Paragon chief to step down to focus on sales

ATTRACTIONS company Paragon Entertainment, the firm behind the new Wallace and Gromit ride at Blackpool Pleasure Beach and the £97m Titanic exhibition in Belfast, said chief executive Mark Pyrah is to step down to focus on sales after the company warned that contract delays will significantly hit full-year expectations.

Mr Pyrah, one of the York-based group’s founders, will take on the role of sales and marketing director while vice chairman Mark Taylor has taken over as executive chairman. A search has started for a replacement chief executive.

The group said that 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 £100,000.

Mr Pyrah said: “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.”

In July, Paragon warned that delays on a major contract would result in a small half-year loss. Yesterday it announced an underlying operating loss of £200,000 for the six months to June 30.

The group is working on a number of high profile projects including the National Museum of Kazakhstan, Kidzania London, Dubai Dreamworks Hotel, Hamley’s Russia, Glasgow Science Centre, Harrods Zaha Hadid, Kapsaic Aramco and the new Olympic Museum works.

Mr Pyrah said a diversification into Attractions and Licensing should generate more predictable revenue and both areas are showing encouraging signs of progress.

Mr Taylor said: “We are delighted that Mark will continue to focus his significant sector and industry expertise on driving the group’s growth.”

The group said confirmed project orders for the second half amount to £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,” said Mr Pyrah.

The group said the performance of its Quest attraction at Westfield, Merry Hill, continues to be challenging and it has impaired its value 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,” said Mr Pyrah.

He said the group is addressing the performance and profitability of Quest and its loss margins narrowed in the first half of 2014.

“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,” said Mr Pyrah.

“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.”

The group made a loss at the EBITDA level of £88,000 during the period.

Analyst Duncan Hall, at FinnCap, said: “Following a soft first half, further anticipated contract delays in the second half makes a small full-year EBITDA likely. Post the first-half exceptional writedown of £400,000, we expect a full year reported loss of £1m.

“Despite contract deferral to the first half of 2015, we have taken the cautionary step of reducing 2015 revenue estimates by 20 per cent to £10m, and lowering EBITDA expectations by £400,000 to £500,000. That observed, tender activity levels remain high and the long-term outlook for the sector is positive.“