26 Mar 2013

Preliminary Results

Source: RNS
RNS Number : 8407A
Paragon Entertainment Limited
26 March 2013
 



Paragon Entertainment Limited
Preliminary announcement for the year ended 31 December 2012

 

Paragon Entertainment Limited (PEL) ("Paragon"), the visitor attractions business, announces its preliminary results for the year ended 31 December 2012.

 

Operational Highlights

·     Design and Build division completed a number of high profile projects in the year and is experiencing an acceleration in project wins and pipeline expansion:

                 -     Delivered more revenue and profits from larger projects than in any previous year
         -     £9.4 million of contracted work for delivery in 2013 as of today
         -     Over £20 million of additional project work for delivery in 2013 and 2014 tendered for
         -     Capacity augmented to accommodate increased workflow: with 32,000 square feet of additional space in  
                York;  new equipment; and expertise in sales, marketing and design added in the year

·     Attractions division saw its first owned and operated visitor attractions opened in November 2012 at Westfield's Merry Hill Shopping Centre, Birmingham under the Quest brand. The site will be home to six attractions and ancillary revenue streams by Easter 2013

·     First licensed attraction opened and significant IP secured in the year:
         -     Quest branded attraction opened in Istanbul by third party under license from Paragon
         -     Sole licence secured with Hasbro to build and operate Nerf themed attractions
         -     Exclusive world-wide licence secured to build and operate Hammer attractions

 

Financial Highlights

 

·     Revenue of £6.1 million, up 41% on a proforma basis reflecting considerable growth in the core Design and Build
 business

·     Gross profit of £2.0 million, up 44% on a proforma basis demonstrating improved margins

·     EBITDA of £305,000 up 1.3% on a proforma basis following a year of considerable investment

 

 


2012

 

£000s

2011

Proforma(1)

£000s

Change





Revenue

6,129

4,336

+41.4%

Gross profit

1,955

1,359

+43.9%

Underlying EBITDA(2)

305

301

+1.3%





 

(1) Unaudited proforma results represent those of the Paragon Creative Group in the 12 month period to 31 August 2011, as presented in the admission document published 16th December 2011.  These results are provided for comparative purposes to enable a better understanding of the performance of the Group in a year when Paragon Entertainment Limited itself existed as a cash shell.

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

 



 

CEO Comment

Mark Pyrah, Chief Executive Officer, commented, "2012 was a positive and transformational year for Paragon Entertainment. Our core Design & Build division continues to go from strength to strength thanks to ever increasing industry recognition. Our first attraction at Westfield's Merry Hill shopping centre near Birmingham represents an important milestone for the business and our aspiration to operate attractions in house".

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

 

Paragon Entertainment Limited
Preliminary results for the year ended 31 December 2012

 

 

 

Cautionary Statement

 

This Preliminary Announcement contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Paragon Entertainment Limited.  These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this Preliminary Announcement should be construed as a profit forecast.

 

BUSINESS PERFORMANCE AND FINANCIAL REVIEW, YEAR ENDED 31 DECEMBER 2012

 

Chairman's Statement

 

Strategic update

Our vision, to create a diversified attractions business with the scope to service an extensive global entertainment industry, started to become reality in 2012 by leveraging Paragon Creative's third party Design and Build business, with over 25 years of industry experience, with a strong management team that was expanded through the acquisition of The Visitor Attraction Company in April 2012.

 

In September 2012 we announced that we had secured space at one of Westfield's UK Shopping Centres in the West Midlands. This is our first owned and operated development and by November we had opened the first phase to the public. The final phase is due to open ahead of Easter 2013, completing the development. In October 2012 we announced the signing of a licensing agreement with Hasbro to use their Nerf brand within attractions.

 

In December 2012 we announced the signing of a worldwide licencing agreement with Exclusive Media for the use of the Hammer brand and associated IP within attractions.

 

The company is currently at the early stages of commercialising both of these agreements and more detail will be announced in due course.

 

These two agreements demonstrate the trust that internationally recognised brands place in Paragon Entertainment to deliver branded attractions.

 

The broader strategy still remains to create a diversified attractions business, expanding through both organic and acquisitive means to gain access to more of the value chain in our core leisure attractions market.

 

Dividend policy

No final dividend is proposed to be paid for the year ended 31 December 2012 and the Company intends to retain any future earnings for the foreseeable future to finance the growth of the Group. However, the Company intends to consider the payment of dividends when it becomes commercially prudent to do so in accordance with applicable laws and subject always to the Group having sufficient cash and distributable reserves for this purpose.

 

Financial performance

 

After accounting for exceptional items, we are pleased to report an overall turnover of £6.1 million and adjusted EBITDA of £0.3 million compared with an EBITDA loss of £0.4 million for the prior year which did not include any trading income as the Company had existed as a cash shell for materially all of the year.

 

In the Company's first full year of ownership of Paragon Creative it saw its revenues increase by 40% over the twelve month period ended 31 August 2011, reported to shareholders in December 2011 as part of the original acquisition. In addition, the business saw strong sequential growth in the year with revenues for the second half of the year up 68% versus the first half.

 

The results evidence the strong growth the Company has seen in its contracted order-book and speculative pipeline within its Design and Build division, a trend management expects to continue through 2013.

 

Staff and management

The first year of implementing the Group vision is always the most challenging. The strategic progress in the Group is testament to the skills and dedication of our staff. Their hard work and determination is now showing benefits and our people should be proud of what they have achieved. I would like to extend my thanks to the management and all of our staff for their efforts throughout the past year.

 

Business prospects

The Company has responded rapidly and effectively to a significant opportunity to grow the Design and Build division during 2012. The successful conversion and continued opportunities to tender for large and prestigious design and build contracts provides long-term revenue visibility and a pipeline far larger than any we have previously experienced.

 

Alongside this success in Design and Build, the Company has progressed its strategic aim to develop proprietary attractions. The first such attraction was opened in November 2012 under the Quest brand with further attractions scheduled to open at the same site ahead of Easter 2013 creating a leisure destination with five separate attraction offerings. This division of the Group is still very much in its infancy but is showing promising potential.

 

Having secured key third party IP in the form of Nerf and Hammer and having developed our own proprietary IP in the form of Quest attractions we have identified significant opportunities to expand the business further by leveraging our unique ability to provide turn-key attraction solutions to the market place. The first licensed Quest attraction opened in September 2012 in Istanbul and further opportunities to license IP are being developed.

 

To complement our organic development we continue to consider strategic acquisition opportunities for the Paragon Entertainment Group.

 

 

Robert Hersov

Chairman

 

 

 

Report of the Chief Executive Officer

 

The year to December 2012 saw Paragon Entertainment embark on an exciting and creative growth strategy to develop a diversified and integrated attractions business. The acquisition of Paragon Creative Limited and The Visitor Attraction Company Limited together with the appointment of a senior management team with extensive industry experience were of foremost importance in delivering that vision. Since then we have continued to develop the business horizontally to provide attraction operations as well as the Design and Build services for which Paragon Creative is a respected industry leader.

 

Our vision

By forming the Paragon Entertainment Group, our aim was to bring together a strong management team from within the visitor attractions sector and to leverage off the scale, diversification and market position of Paragon Creative's Design and Build operations through both organic and non-organic growth opportunities to extend into the development and operation of a portfolio of proprietary, owned and licensed, branded attractions.

 

In addition we intended to broaden our service offering across the value chain such that our core operating divisions now cover:

 

·     Design and Build of third party attractions

·     Attractions that are built, owned and operated by Paragon or licensed for third party operators

·     Operation of attractions for third party developers

·     Support services to the industry such as design, consultancy and project feasibility

 

Design and build

Design and Build has been our success story of the year and has exceeded our expectations.

 

The past year has seen a number of exciting and high profile projects. Some of the most notable being the new Titanic visitor attraction in Belfast, Sea City Museum Southampton, Chocolate - York's Sweet Story, The Lost Cellars at Alnwick Castle, The Orb at York Minster, Weblab Google Project at the Science Museum, Me and My Body Exhibition at Eureka! Children's Museum and the Olympic Museum in Lausanne, Switzerland.

 

There has been considerable growth in the sector and our pipeline of potential opportunities has increased considerably from £20 million to in excess of £60 million. We have been successful in our conversion of this pipeline having already confirmed orders of £9.4 million with a further £20 million in progress under tender for delivery in 2013 and 2014.

 

The scale of our projects has also increased significantly and we now have a number of contracts ranging between £1 million and £5 million in size.

 

We have seen structural changes within the sector which have led to a resurgence of opportunities, which we are well placed to exploit. We invested over £0.4 million during the year in our workshops and increased our productive capacity by more than 50%. Along with investment in additional working capital, this has enabled us to win larger Design and Build contracts and scale the business aggressively.

 

Attractions

At the time of the Admission, too Aim the Company outlined its strategy to leverage Paragon Creative's existing track record for delivering attractions to third party customers and to develop and operate a portfolio of branded attractions.

 

The business model has been well received in its target sectors, however, as a new concept it took longer than expected for us to finalise locations. Progress was made and in November we opened the first phase at our first site at Westfield Merry Hill, in the West Midlands. The final phase becomes fully operational at Easter 2013.

 

This site is not only important in the strategic development of the Group, but it has enabled the development of a close working relationship with Westfield Shopping Centres as a trusted leisure partner.

 

We have also developed our portfolio of licensed brands. These broaden our attraction offering to suit the requirements of the locations we identify. In particular, we have entered into licensing agreements with Hasbro for their Nerf brand and with Exclusive Media for attractions based on the Hammer House of Horror brand and associated intellectual property.

 

We now boast over 12 attraction concepts that sit underneath the Quest brand. This means that we can be much more adaptable and strategic about finding locations which opens up more opportunities to us. Concepts include Mirror Mazes, High Ropes, Hilo, City Golf, Yu Kids, Nerf Arena and Nerf Target Zones. A Quest attraction was also opened at the Aquarium in Istanbul. Consisting of two attractions, a 'Mirror Maze' and a 'Quest for the Rainforest', these separately ticketed attractions within the Aquarium went live in November and January, respectively, and have proved to be very successful with royalty income being provided as well as the initial Design and Build work.

 

Corporate acquisitions and strategic recruitments

Following the acquisition of Paragon Creative on 22 December 2011, the Board was pleased to announce in April 2012 the exciting acquisition of The Visitor Attraction Company Limited ("TVAC"), a respected industry provider of strategic development, operating and project management services to the leisure attractions industry.

 

Established in early 2010 through the combination of a team of independent specialists, each with over 10 years of leisure attraction development and operational experience, TVAC's projects include; Wedgwood, Carlsberg, The London Olympic Legacy, ArcelorMittal Orbit, The British Olympic Experience, Skyvue (Las Vegas, USA) and the Lisbon Story Centre. since acquisition, TVAC has become active in Africa where it has won several assignments.

 

Together, Paragon Creative, TVAC and the experienced management team are in a position to bring a more holistic proposition to our customers, further extending Paragon's reach into new services and markets.

 

Outlook

To date in 2013, the number and scale of contracts coming up for tender within our Design and Build division has been without precedent. The profile of the client base and industry visibility afforded by securing such contracts has duly steered our attention in the last few months.

 

At time of writing, Design and Build is contracted to deliver more revenues on larger projects than ever before. To complement this, our record pipeline of potential projects looks ever more attainable in light of the recent successes. We have never had such a full order book three months into the year. It is very exciting.

 

Our success in capitalising upon these opportunities has been countered by the external delays we have experienced in the Attractions division with the implementation of our proprietary attraction roll-out strategy. However, now that Quest is available to be seen and viewed at Merry Hill we have had an increased amount of interest from people with sites. Last year we had a concept, this year we have a substantial visitor attraction, designed, built and being operated. This makes a huge difference when selling our concept. This is a very exciting time for the Attractions division and I look forward to updating shareholders on our progress.

 

We have also just licensed three Nerf attractions to a third party which reinforces our developing Licensing division. We have some very valuable IP in Quest, Nerf and Hammer and this will be leveraged as the year progresses.

 

The uniqueness of Design and Build, our owned Attractions and Licensing will drive our growth strategy to develop an integrated and diversified attractions business.

 

 

Mark Pyrah

Chief Executive Officer

 

Reported results for the year

These financial statements report the financial performance of the Group for the year ended 31 December 2012. The comparative period reported the financial results of Paragon Entertainment Limited for the 12 months ended 31 December 2011 but were essentially only those of the previous cash shell prior to the acquisition of Paragon Creative Limited in December 2011.

 

In order to present a more meaningful comparator for the Group's performance, an Unaudited proforma of the results has been constructed which comprises those of the Paragon Creative group for the year to 31 August 2011 which were presented in the admission document with those of Paragon Entertainment Limited for the year to 31

December 2011.

 

Revenue

Revenue for the year was £6.1 million compared to £nil in the prior year when the Company was a cash shell.

Proforma revenues for the prior year were £4.3 million representing a 40% increase in 2012 on the prior period.

 

The majority of revenues, being £5.8 million, were derived from Design and Build projects. The remainder was for consultancy services carried out by The Visitor Attraction Company of £0.2 million and ticket sales of £0.1 million from the newly opened attraction at Merry Hill.

 

Gross profit

Reported gross profit for the year was £2.0 million compared to £nil in the prior year. Proforma gross profit for the prior year was £1.4 million, and so the 2012 figure represents a 44% increase.

 

The gross margins have seen a marginal improvement from 31% to 32%. The increase has been due to a number of high quality projects which have allowed Paragon to add value in design and engineering.

 

Operating expenses

Reported operating expenses for the year were £3.8 million compared to £2.9 million in the prior year. Proforma operating expenses for 2012 were £4.3 million.

 

Underlying operating expenses, which includes adjustments for exceptional items, amortisation and share based payment charges were £1.7 million for the year compared to £1.1 million for the prior period on a proforma basis. The increase in expenses reflects the increased size of business including the expansion of workshop space and capacity and the additional costs associated with being an AIM listed entity.

 

EBITDA and operating profit

The underlying EBITDA was £0.3 million compared prior period proforma EBITDA of £0.3 million for the year.

 

Reported operating losses of £1.9 million have reduced from £2.9 million in the prior period as the Group has moved into being a trading entity.

 

The loss per ordinary share for the year was 0.98 pence (2011: loss of 5.50 pence). Adjusted earnings per share, before charging amortisation, depreciation, charges for share options and exceptional items, was a profit of 0.08 pence (2011: loss of 0.69 pence).

 

Interest and facilities

The Group incurred interest of £30,000 for the year. The Group has debt facilities with HSBC which amount to a £0.3 million term loan and a £0.6 million overdraft facility. The Group has also entered into several financial leases and a premium credit arrangement.

 

As at the end of December 2012 none of the overdraft had been utilised.

 

Taxation

The Group has incurred no taxation in respect of the year to December 2012. The low reported taxable loss coupled with the ability to utilise certain tax liability losses brought forward has meant that the current tax is £nil. Deferred tax balances have increased with a reduction in relation to tax assets from a utilisation of tax losses being more than offset by the unwinding of the tax liability associated with the intangible assets. A tax credit of £0.3 million is reported.

 

Cash flow and financing

 

Operating cash flow

The Group incurred an operating cash outflow for the year to 31 December 2012 of £0.4 million (2011: cash outflow of £2.0 million). Of this, approximately £0.5 million relates to exceptional items in relation to the acquisition of Paragon Creative group giving rise to operating cash inflow before exceptional items of £0.1 million.

 

Investing activities

The Group has made significant investment during the year to 31 December 2012 of £1.4 million in property, plant and equipment. Of this, £0.9 million relates to investment at our first attraction site at Westfield's Merry Hill Shopping Centre and £0.1 million in Quest at the Istanbul Aquarium. The remainder of £0.4 million was in the development and expansion of the workshops of Paragon Creative in York to meet increased project demand.

 

Cash position

The Group's cash position at 31 December 2012 was £0.5 million (2011: £2.3 million).

 

Net assets

As at 31 December 2012, the Group had net current liabilities of £0.4 million. However, of this, £0.9 million is a liability recorded against the payment of deferred and contingent consideration on the acquisition of Paragon Creative Limited and The Visitor Attraction Company Limited. In accordance with the terms of the purchase agreements, this amount can be settled in shares or cash at the discretion of the company.

 



 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2012


Note

2012

£000s

2011

£000s

Revenue

4

6,129

-

Cost of sales


(4,174)

-

Gross profit


1,955

-

Operating expenses


(3,808)

(2,888)

Analysed as:


 

 

EBITDA


305

(361)

Share based payment charges


(21)

(401)

Exceptional and other items

5

(104)

(2,025)

Amortisation of acquired intangibles


(1,940)

(100)

Depreciation


(93)

(1)

Operating loss


(1,853)

(2,888)

Finance costs


(30)

-

Loss before income tax


(1,883)

(2,888)

Income tax credit


308

25

Loss and total comprehensive income attributable to the owners of the parent


(1,575)

(2,863)


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

Basic Earnings per Share

6

(0.98)

(5.50)

Diluted Earnings per Share

6

(0.98)

(5.50)





 



 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2012


Non-current assets




Intangible assets


2,862

4,437

Property, plant and equipment


2,005

698

Deferred income tax asset


44

155

Total non-current assets


4,911

5,290

Current assets




Inventories


6

-

Current income tax asset


-

60

Deferred income tax asset


149

-

Trade and other receivables


1,882

1,494

Cash and cash equivalents


539

2,420

Total current assets


2,576

3,974

Total assets


7,487

9,264

 

Current liabilities




Trade and other payables


2,847

2,489

Deferred income


99

448

Borrowings

7

56

163

Total current liabilities


3,002

3,100

Non-current liabilities




Borrowings

7

365

344

Provisions


18

65

Deferred income tax liabilities


299

641

Total non-current liabilities


682

1,050

Total liabilities


3,684

4,150

Equity attributable to the owners of the parent




Share capital


162

158

Share premium


8,884

8,645

Retained earnings


(5,243)

(3,689)

Total equity


3,803

5,114

Total equity and liabilities


7,487

9,264

 



 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2012



 

Balance at 31 December 2010


49

4,665

(826)

3,888

Comprehensive income






Loss for the year


-

-

(2,863)

(2,863)

Total comprehensive income


-

-

(2,863)

(2,863)

Transactions with owners






Issue of share capital


109

4,262

-

4,371

Costs directly related to the issue of shares


-

(282)

-

(282)

Transactions with owners


109

3,980

-

4,089

Balance at 31 December 2011


158

8,645

(3,689)

5,114

Comprehensive income






Loss for the year


-

-

(1,575)

(1,575)

Total comprehensive income


-

-

(1,575)

(1,575)

Transactions with owners






Issue of share capital


4

239

-

243

Reversal of share based payment charges


-

-

21

21

Transactions with owners


4

239

21

264

Balance at 31 December 2012


162

8,884

(5,243)

3,803

 

 



CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2012


Cash flows from operating activities




Cash used in operations

8

(426)

(2,012)

Finance costs


(8)

-

Taxation paid


(8)

-

Net cash used by operating activities


(442)

(2,012)

Cash flows from investing activities




Acquisition of subsidiary, net of cash and overdraft acquired

2

6

(1,787)

Additions to property, plant and equipment


(1,327)

-

Net cash used in investing activities


(1,321)

(1,787)

Cash flows from financing activities




Proceeds from issuance of capital


43

2,457

Payment for share issue costs


-

(282)

Proceeds from borrowings


350

-

Repayment of borrowings


(379)

-

Net cash from financing activities


14

2,175

Net decrease in cash and cash equivalents


(1,749)

(1,624)

Cash and cash equivalents and bank overdrafts at beginning of year


2,288

3,912

Cash and cash equivalents and bank overdrafts at end of year


539

2,288

 



 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2012

1.        Basis of preparation

Financial statements

The full year results for the year ended 31 December 2012 have been extracted from the audited consolidated financial statements which have not yet been sent to shareholders.  The financial information set out in this preliminary announcement does not constitute statutory accounts but is derived from those accounts. While the financial information in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards ('IFRS'), this announcement does not itself contain sufficient information to comply with IFRS.

 

The financial information shown in this announcement has been extracted from, and is consistent with, the audited financial statements for the year ended 31 December 2012.  The auditors have reported on those accounts and their reports were unqualified and did not draw any attention to any matters by way of emphasis without qualifying their report. The Group has published its Annual Report and Accounts for the year ended 31 December 2012 on its website www.paragonent.com.

 

Additional performance measures

The Group presents one-off items, underlying EBITDA, adjusted profit before tax and adjusted earnings per share information. These measures are used by the Group for internal performance analysis and incentive compensation arrangements for employees. The terms 'one-off items', 'underlying' and 'adjusted' may not be comparable with similarly titled measures reported by other companies. The term 'EBITDA' refers to operating profit or loss excluding operating one-off items, share-based payment charges, depreciation and amortisation of intangible assets. The term 'underlying operating profits' refers to EBITDA less depreciation. Finally, 'normalised earnings per share' refers to EBITDA less depreciation, net finance costs and attributable tax.

 

2.        Business combinations

Acquisition of the Visitor Attraction Company Limited in 2012

On 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 and cash with a total consideration of £313,154.  TVAC is a provider of strategic development, operating and project management services to the leisure attractions industry.               

 

Under the terms of the purchase agreement, the Company has agreed to a maximum consideration of £313,154. This was satisfied by the issue of 2,317,497 ordinary shares on completion, up to a maximum of 1,158,750 ordinary shares on the first anniversary of the acquisition subject to certain performance criteria and £13,154 to be paid in cash. 

 

TVAC has extensive expertise in the development and operation of leisure attractions and complements Paragon's wide array of attraction services which range from initial design and production for third party clients through to direct operation and development of proprietary themed attractions. The acquisition of TVAC is in line with the Paragon's broader strategy, announced on readmission to AIM in December 2011 to expand through organic and acquisitive means and thereby gain access to more of the value chain in its core leisure attractions market.

 

Together, Paragon and TVAC are in a position to bring a more holistic proposition to their customers, further extending Paragon's reach into new services and markets.

 



 

The details of the business combination are as follows:

 

 

 

Cash and cash equivalents

 

 

6

Trade and other receivables

 

 

65

Trade and other payables

 

 

(72)

Total identifiable net liabilities

 

 

(1)

Provisional goodwill

 

 

314

Total net assets

 

 

313

Consideration satisfied by:

 

 

 

Fair value of shares issued

 

 

200

Cash

 

 

13

Contingent consideration (payable in shares)

 

 

100

Total consideration

 

 

313

 

Consideration transferred

The consideration was settled on completion by the issue of 2,317,497 ordinary shares at 8.63 pence per share amounting to fair value of £200,000.  The purchase agreement also included an element of contingent consideration which is to be settled 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 or cash, at the Company's option.  A final sum of £13,154 is to be paid in cash based upon the net assets of the company at 29 February 2012.

 

At and around the time the shares were issued the official quoted price of the shares on AIM was 8.63p and therefore that is deemed to be the fair value of the shares.

 

The total amount of directly related acquisition costs of £21,000 have been charged to operating expenses of the business and are included within exceptional items.

Goodwill

The goodwill of £314,000 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 which includes consultancy work and is not expected to be deductible for tax purposes.

TVAC's contribution to Group results

TVAC contributed total revenues of £168,000 and a total loss after tax of £155,000 to the Group for the period from the date of acquisition to 31 December 2012. If the acquisition had occurred on 1 January 2012, Group revenue would have been £6.1million and the net loss would have been £1.6 million.  These amounts have been calculated using the Group's accounting policies and by adjusting the results of the subsidiary to reflect the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had applied from 1 January 2012, together with the consequential tax effects.  No allowance has been made for a change in the Group strategy which would have occurred had the acquisition taken place at the start of the financial year.

 



 

3.   Segment Reporting

Segment information for the reporting periods is as follows:

 

2012

 

 

 

 

Total Revenues

6,768

145

-

6,913

Of which from external customers

5,984

145

6,129

Segment revenues

6,768

145

-

6,913

EBITDA before share based payments and exceptional items

1,274

(156)

(813)

305

 

2011

 

 

 

Total Revenues

-

-

-

-

Of which from external customers

-

-

-

-

Segment revenues

-

-

-

-

EBITDA before share based payments and exceptional items

-

-

(361)

(361)

 

Geographic Segments

United Kingdom

 

 

4,936

-

Switzerland

 

 

686

-

Turkey

 

 

455

-

Other

 

 

52

-

Total revenues

 

 

6,129

-

 

4.   Revenue

 

 

 

Design and Build

 

 

5,984

-

Attractions

 

 

145

-

Total revenues

 

 

6,129

-

 

5.   Exceptional and other items

Costs of the acquisition of Paragon Creative Limited

 

43

387

Costs of the acquisition of The Visitor Attraction Company Limited

 

21

-

Cost of legal restructuring of Group

 

12

-

Onerous contracts acquired on Drinkall Dean (London) Limited

 

28

-

Exceptional pre-acquisition costs of the company not related to current business

 

-

1,638

 

 

104

2,025

 

The costs of the acquisition of Paragon Creative Limited and of The Visitor Attraction Company Limited include due diligence, legal and other exceptional costs entirely related to the such acquisitions.  Management do not expect any further related costs to arise. 

 

The costs related to onerous contracts acquired on Drinkall Dean (London) Limited relate to specific contracts which the company had an obligation to fulfil. 

 

The exceptional pre-acquisition costs of the company not related to the current business in the prior year include all those non-recurring costs, which includes a level of aborted due diligence costs, relating to the previous activity of the company in seeking one or more acquisitions of quoted and unquoted companies prior to identifying and making the acquisition of Paragon Creative Limited in December 2011.  Management do not expect any further related costs to arise.

 

6.   Earnings per share

Basic

 

 

(0.98)

(5.50)

Diluted

 

 

(0.98)

(5.50)


Earnings per share have been calculated by dividing the loss attributable to shareholders by the weighted average number of ordinary shares in issue during the year.  As the basic earnings per share is a loss, a dilution does not take place.

 

The calculations of basic and diluted loss per share are:

Loss for the year attributable to shareholders

 

 

(1,575)

(2,863)





 

Weighted average number of ordinary shares in issue:

Basic

 

 

161,049,642

52,098,000

 

From continuing operations

 

 

 

 

Basic normalised earnings/(loss) per share

 

 

0.08

(0.69)


Normalised earnings per share have been calculated by dividing the loss attributable to shareholders before amortisation, charges for share options and exceptional items by the weighted average number of ordinary shares in issue during the year.  The numbers used in calculating the normalised basic earnings per share are reconciled below:

Loss before tax

 

 

(1,883)

(2,888)

Amortisation

 

 

1,940

100

Charges for share options

 

 

21

401

Exceptional items

 

 

104

2,025

Adjusted profit/(loss) attributable to shareholders

 

 

182

(362)

Current year tax (charge)/ credit excluding tax effect of above items

 

 

(57)

5

Normalised earnings/(loss)

 

 

125

(357)

 

7.   Borrowings

Current liabilities

 

 

 

Bank overdrafts

 

-

132

Bank loans

 

22

19

Hire purchase liabilities

 

34

12

 

 

56

163

Non-current liabilities

 

 

 

Bank loans

 

326

337

Hire purchase liabilities

 

39

7

 

 

365

344

Total borrowings

 

421

507

Security

The bank loan and bank overdraft are secured by an unlimited debenture by each of the companies in the Group.

The hire purchase liabilities are secured against the assets that are subject to the specific arrangement. 



 

Interest rates

The bank loan incurs interest at 2.95 percent above the Bank of England base rate. 

Maturity analysis

The year of maturity of the loan is 2022.  The maturity of the hire purchase varies from 2013 to 2015.  The maturity profile of the liabilities is as follows:

 

 

Within one year

 

77

163

Between one and two years

 

62

26

Between two to five years

 

121

80

In over five years

 

250

238

Total

 

510

507

 

Exposure to interest rate changes

The exposure of the Group's borrowings to interest rate changes and contractual re-pricing dates at the end of the reporting periods are as follows:

6 months or less

 

348

488

1-5 years

 

73

19

Total

 

421

507

 

The carrying amounts and fair value of the non-current borrowings are as follows:

 

2012

£000s

2011

£000s

2012

£000s

2011

£000s

Bank loans

326

337

326

337

Hire purchase liabilities

39

7

39

7

Total

365

344

365

344

 

The fair value of current borrowings is broadly equal to their carrying amount, as the impact of discounting is not significant. The fair values are based on cash flows discounted using a rate based on the borrowing rate of 7.5%.

 

The Group has the following undrawn borrowing facilities:

 

 

 

Floating rate:

 

 

 

- Expiring within one year

 

600

18

 

 

600

18

 

The facilities expiring within one year are annual rolling facilities subject to a periodic review during each year. The next review date is July 2013.

8.   Cash used in operations

 

 

Loss before taxation

 

(1,883)

(2,888)

Adjustments for:

 

 

 

finance costs

 

30

-

depreciation

 

93

1

amortisation

 

1,940

100

share based payments

 

21

401

trade and other receivables

 

(379)

(184)

trade and other payables

 

(248)

558

Cash used in operations

 

(426)

(2,012)


Non-cash transactions

The principal non-cash transaction is the issue of shares as consideration for the acquisition as discussed in note 2 and for the issue of shares as consideration for services provided by a related party.

 

9.   Annual Report and Accounts

The audited Annual Report and Accounts for the year ended 31 December 2012 are available from our investor relations website at www.paragonent.com.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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