Merlin Entertainments Group Continues Aggressive Growth Strategy
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. “
- Ends -
For further information:
MERLIN ENTERTAINMENTS GROUP
Including interviews with CEO Nick Varney/CFO Andrew Carr/photographs please call
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 can be downloaded from: www.merlinentertainments.biz
Notes to Editors:
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
Merlin Shareholders
3. The Blackstone Group is a leading global alternative asset manager and provider of financial advisory services. Its alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement service. Other current investments in the leisure sector include Center Parcs, a leading provider of short-break holidays in the UK, Universal Studios in Orlando, and Cine-UK, the cinema company operating multi-plex screens under the brand name CineWorld. Further information is available at www.blackstone.com.
4. KIRKBI Invest A/S is a privately held, family-owned wealth management company, based in Billund, Denmark. Its holdings include a number of investment companies plus a 75% ownership share in the LEGO Group, the remaining 25% being held by a family foundation.
The LEGO Group was founded in 1932 and today the group is one of the world's leading manufacturers of play materials for children, employing approximately 5,000 people globally. The LEGO Group is committed to the development of children's creative and imaginative abilities. LEGO products can be purchased in more than 130 countries.
LEGO and the LEGO logo are trademarks of The LEGO Group. ©2008 The LEGO Group.
5. About Dubai International Capital LLC is an international investment company focused on both private equity and public equity. A wholly-owned subsidiary of Dubai Holding, DIC manages an international portfolio of diverse assets that provide its stakeholders with value growth, diversification, and strategic investments. Assets under management total over US$12 billion.
DIC Private Equity invests mainly in secondary buyouts in developed markets and has acquired businesses in a range of sectors in Europe and North America. Acquisitions include the UK leisure company Tussauds Group for £800m (later merged with Merlin Entertainments; DIC retains a 20% stake), the UK engineering company Doncasters for £700m, the US engineering company FastenTech for $492m, the UK hotel chain Travelodge for £675m, the German industrial packaging manufacturer Mauser for €850m, the UK healthcare company Alliance Medical for £600m, and the German producer of specialty alumina Almatis.
DIC Global Equities makes structured investments in large-cap, global equities, either directly or via DIC’s US$2 billion Global Strategic Equities Fund (GSEF). The GSEF has acquired substantial stakes in HSBC, EADS, and Sony Corporation. DIC has directly invested in a 2.87% stake in the Indian financial services firm ICICI Bank.
DIC has also taken a strategic 9.9% stake in Och-Ziff, an alternative asset management firm based in New York.
DIC Emerging Markets invests in a range of asset classes in emerging markets. Private equity investments include significant stakes in the UAE-based luxury retailer Rivoli Group and Singapore-based True Group, a leading provider of wellness services in South East Asia in addition to a US$200 million investment in Oger Telecom, a leading regional telecom conglomerate. DIC has also established sector or country-specific investment funds such as Ishraq, a US$150 million investment company bringing the Holiday Inn Express brand to the Middle East; the US$500 million MENA Infrastructure Fund, which invests in infrastructure projects in the Middle East and North Africa, and Jordan Dubai Capital, a US$300 million investment company that targets private equity opportunities in Jordan. DIC is a founding shareholder of Dubai Aerospace Enterprise and has a joint venture with CBRE that provides real estate asset management services.
DIC Asset Management (DICAM) arranges and promotes the investment funds. DICAM is regulated by the Financial Services Authority and holds a Category 4 licence.
DIC contributes to filling the equity gap faced by regional entrepreneurs through its fully-owned subsidiary, the Arab Business Angels Network (ABAN). ABAN acts as a link between entrepreneurs and Angel Investors and aims to complement the economic development objectives of the Arab world by facilitating the development of creative and productive entrepreneurial ventures. Additional information about the Arab Business Angels Network is available at: www.aban.ae.
Information about Dubai International Capital LLC is available at: www.dubaiic.com.