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Merlin Entertainments Group continues Aggressive Growth Strategy

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                                                                                                        2007 Highlights

A step change – from No 1 visitor attraction in Europe at the end of 2006, to second largest visitor attraction operator in the world.  

Performance Improvement on 2006                                                                                                                                                                        

  • Total number of visit to attractions 27.5 m , 112% up on 2006.  Visits for the full year 2007 were 32.4 million
  • 155% Increase in revenue 2007 over 2006 –  € 712.9 million up € 433.7 million
  • Like for like revenue growth of 9% on core business (excluding Gardaland/Tussauds acquisitions)
  •   Group EBITDA (excluding non-recurring items) of €251.8 million, up €175.5 million on 2006 (230%)     15% EBITDA growth on Merlin core business – excluding Gardaland/Tussauds acquisitions
  •   EBITDA growth on four LEGOLAND Parks alone since acquisition is 80% – from €37.5m (2004) to €65.1m
  •   Group operating profit €180.2 million, up  €128.2 million (246%) on 2006 Cash generated from operations of €226.4 million, up €153.4 million (210%)on previous year
  •  Capital investment of €99.5 million during the year
  •   Repayment of bank debt in the year of €916.4 million
  •   Cash at bank and in hand at year end of €62.5 million

 Attraction Highlights  in 2007

  • Acquisition of The Tussauds Group – including The London Eye, Madame Tussauds, Alton Towers, Thorpe Park, Heide Park, Chessington World of Adventures, Warwick Castle
  •  Launch of first LEGOLAND Discovery Centre  – new indoor interactive attraction – in Berlin
  •  Opening of two new hotels – at Chessington and Heide Park
  •  Opening of new SEA LIFE in Hanover
  •  Opening of first LEGOLAND Atlantis by SEA LIFE – in LEGOLAND Billund
  •  Opening of Madame Tussauds in Washington DC
  •   Major new investment in all premier attractions
     

Already in 2008

  • Acquisition of The London Aquarium
  • Two new LEGOLAND Discovery Centres – in Duisburg and Chicago (August)
  • New Madame Tussauds in Berlin (July)
  • New SEA LIFE attractions in Gardaland; Chessington World of Adventures; LEGOLAND, California; and Cuxhaven
  • First Holiday Village opened in LEGOLAND, Germany in June
  • New deal signed for fifth LEGOLAND Park – LEGOLAND Dubailand to open in 2011
  • Announced two new attractions to open in New Jersey in 2009 – The Pepsi Globe observation wheel, and a LEGOLAND Discovery Centre – the second in the USA
  • Announced Madame Tussauds to open in Hollywood in 2009
  • Major new investment in all premier attractions…………

This week Merlin Entertainments published its key results for the year ended 2007.   A spectacular year for the company, 2007 represented a real step change for Merlin – taking it ever closer to its stated ambition to be the world leader in location based, branded, quality family entertainment.

The acquisition of The Tussauds Group in May moved Merlin into the position of No 2 visitor attraction operator in the world (to Disney).  This came only six months after it took the No 1 slot in Europe with the acquisition of Gardaland, one of Italy’s premier theme parks, at the end of 2006.    Indeed, Merlin’s growth – both through organic development and targeted acquisition – has been extraordinary since it was acquired by Blackstone in April 2005 for £102.5 million (€150 million).    Three years later, it has grown in scale by more than ten times.

 Commenting CEO Nick Varney said, “We are very encouraged by these results – it has been a very intensive 18 months, and they are a real testament to everyone in the company who have worked so hard to achieve a seamless integration of the new businesses, while continuing to deliver memorable experiences to all our visitors.

 “Merlin Entertainments Group is an exceptional leisure business. It is a very special company with iconic brands, and a management team which has always had a profound belief in its potential to become a world leader.  We have also been very fortunate in our shareholders, and in particular Blackstone whose vision, financial strength and negotiating expertise have helped us make this a reality.“

Core Business Growth

These results are not just about growth through targeted strategic acquisitions – on the contrary, Merlin has seen double digit EBITDA growth within its core operating business every year since 2000.  In 2007 the Group achieved a 9% increase in revenue/15% EBITDA increase over 2006, on its core businesses alone (excluding Gardaland/Tussauds acquisitions).  As an example, the LEGOLAND Parks’ business , acquired in 2005, has grown EBITDA by double digit under Merlin’s stewardship – up 80% in 3 years from €37.5m (2004) to €65.1m.    The company’s real success lies in the strength and enthusiasm of its people – and its ability to maximise organic growth within the business through planned investment in all its sites, and high levels of customer service. 

The integration of both the Gardaland and Tussauds businesses into the original group was also accomplished with minimum disruption to trading.     In 2007 commercial targets were met and exceeded – and this despite the wettest summer on record in three of the Group’s key markets – Germany, UK and Denmark.  More importantly, early results in 2008 already indicate that Merlin is outperforming the market, despite a cold early Easter and current economic conditions.   Indeed, while the public may be cutting back on foreign holidays, and other perceived luxuries, a family day out at a quality attraction becomes even more important.

Underlining all this is a robust and balanced portfolio of 58 (by end 2008) high quality branded attractions and 6 hotels, which has been built not only to provide a broad geographic and demographic spread; but also a combination of indoor short stay attractions (midway), and resort theme parks. This mix gives the company the unique ability to continue to trade through adverse external conditions like weather, economic downturns, or local market difficulties.

 Merlin Entertainments Group – Going Forward

The expanded company now comprises 3 Operating Groups: 

    * Resort Theme Parks incorporating Gardaland, Alton Towers, Thorpe Park, Heide Park and Chessington World of Adventures;
    * Midway Attractions including Madame Tussauds, SEA LIFE,

The London Eye, Dungeons, Warwick Castle, LEGOLAND Discovery Centres and Earth Explorer

    * LEGOLAND Parks.   Four existing Parks in Denmark, California, Germany and the UK – and the development of the new LEGOLAND Dubailand Park, scheduled to open in 2011
    * These Operating Groups are supported by a central Property and Development Group responsible for new site search, project delivery, hotel development, property management and creative services, which includes the Merlin Studios which sculpt wax figures for the eight Madame Tussauds sites, and work on theming for the Parks and Hotels

Finally, Merlin has proven that strong and consistent growth is based on detailed market understanding, and the ability to develop highly distinctive and innovative brands which are transferable across borders.  This expertise will remain central to its future strategy, and the structure is designed to facilitate and accelerate the company’s continuing dynamic growth plans, particularly in Europe and North America.

Concluding, Varney said, “2007 shows our clearly defined growth strategy is working.  We will continue to build on this by:

  • Continued development of our existing attraction sites
  • Rolling-out 3 to 4 of our key midway brands every year – Madame Tussauds, LEGOLAND Discovery Centres, SEA LIFE and Dungeons in Europe, the USA, and beyond
  • Developing our theme parks into destination resorts with the addition of second gate midway attraction concepts and accommodation  – encouraging 2/3 day visits and
  • Strategic acquisition if appropriate.

“I believe that Merlin has a unique opportunity to become the world leader in our sector, and, with the continued support of our investors, my colleagues and I are entirely committed to achieving that objective. “

See also: 

Merlin Entertainments wins Prestigious "Best Management team" Award
Merlin’s Magic Wand and Legoland Windsor create "Magical experiences" for Seriously and Terminally Ill Children
Merlin Takes The Helm At Blackpool SEA LIFE Centre
New General Manager for London Aquarium
Merlin Buys London Aquarium

For further information:
Sally Ann Wilkinson/Penny Roberts
+ 00 44 20 8899 6110/ +00 44  20 8948 4225 /+ 00 44 7774 415372

 A copy of the full Merlin Entertainments Annual Review will be available to download  from  www.merlinentertainments.biz  on Saturday 28th June 2008.

1. Merlin Entertainments published these results as a requirement of the Walker Report  which following a review of PE ownership in the UK, from June 30 2008 requires full annual disclosure from major private  owned companies.  Merlin Entertainments’ primary shareholder is the Blackstone Group, which purchased the company in May 2005.  Other shareholders are Dubai International Capital LLC (DIC), and KIRKBI Invest A/S

2. Merlin  Entertainments Group is the leading name in location based, family entertainment, which has seen the most successful and dynamic growth of any company in the sector over the last five years.   The world’s second largest visitor attraction operator, Merlin has 58 attractions and six hotels in 12 countries and across 3 continents.   The company aims to deliver memorable and rewarding experiences to its 33 million visitors worldwide, through its iconic global and local brands, and the commitment and passion of its managers and 13, 000 employees.   Merlin Entertainments operates the following attractions – SEA LIFE, Madame Tussauds, LEGOLAND, The London Eye, Dungeons, Gardaland, LEGOLAND Discovery Centres, Alton Towers, Warwick Castle, Thorpe Park, Chessington World of Adventures and Earth Explorer

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