CFO to leave after covenant breach at Paragon

PARAGON Entertainment, the York-based designer and operator of attractions, endured a bumpy ride in 2014 which has caused a £1m loss, a breach of its banking covenant and the departure of its chief financial officer.

It was already looking for a chief executive after the former role-holder, Mark Pyrah, “shifted his focus to sales and marketing” last September, although remains interim CEO, while vice-chairman Mark Taylor stepped up to executive chairman.

Now Paragon has said CFO Richard Arden will depart at the end of next month at the same time as it announced a breach of its banking covenant caused by it recording an EBITDA loss in 2014.

The group has a secured bank loan, of £281,000 at the year-end, which requires its quarterly EBITDA to be more than three times the interest on the loan. The group’s annual EBITDA loss of £84,000 therefore resulted in a breach and while its bankers, HSBC, have told Paragon “they do not intend calling in the overdraft or loan facility and continue to work with us constructively”, the group is exploring its long-term funding options.

Mr Taylor described 2014 as “a very testing year”, which included the closure of its Quest adventure playground attraction in Merry Hill, West Midlands. It lost £629,000 on its operation and surrendered the lease last November before completing a trade and asset sale agreement in May.

The group’s turnover during the year fell 19% to £7.72m, which it said was caused by “contract delays at the instance of third parties” although it expects much of the delayed work to still be completed, this year and in the future. Losses reached £980,000, and for the first time since it listed on AIM in 2012 it recorded underlying operating losses, of £212,000.

“It would be easy to dwell on our underperformance, but this really does not do justice to the solid developments and achievements made during the year,” said Mr Pyrah.

“Despite facing challenges in 2014, we have successfully retained our market leading position, and completed numerous UK and overseas projects including specialist design and build at the Museum of Kazakhstan, IWM First World War Galleries, Harrods and Glasgow Hospital. We are a leader in our industry through our well-known client base and innovative work. This is proving crucial to the growth of our new divisions and underscores our confidence in our strategic five year plan.

 

“We have produced some amazing work and our pipeline has gone from strength to strength giving us assurance of the sector size for the future and the strategic relationships we have formed during 2014 have given us a robust platform for growth.”