The future of visitor attraction designer Paragon Entertainment (PEL:AIM) is looking more promising after the £4 million cap signs a five-year agreement with international toy brand Hamleys.

The deal gives Paragon the right of first refusal to design and build theme-park style attractions within Hamleys’ stores.

No financial details have been disclosed, but the news sends Paragon’s shares up 5.2% to 2.5p.

PARAGON ENTERTAINMENT - Comparison Line Chart (Rebased to first)

It’s a turn up for the group, which saw its pre-tax loss surge four-fold to £427,000 in 2014 after unexpected project delays and underperformance at its flagship adventure playground attraction at Quest in Westfield Merry Hill.

This led to it breaching its banking covenant and its chief financial officer quitting at the end of July.

The group returned to profitability in the first half of the year, with a pre-tax profit of £153,000 and a 20% increase in revenue to £4.5 million. It also won a £5 million design and build project for a major theme park in the United Arab Emirates, which started in full production in September.

At its interim results Paragon said full year results will be below expectations, with revenue of £9 million and EBITDA (earnings before interest, tax, depreciation and amortisation) of £0.2 million, but 2016 is expected to be a better year given the progress made on the order book and improved visibility of earnings.

The Hamleys deal is encouraging but Paragon faces a huge task in improving its long-term funding position.

Issue Date: 04 Dec 2015