tel: +44 (0)20 7397 8900 |
Ivonne Cantu / Max Hartley (Nomad)
Alex Aylen / Julian Morse
The first half of the year has seen exciting growth and the continuing development of our stated strategy of developing a diversified attractions business. Group revenues were £2.3 million for the period; a result greater than ever experienced before. The core 'Design and Build' segment has seen its best year to date and has a record contracted order book for the remainder of the year. In addition, we have secured our first site on which to build, own and operate attractions.
Our Vision"To create a diversified attractions business with the scope to service an extensive global entertainment industry"
We are excited to have achieved a number of strategic priorities which bring us ever closer to realising our vision.
In April, we acquired the entire share capital of The Visitor Attraction Company ("TVAC"), a provider of strategic development, operating and project management services to the leisure attractions industry.
In May, we acquired the trade and assets of Drinkall Dean LLP, a provider of experiential design concepts within the retail sector. We also launched a new division, Paragon Creative Communications, comprising of experienced graphic designers and marketing professionals with a strong track record in the museum, heritage and corporate sectors.
We are broadening our core service offerings across the value chain such that our core operating divisions now cover:
Design and Buildof models, scenic and interactive displays and the provision of specific support services, such as design, consultancy and project feasibility, to third party owners and operators of attractions
Attractionsthat are owned and operated by the Group, using proprietary and licenced branded intellectual property
Operationof attractions that are owned by a third party, but where the Group is responsible for part or all of the management and is the appointed operator
Design and BuildDesign and Build continues to form the core component of the Paragon group. The first half of the year saw us complete exciting high profile projects, ready for the Easter and Summer periods. These included the new Titanic visitor attraction in Belfast, Sea City Museumin Southampton, Chocolate - York's Sweet Story, The Lost Cellarsat Alnwick Castle, the Cairo Children's Centre for Creativity, Giants Causeway Visitor Attractionand Web Lab Chrome Experimentat the Science Museum in London.
For the first half of the year we report revenues of £2.3 million which represents the best ever performance of the design and build element of our business.
As we enter into the second half, we are pleased to report project wins including a significant development at The Olympic Museum in Lausanne, Switzerland, the new Wallace and Gromit dark ride at Blackpool Pleasure Beach, a new visitor gallery at Eureka!, a new visitor experience at York Minster as well as several smaller projects. The impact of these new projects is a record production order book for the remainder of 2012 and into 2013. In total, the value of confirmed orders amounts to £11.7m by the end of 2013.
Our pipeline of potential new projects continues to increase and now stands above £50 million. Structural changes within the sector and the Sales and Development department of the Company have led to a resurgence of projects, and the business remains well placed to exploit these opportunities.
AttractionsOur business strategy has always been to enter the attractions market, leveraging upon Paragon Creative's existing track record of delivering attractions to third parties, thereby developing and operating a portfolio of propriety owned and licensed branded attractions.
During the first half of the year, we developed this strategy by acquiring TVAC, a respected industry provider of strategic development, operating and project management services to the leisure attractions industry.
The business model has been well received by landlords and we continue to progress a number of opportunities with the aim of rolling out proprietary Paragon attractions. In the current fiscal year we expect to deploy around £1 million in developing these attractions and are on target to open our first, multi-attraction, site by the year end in time for the important Christmas market and will make a further announcement in due course.
We are also developing attractions based upon licensed brands. Discussions are on-going with a number of interesting third parties and we will provide an update when those discussions have concluded positively.
Trading updateTo date in 2012, we have been pleased with both the number and scale of contracts which have been coming up for tender within the Design and Build division. This has given us confidence that we will be able to meet expectations on revenues and profits.
The success we have had in capitalising upon opportunities in 'Design and Build' has been tempered by delays in the delivery of a roll out of our proprietary attractions. However, our first attraction is to open in 2012 and this will mark the next step of our business development. We are currently in discussions with a number of potential sites for our attractions in the UK and Europe and will update the market on developments as appropriate.
Mark Pyrah
Chief Executive
FOR THE SIX MONTHS ENDED 30 JUNE 2012
Note | Six months to June 2012 £000s | Six months to June 2011 £000s | Year to December 2011 £000s | ||
Revenue | 2,290 | - | - | ||
Cost of sales | (1,545) | - | - | ||
Gross Profit | 745 | - | - | ||
Administrative and other operating expenses | (2,200) | (881) | (2,888) | ||
Analysed as: | |||||
EBITDA before share based payments and exceptional and other items | 11 | - | (361) | ||
Equity settled share based payment charges | (6) | - | (401) | ||
Exceptional and other items | 5 | (80) | - | (2,025) | |
Amortisation of acquired intangibles | (1,350) | - | (100) | ||
Depreciation and other amortisation | (30) | - | (1) | ||
Operating loss | (1,455) | (881) | (2,888) | ||
Finance costs | (12) | - | - | ||
Loss before income tax | (1,467) | (881) | (2,888) | ||
Income tax credit | 270 | - | 25 | ||
Loss and total comprehensive income for the period | (1,197) | (881) | (2,863) | ||
Loss and total comprehensive income attributable to the owners of the parent | (1,197) | (881) | (2,863) | ||
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 | 6 | (0.75) | (1.80) | (5.50) | |
Diluted earnings per share | 6 | (0.75) | (1.80) | (5.50) | |
AS AT 30 JUNE 2012
Note | June 2012 £000s | June 2011 £000s | December 2011 £000s | |
Non-current assets | ||||
Intangible assets | 3,393 | - | 4,437 | |
Property, plant and equipment | 859 | - | 698 | |
Deferred income tax asset | 84 | - | 156 | |
4,336 | - | 5,291 | ||
Current assets | ||||
Current tax asset | 60 | - | 60 | |
Trade and other receivables | 1,736 | 4 | 1,494 | |
Cash and cash equivalents | 7 | 1,578 | 3,305 | 2,420 |
3,374 | 3,309 | 3,974 | ||
Current liabilities | ||||
Trade and other payables | 2,300 | 302 | 2,489 | |
Deferred income | 456 | - | 448 | |
Borrowings | 8 | 60 | - | 163 |
Current income tax liabilities | - | - | 1 | |
Total current liabilities | 2,816 | 302 | 3,101 | |
Net current assets | 558 | 3,007 | 873 | |
Non-current liabilities | ||||
Borrowings | 8 | 341 | - | 344 |
Provisions | 16 | - | 65 | |
Deferred income tax liabilities | 371 | - | 641 | |
728 | - | 1,050 | ||
Net assets | 4,166 | 3,007 | 5,114 | |
Equity attributable to the owners of the parent | ||||
Share capital | 9 | 162 | 49 | 158 |
Share premium | 9 | 8,884 | 4,665 | 8,645 |
Retained earnings | (4,880) | (1,707) | (3,689) | |
Total equity | 4,166 | 3,007 | 5,114 |
FOR THE SIX MONTHS ENDED 30 JUNE 2012
Share capital £000s | Share premium £000s | Accumulated Losses £000s | Total £000s | ||
Balance at 1 January 2011 | 49 | 4,665 | (826) | 3,888 | |
Comprehensive income | |||||
Loss for the period | - | - | (881) | (881) | |
Total comprehensive income | - | - | (881) | (881) | |
Transactions with owners | - | - | - | - | |
Balance at 30 June 2011 | 49 | 4,665 | (1,707) | 3,007 | |
Balance at 1 January 2012 | 158 | 8,645 | (3,689) | 5,114 | |
Comprehensive income | |||||
Loss for the period | - | - | (1,197) | (1,191) | |
Total comprehensive income | - | - | (1,197) | (1,191) | |
Transactions with owners | |||||
Issue of share capital | 4 | 239 | - | 243 | |
Equity-settled share based payment transactions | - | - | 6 | 6 | |
Transactions with owners | 4 | 239 | 6 | 243 | |
Balance at 30 June 2012 | 162 | 8,884 | (4,880) | 4,166 |
FOR THE SIX MONTHS ENDED 30 JUNE 2012
Note | Six months to June 2012 £000s | Six months to June 2011 £000s | Year to December 2011 £000s | |
Cash flows from operating activities | ||||
Cash used in operations | 10 | (558) | (608) | (2,014) |
Net cash used by operating activities before interest and taxes | (558) | (608) | (2,014) | |
Interest paid | (2) | - | - | |
Income taxes paid | (8) | - | - | |
Net cash used by operating activities | (568) | (608) | (2,014) | |
Cash flows from investing activities | ||||
Purchase of property, plant and equipment | (156) | - | - | |
Acquisition of subsidiary, net of cash acquired | 6 | - | (1,786) | |
Net cash used in investing activities | (150) | - | (1,786) | |
Cash flows from financing activities | ||||
Proceeds of issuance of ordinary shares | 43 | - | 2,457 | |
Cash repayments of borrowings | (35) | - | - | |
Payment for share issue costs | - | - | (282) | |
Net cash generated from financing activities | 8 | - | 2,175 | |
Net decrease in cash and cash equivalents | (710) | (608) | (1,625) | |
Cash and cash equivalents and bank overdrafts at beginning of period | 2,288 | 3,913 | 3,913 | |
Cash and cash equivalents at end of period | 7 | 1,578 | 3,305 | 2,288 |
1. General information
Paragon Entertainment Limited is a limited company incorporated in the Cayman Islands 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 and UK Establishment registration number BR015952.
The condensed consolidated interim financial information, including the financial information for the year ended 31 December 2011 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 2011 is derived from the non-statutory accounts for that financial period.
The non-statutory accounts for the year ended 31 December 2011 were approved on 22 June 2012 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 and was approved for issue by the Board on 18 September 2012.
Basis of preparation
The condensed consolidated interim financial information for the period ended 30 June 2012 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 2011 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 2012 of £1.6 million. 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 policiesThe principal accounting policies of the Group are consistent with those set out in the Group's 2011 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 analysisAn operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses. IFRS 8 requires disclosure of the operating segments that are reported to the Chief Operating Decision Maker ("CODM").
The CODM has been identified as the Board of Directors, which has responsibility for planning and controlling the activities of the Group. The Group's single reportable segment has been identified as the 'design and building of models, scenic and interactive displays and provision of specific support services to third party owners and operators of attractions' ("Design and Build"). All activities encompassed in this segment are performed to a set specification as defined by the customer and outlined in a written contract. Trading activities in this segment are performed by the legal entities Paragon Creative Limited, Drinkall Dean (London) Limited and The Visitor Attraction Limited. The Group is also developing other segments identified as the 'owning and operating proprietary and licenced branded visitor attractions ' ("Attractions") and the 'operating of third party owned visitor attractions' ("Operations").
However, both attractions and operations had no material trading revenues in the period and as such the Group only has one reportable segment, no further segmental information is disclosed.
4. Business combinations Acquisition of The Visitor Attraction Company LimitedOn 5 April 2012 the Group acquired the entire share capital of The Visitor Attraction Company Limited ("TVAC") by means of a share for share exchange for a total consideration of up to £300,000. TVAC isa well-respected industry leadingprovider of strategic development, operating and project management services to the leisure attractions industry. The acquisition was strategic to the Group to enable it to extend its range of services it can offer to the attractions industry.
Paragon's strategy was to bring together the core of its design and build core, together with a strong management team and leverage this position to create a portfolio of attractions which are owned and managed by the Group. TVAC has extensive expertise in the development and operation of leisure attractions and complements Paragon's array of attraction services. The acquisition was therefore in line with Paragon's broader strategy, announced late last year, to expand through organic and acquisitive means and thereby gain access to more of the value chain in its core leisure attractions market.
The details of the business combination are as follows: | Fair value £000s | ||
Cash and cash equivalents | 6 | ||
Intangible assets | 150 | ||
Trade and other receivables | 65 | ||
Trade and other payables | (76) | ||
Deferred tax liability | (30) | ||
Total identifiable net assets | 115 | ||
Provisional Goodwill | 185 | ||
Total net assets | 300 | ||
Consideration satisfied by: | |||
Fair value of shares issued | 200 | ||
Deferred consideration (payable in shares) | 100 | ||
Total consideration | 300 |
Consideration transferred
The consideration was settled on completion by the issue of 2,317,497 ordinary shares at the market price of 8.63 pence per share, amounting to fair value of £200,000. The purchase agreement also included an element of deferred consideration which is to be settled, subject to certain performance criteria, by the issue of ordinary shares of the company at the prevailing share price at the time of issue, subject to a maximum number of shares of 1,158,750. The amount will become payable on the anniversary of the acquisition.
A total of £15,000 in directly related acquisition costs has been charged to the operating expenses of the business and are included within exceptional and other items.
Identifiable net assetsA number of adjustments have been made to the value of net assets to account for the fair values.
Fair value adjustments relate to identifiable intangibles relating to the value of customer relationships. The total fair value of customer relationships is considered to be £150,000.
Goodwill
The purchased goodwill of £185,000 is primarily related to growth expectations and the ability to be able to leverage on the company's substantial skill and expertise within both its existing sector and the expansion into the ownership and operation of licensed and proprietary visitor attractions. Goodwill has been allocated to the 'Design and Build' segment and is not expected to be deductible for tax purposes.
5. Exceptional and other itemsSix months to June 2012 £000s | Six months to June 2011 £000s | Year to December 2011 £000s | ||
Costs of the acquisition of Paragon Creative Limited | 45 | - | 387 | |
Costs of the acquisition of The Visitor Attraction Company Limited | 15 | - | - | |
Costs associated with acquiring onerous contracts | 20 | - | - | |
Exceptional pre-acquisition costs of the company not related to current business | - | - | - 1,638 | |
Total Exceptional and other items | 80 | - | 2,025 | |
Amortisation on acquired intangibles | 1,350 | - | 100 | |
Equity settled share based payment charges | 6 | - | 401 | |
1,436 | - | 2,526 |
6. Earnings per share
Six months to June 2012 | Six months to June 2011 | Year to December 2011 | ||||
Earnings £000s | EPS p | Earnings £000s | EPS p | Earnings £000s | EPS P | |
Weighted average number of shares in issue ('000s) | 160,418 | (0.75) | 49,000 | (1.80) | 52,089 | (5.50) |
Loss for the period | (1,197) | (881) | (2,863) | |||
Exceptional Items and other items net of taxation | 1,166 | - | 2,501 | |||
Loss for the period before exceptional items attributable to the equity holders of the company | (31) | (0.02) | (881) | (1.80) | (362) | (0.69) |
Basic earnings per share
The calculation of basic earnings per share for the six months ended 30 June 2012 was based upon the attributable loss to the equity holders of the company of £1,191,000 (2011: £882,000) and a weighted average number of ordinary shares outstanding of 160.4 million (2011: 49 million).
Diluted loss per share is the same as loss per share as the Group is loss making for the period (and comparative period).
Normalised earnings per share
The calculation of Normalised earnings per share for the six months ended 30 June 2011) was based upon the attributable loss to ordinary shareholders of £31,000 (2011: £882,000) and a weighted average number of ordinary shares outstanding of 160.4 million (2011: 49 million).
7. Cash and cash equivalentsCash and cash equivalents in the statement of financial position comprise the following:
June 2012 £000s | June 2011 £000s | December 2011 £000s | |
Cash at bank | 1,578 | 3,305 | 2,420 |
Cash and cash equivalents (excluding overdrafts) | 1,578 | 3,305 | 2,420 |
Cash and cash equivalents include the following for the
purposes of the statement of cash flows:
June 2012 £000s | June 2011 £000s | December 2011 £000s | |
Cash and cash equivalents (excluding overdrafts) | 1,578 | 3,305 | 2,420 |
Bank overdrafts | - | - | (132) |
Cash and cash equivalents | 1,578 | 3,305 | 2,288 |
June 2012 £000s | June 2011 £000s | December 2011 £000s | |
Current liabilities | |||
Bank overdrafts | - | - | 132 |
Bank loans | 20 | - | 19 |
Hire purchase liabilities | 40 | - | 12 |
60 | - | 163 | |
Non-current liabilities | |||
Bank loans | 324 | - | 337 |
Hire purchase liabilities | 17 | - | 7 |
341 | - | 344 | |
Total borrowings | 401 | - |
Issued and fully paid | Number of shares | Ordinary Shares £000s | Share premium £000s | Total £000s |
At 1 January 2011 | 49,000,000 | 49 | 4,665 | 4,714 |
At 30 June 2011 | 49,000,000 | 49 | 4,665 | 4,714 |
At 1 January 2012 | 158,288,053 | 158 | 8,645 | 8,803 |
Issues of ordinary shares | 1,075,000 | 1 | 42 | 43 |
Shares issued in exchange for acquisition of TVAC | 2,317,497 | 3 | 197 | 200 |
At 30 June 2012 | 161,680,550 | 162 | 8,884 | 9,046 |
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 passuwith each other in all respects including receipt of dividends and proceeds in the winding up of the company.
Additional shares were issued during the year as follows:
On 10 January 2012, the company completed its December 2011 placing and raised £43,000, gross, by way of placing a further 1,075,000 ordinary shares of 0.1p each at a price of 4p.
On 5 April 2012, the company issued 2,317,497 ordinary shares of 0.1p each at a price of 8.63p per share pursuant to a sale and purchase agreement to acquire the share capital of The Visitor Attraction Company Limited.
10. Cash used in operations
Six months to June 2012 £000s | Six months to June 2011 £000s | Year to December 2011 £000s | |
Loss before taxation | (1,467) | (881) | (2,888) |
Adjustments for: | |||
- depreciation | 30 | - | 1 |
- amortisation | 1,350 | - | 100 |
- share based payments | 6 | - | 401 |
- trade and other receivables | (238) | 4 | (184) |
- trade and other payables | (251) | 269 | 556 |
- Interest expense | 12 | - | - |
Cash used by operations | (558) | (608) | (2,014) |
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