Life looks sweet for Paragon as British stay home

Late last year it bought York-based Paragon Creative for about £4m in cash and shares through a reverse takeover, changing its name from Marwyn Capital to Paragon Entertainment.

The Alternative Investment Market-listed design, production and fit-out firm said it now has an £11m order pipeline to work on attractions over the next 18 months.

Potential projects total more than £50m, and Paragon said structural changes are leading to a “resurgence of opportunities”.

“People want quality entertainment,” said Paragon chief executive Mark Pyrah. “People are still spending their money on entertainment.

“The industry has seen not massive growth but good growth over the last two to three years primarily with people staying at home (in the UK).

“There’s also the lottery, and they have been quite quiet in that sector while concentrating on the Olympics. It’s not a glut, but it’s helping a lot of projects move forward when they have been on hold.

“There are an awful lot of green shoots in the market.”

The bulk of Paragon’s work is through its design and build arm, which is performing “exceptionally well and is exceeding all our internal expectations”.

This division completed a number of high-profile projects in recent months.

They include the new Titanic visitor attraction in Belfast, Sea City Musuem in Southampton, York’s new exhibition charting the city’s chocolate and confectionery history and the Cairo Centre for Children’s Creativity.

The Egyptian project was awarded Best International Project at the Museum and Heritage Awards 2012.

Three-quarters of Paragon’s projects are international, and it also worked on schemes including an aquarium in Istanbul.

“There’s more design and build work out there than there was last year,” said Mr Pyrah.

“The pound is also playing to our advantage. The UK is a relatively cost-effective place to holiday.”

Paragon’s new projects, which remain under wraps, are up to £5m in value.

It is also working on developing its own attractions, including two key concepts. Quest is a Crystal Maze-style adventure concept, featuring a number of challenges. Urban Adventure is a high wire concept, which Paragon believes will be ideally suited to dead space in shopping centres.

It hopes to develop a number of these as owned or licensed attractions.

Paragon said while the business model has been “well received”, it has taken longer than expected to finalise locations.

“We are focusing on the retail environment at the moment, as there’s a strong demand for more leisure work,” said Mr Pyrah. One of its potential retail sites is in Yorkshire, he added.

Yesterday the group reported operating losses of £2.9m for 2011, after accounting for costs including the purchase of Paragon Creative and previously aborted transactions.

A non-trading cash shell for much of 2011, it reported no revenues for the year.

The reverse takeover also included a £2m fundraiser, and Paragon ended 2010 with £2.3m of cash.

In April it bought London-based project management firm The Visitor Attraction Company (TVAC), funded through a £300,000 share issue.

TVAC’s projects include The London Olympic Legacy, ArcelorMittal Orbit and The British Olympic Experience. In May it also started working with design consultants Drinkall Dean, as it steps up work in the retail sector.

“Drinkall Dean not only extends our capacity to undertake more design work as the wider group grows but gives us an essential skill, ability and track record within the retail sector allowing us to retain more of our project work in-house,” said Mr Pyrah.

“The retail market is changing and as big brands consolidate there is a big push into more experiential retail environments. The combination of Drinkall Dean and Paragon Creative provides the unique skill base required to leverage this transition.

“Together, Paragon Creative, TVAC and Drinkall Dean are in a position to bring a more holistic proposition to our customers, further extending Paragon’s reach into new services and markets.”

Chairman Robert Hersov added Paragon is on the hunt for more deals. “To complement the organic development of our group we continue to consider accretive strategic acquisition opportunities for the Paragon Entertainment Group,” he said.

Viking roots of a creative company

PARAGON Entertainment Group traces its roots back to 1987, when as Heritage Projects, it designed and built the original Jorvik Viking Centre in York.

Over seven years it designed and built more than 30 major projects.

In 1993 a management buy-out saw the business renamed Scenic Route. Between 1993 and 2006, it was involved in more than 300 projects in the museum, retail, aquarium, leisure and theme park sectors.

In 2003, Paragon’s current chief executive Mark Pyrah met Peter Holdsworth, a model maker with a company called Paragon 3D. Together they created a leading UK model-making and interactive production company.

In early 2006 Paragon bought Scenic’s assets, to create Paragon Creative, a company spanning models, interactive, prop-making and fit-out.

Based at Elvington Airfield near York, it has 40,000 square feet of space.