Paragon Entertainment, the firm behind the Wallace and Gromit ride at Blackpool Pleasure Beach and some exhibits at the Eureka! Children’s Museum in Halifax, said it expects full-year earnings to be significantly lower than previous expectations.
The York-based firm blamed the deferral of two major projects, delays and cost overruns at other projects, plus increased overheads.
Paragon’s projects have included the building of The Rolling Stones exhibition called Exhibitionism at the Saatchi Gallery in London which was the first international exhibition on the rock band.
Taking over the entire two floors of the Saatchi Gallery with nine thematic galleries, the exhibition combined over 500 original Stones’ artefacts, with cinematic and interactive technologies offering an insight into the band’s 50-year history.
Paragon was also involved in the design and build of Kidzania in London, the galleries at the Olympic Museum for the IOC in Switzerland, the galleries at The National Museum of Kazakhstan and the Titanic Belfast exhibition.
Paragon said its second half performance has been notably impacted with the result that 2017 earnings will be significantly lower than previous expectations of £700,000. It expects to complete the 2017 financial year with sales broadly in line with the board’s expectations at £15.0m.
The group said that despite solid growth in its Product business, two major projects with high margins which were forecast for 2017 have been deferred to 2018.
In addition, delays and cost overruns on projects resulted in less gross margin than was previously expected and group overheads increased in expectation of improved revenue growth in the second half.
Paragon said that in the absence of this growth and increased margin it is taking steps to rationalise costs and manage spare capacity while ensuring that the group is adequately resourced for the future.
Paragon’s chairman Mark Taylor said: “Our enormous growth in recent years necessitates that we take a breath and consolidate.
“While we are disappointed with the way 2017 has unfolded we remain satisfied that the longer term plan for Paragon is sound and our aspirational objective of achieving revenues of £20m in 2020 remains an appropriate medium term goal for the business with a focus on high quality earnings rather than growth for growth’s sake.”
He said the group is working hard to improve operational delivery and both the contracting and finance teams are now under new leadership and have improved processes to tighten contract discipline.
“However there has been management distraction, in terms of prolonged contract discussions and staffing issues during the second half which has diverted attention away from several key projects which we had intended to execute on this year,” he added.
“These projects are intended to streamline and improve further our design methodology, procurement operations and management reporting, as well as improve operational flexibility and ultimately margins.”
Paragon said the impact of these programmes will probably only become apparent in 2018. The firm is hoping to relocate to a single site in order to improve efficiencies and reduce property costs.