AIM-listed firm saw revenue grow 70% and gross profit jump 91% to £3.76m

Companies: Paragon Entertainment

AIM-listed design specialist Paragon Entertainment published its final results this morning, showing strong revenue growth of 70%, gross profit growth of 91%, but a 50% drop in earnings, in the year to 31 December. 


The Company saw revenue grow to £14.4m and gross profit to £3.76m, up from £8.5m and £1.97m last year. Its gross profit margin improved 3% to 26%, and EBITDA increased 4-fold to £1.19m. 


Despite the results, the Group saw earnings and EPS fall, and shares fell 4% early on Thursday. On a normalised basis, earnings grew significantly on last year.


The Group's revenues increased on the back of the completions of several major projects, including Kung Fu Panda, Madagascar, Little Explorers, Coronation Street, and Fountains Abbey. Ongoing projects include Cloudy with a Chance of Meatballs and Hunger Games.


finnCap analyst Mark Paddon said the group had reshaped its business over the past two years, strengthening management and infrastructure, while increasing capacity and reviewing strategic emphasis. Mr Paddon added that finnCap was raising its target price to 6p:


"We anticipate a progressive revaluation given the potential growth profile in an addressable and fragmented international market. Our 2017 forecasts remain unchanged following the results which imply EBITDA growth of 26%, and we raise our target price to 6p, implying potential share price upside of 23%."

Exec Chairman Mark Taylor said the firm had achieved two of its strategic aims in the year: solid growth in revenue and EBITDA and investing in building capacity for the future.


Mr Taylor said that by investing in the business' long-term capacity, it had been able to manage the growth better than in previous years. He also said the firm had invested in HR, technology, IT infrastructure, and its premises:


"The numbers speak for themselves: in short, we have continued to do what we said we would do, and we remain excited about the future."


The information contained within this post is based on personal experience and opinion and should not be considered as a recommendation to trade nor financial advice.