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Amusement Parks: Merlin Entertainments Group Continues Strong Growth Record

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First year of full figures since acquisition of Gardaland (Dec 2006)/The Tussauds Group (May 2007) from second largest visitor attraction operator in the world

Visits:  Total number of visits to attractions grew by 7.6m to 35.1m, 28% up on 2007. (Full year proforma * visits up 8% year on year
                                                                                                                                                                                                                                                    
Revenue:  37% increase in 2008 – £662.3m up  £178.1m (Full year proforma revenue growth of 18%)

EBITDA:   Eighth consecutive year of double digit growth £203m – up £32.1m on 2007 (19%) (Full year proforma EBITDA growth of 20%)

Operating Profit before one-off write-downs:  Up by £15.3m (12%) to £142.2m

Cash generated from operations of £219.1m, up £65.4m (43%) on previous year

Cash at bank and in hand at year end £114.9m and immediately available money market funds of £23.8m

Leverage on net external bank debt at year end equates to 5.1 times adjusted EBITDA

Note:  Fuller breakdown/annual review available from: www.merlinentertainments.biz/

Despite poor weather and a worsening global economy, figures published today show that 2008 proved another year of strong growth and strategic progress for the world’s second biggest visitor attraction operator, Merlin Entertainments (‘Merlin’).

2008 was the first full year of integrated operation for Merlin since the aquisition of Italy’s premier theme park, Gardaland in December 2006 and The Tussauds Group attractions in May 2007.   The 2008 figures demonstrate that through a policy of strategic investment, clear positioning and tight financial management Merlin has successfully integrated these businesses, and is beginning to maximise the latent potential and return on capital investment across these acquisitions, as well as its existing individual attractions.

2008 also saw the eighth consecutive year of double-digit EBITDA growth for Merlin – 20% up on 2007.   This consistency, which is echoed across all Merlin’s figures, was acknowledged only last week when Merlin took the top slot in this year’s PricewaterhouseCoopers Profit Track 100.

This prestigious league table, often termed ‘the definitive barometer of growth companies’, features the UK’s top 100 private companies with the fastest growing profits measured over the last three years.   Merlin Entertainments moved to the top slot (from No 9 in 2008) with an average 130% annual profit growth over the three years 2004 – 2007.

Merlin ascribes its continued growth and performance to:

A senior management team able to improve/turn round the performance of all the company’s individual assets

An ‘fmcg’ approach to its brands.  Merlin describes itself as providing location based, branded, quality family entertainment.  Its approach to its brands is to create clear core propositions, which are highly distinctive, innovative, and transferable across borders – but also with the ability to reflect local themes/interests.  This means Merlin has succeeded in many overseas markets where other global operators have failed.

Broad/robust portfolio across its Resort Theme Parks, Midway attractions and LEGOLAND Parks.   The spread of indoor/outdoor attractions across a wide geographic area; and appeal across different customer groups; all help to protect the business from the effects of weather or localised market problems.

A clear growth strategy. 

Consistent and sustained underlying organic growth.  Year-on-year Merlin’s core business has outperformed targets, continually increasing the profitabilty of individual attractions.  This has been driven by Merlin’s significant investment in new rides, attractions, shows and guest services resulting in market leading customer satisfaction levels.

A programme of new openings – rolling out an average of 4 / 5 Midway indoor attractions each year (Madame Tussauds, SEA LIFE, Dungeons and LEGOLAND Discovery Centres)

Development of the theme parks as shortbreak destinations via the addition of themed accommodation and second gates.

Selected acquisitions, including in 2008 The London Aquarium, and The Underwater Adventures Aquarium in the famous Mall of America in Minnesota, USA. 

Keen focus on people development. Merlin continues to develop world class HR initiatives with a new graduate scheme  attracting candidates from UK, USA and Germany; as well as positive development and succession management strategies across the business

Strong CSR policies – demonstrated by the company’s responsible approach to environmental/energy and other issues; as well as its global reputation for marine and animal conservation campaigns linked to the SEA LIFE and Chessington Zoo brands.  2007 also saw the formation of a new charitable foundation, Merlin’s Magic Wand, designed to help disadvantaged children enjoy the company’s attractions 

Commenting, CEO Nick Varney said,     “We are very encouraged by these results, and by the fact that a large proportion of our growth in 2008 was driven by like-for-like trading in our existing parks and attractions.    Indeed I believe Merlin’s real success lies in our ability to maximise organic growth within the business through planned investment in all our sites combined with high levels of customer service.  This is demonstrated for example in the significant improvement in performance in both revenue and visitor numbers of attractions like Alton Towers and Chessington World of Adventures. “

“Most importantly, our primary objective is to deliver memorable experiences to all our visitors. Without their word-of-mouth endorsement and return visits there would be no business – and this is never more true than in tough economic times.”

“The key to delivering this objective is the strength and enthusiasm of our people at every level.   It is with their support that we have successfully completed the integration of three major businesses while still meeting, and exceeding our targets.” 

The 2008 results demonstrate that the Group’s clearly defined growth strategy is continuing to work.   In 2009/10 Merlin will build on this by:

continued development of existing attraction sites including the opening of “SAW” – the ride at Thorpe Park

rolling-out more Midway attractions each year, with the USA and  Asia primary targets

adding major partnership projects such as LEGOLAND Malaysia, due to open in 2012

developing the theme parks into short break destination resorts, with an expansion of Hotel LEGOLAND in Billund and three hotel planning applications pending

strategic acquisition as appropriate

Against this background, and despite the turmoil in the global economy, Merlin is cautiously optimistic for the future.  Early results in 2009 are promising, and while the public may be cutting back on foreign holidays, and other perceived luxuries, a family day out at a quality attraction potentially becomes even more important.  What Merlin has to deliver is the value for money and customer service those same customers will increasingly demand.

Concluding, Varney said, “Through 8 years of strong growth across the business, Merlin Entertainments is emerging as one of the most exciting companies in the world. This continues to be based on strong brands, a focused growth strategy, and most of all an excellent team.”

Attraction Highlights  in 2008
 

Acquisition of The London Aquarium in May 2008 and beginning of £5m refit which was completed in time for Easter 2009

Acquisition of Underwater Adventures Aquarium in famous Mall of America in Minnesota in December 2008

LEGOLAND Discovery Centres (LDC)  – new brand firmly established and opened in Duisburg, Germany and Chicago, USA

Madame Tussauds opened in Berlin

SEA LIFE centres opened as second gate attractions in LEGOLAND, California; Gardaland, Italy

First LEGOLAND Holiday Village accommodation opened at LEGOLAND Deutschland

Major investment in existing portfolio attractions including SEA LIFE Centre at Chessington World of Adventures & Zoo: new family themed area in Alton Towers Resort – Mutiny Bay; new Land of Adventures with 7 new attractions in LEGOLAND California

Already open/planned for 2009
 
First Merlin attraction in Portugal and 29th SEA LIFE attraction – due to open in Porto in June

Madame Tussauds to open in Hollywood in August

New deal signed for fifth LEGOLAND Park – LEGOLAND Malaysia – to open in 2012 (LEGOLAND Dubailand delayed until 2015)

Work to begin on first UK LDC scheduled to open early in 2010 – announcement imminent

Planning stages for 3 new resort hotels – in LEGOLAND California, LEGOLAND Windsor and Thorpe Park

Two new attractions to open in New Jersey, USA in 2010 – The Pepsi Globe observation wheel, and a LEGOLAND Discovery Centre – the third in the USA

Major new investment in existing portfolio attractions including SEA LIFE Centre (Sharkbait Reef) in Alton Towers Resort; Land of the Pharoahs  in LEGOLAND Windsor; new Dungeon at Warwick Castle; SEA LIFE London Aquarium reopens after major refit

See also: Amusement Parks: Merlin Entertainments the Fastest Growing Private Company in the UK
World Leadership through People and Creative Ideas : An interview with Nick Varney, CEO of Merlin Entertainments Group
Merlin Entertainments – Rembrandt’s dark secret: Rembrandt show at The Amsterdam Dungeon
A New World Class Aquarium for the UK As Merlin Entertainments Reveals the ‘New’ Sea Life London Aquarium

 

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