2017 INTERIM RESULTS PRESENTATION 4 AUGUST 2017
FORWARD-LOOKING STATEMENTS DISCLAIMER The information contained in this presentation has not been independently verified and this presentation contains various forward-looking statements that reflect managements current views with respect to future events and financial and operational performance. The words “anticipate‟, “target‟, “expect‟, “estimate‟, “intend‟, “plan‟, “goal‟, “believe‟ and similar expressions or variations on such expressions identify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. These forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other factors, which may be beyond Merlin Entertainments plc’s (the “Group’s”) control and which may cause actual results or performance to differ materially from those expressed or implied from such forward-looking statements. All statements (including forward-looking statements) contained herein are made and reflect knowledge and information available as of the date of preparation of this presentation and the Group disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. Nothing in this document should be construed as a profit forecast. 2 |
SUMMARY GROUP PERFORMANCE Strong revenue performance despite some difficult markets Improvement in like for like growth in LEGOLAND Parks Good RTP performance, despite softness in UK theme park market Midway impacted by one-offs, phasing and subdued London market Positive contribution from New Business Development On track for 2020 milestones Good NBD contribution in H1 2017 Successful opening of LEGOLAND Japan Confidence in pipeline Full year profit outlook in line with expectations 3 |
SUMMARY FINANCIALS Strong revenue growth offset by phasing and one-offs Total Total £ millions, unless Like for like H1 2017 H1 2016 growth at growth at stated growth actual FX constant FX Revenue 685 573 19.4% 9.6% 3.7% EBITDA 144 126 14.6% 2.4% Margin 21.1% 22.0% Operating Profit 73 70 5.1% (8.3)% PBT 50 50 0.7% Profit for the period 37 37 1.1% EPS 3.7p 3.6p 0.6% Dividend per Share 2.4p 2.2p 9.1% 4 | Definitions are provided in the appendix
REVENUE BRIDGE H1’16 – H1’17 Revenue growth from NBD and Existing Estate Contribution to +8.9% +3.7% +5.9% +19.4% total growth: Net New Business Development: £37m (1) 25 8 5 23 52 685 573 H1 2016 Revenue FX LFL Accommodation Midway roll out LLP Dev. Central H1 2017 Revenue Definitions are provided in the appendix 5 | Percentage contribution to growth does not sum to 19.4% due to use of different denominators in the calculation. Detail of FX impact is shown on slide 23
MIDWAY PERFORMANCE Continued underlying growth Revenue Growth impacted by one-offs/ phasing: LFL growth: (0.2)% (0.4)% Sales tax rebate in 2016 300 £m Week 53 impact on LFL trading 270 Strong NBD comparative H1 2016 H1 2017 Momentum in London market earlier in the year slowed after terror attacks 11.3% at actual FX 2.3% at constant FX Softness in North America, particularly in LDCs EBITDA Five new attractions opened to date Margin: 33.6% 29.7% 91 £m 89 H1 2016 H1 2017 (1.6)% at actual FX (8.8)% at constant FX 6 |
LONDON MARKET UPDATE Midway London maintaining share; marketing plans in place International holiday inbound visitation 1 20% Mixed data, but confident in market share compared to Domestic overnight trips 2 1% other London visitor attractions Domestic day trip 3 (4)% Summer marketing plan underway Targeting visitors already within Central London, upselling to cluster tickets Maintain focus on cost efficiencies Confident in competitive positioning 7 | 1 – Latest monthly data (Jan-May), ONS International Passenger Data 2 – Latest results (Jan-April) Visit England GB Domestic Tourism Report 3 – Latest results (Jan-May) Visit England The Great Britain Day Visits Survey
LEGOLAND PARKS PERFORMANCE Improvement in LFL growth; successful opening of Japan Revenue Improvement in LFL growth LFL growth: 3.3% 8.0% Strong performance following good Easter £m 267 198 trading and ‘The LEGO Batman Movie’ Opening of LEGOLAND Japan H1 2016 H1 2017 34.6% at actual FX Contribution from new accommodation at 20.8% at constant FX LEGOLAND Billund and Florida EBITDA Margin: 33.5% 32.1% £m 85 66 H1 2016 H1 2017 29.0% at actual FX 15.4% at constant FX 8 |
LEGOLAND JAPAN Successful opening supports confidence in roll out opportunity Japan opened ahead of schedule and on budget on 1 April Trading in line with expectations Annual Pass Sales very strong (c70k passes sold to date) Expect small positive EBITDA contribution in 2017 Hotel and SEA LIFE Centre on track for 2018 opening 9 | 9 |
RESORT THEME PARKS PERFORMANCE Strong start to the year; continued recovery at Alton Towers Revenue Strong start to the year with a good LFL growth: (10.2)% 6.2% Easter UK theme park market impacted by terror £m 118 104 attacks Continued recovery at Alton Towers H1 2016 H1 2017 12.7% at actual FX High year investments at Chessington and 7.7% at constant FX Heide Park Full period benefit of accommodation EBITDA opened in 2016 H1 2016 H1 2017 £m (4) (8) 10 |
SUMMARY P&L AND GUIDANCE Guidance unchanged Full year 2017 Guidance £ millions, unless Reported Constant H1 2017 H1 2016 stated Currency Currency Depreciation – c£150m Op. Group EBITDA 170 149 14.6% 4.1% Capex – £360m-390m Central Costs (26) (23) (14.7)% (14.2)% Central costs - c£50m EBITDA 144 126 14.6% 2.4% Interest charge – c£45m D&A (71) (56) (26.3)% (16.5)% Tax rate – c26% Operating Profit 73 70 5.1% (8.3)% Net Finance Costs (23) (20) (16.1)% PBT 50 50 0.7% Tax (13) (13) 0.2% Profit for the period 37 37 1.1% 11 |
PRODUCTIVITY UPDATE Maintaining our focus on efficiency; 2016 Opex Cost growth base NBD roll out Continued inflationary pressures: Wage legislation in UK, Germany and US Cost pressures Growth in business rates in UK Ongoing investment in product and marketing Productivity and efficiency focus Savings Structural and variable savings in 2017 through payroll, operating hours and internal benchmarking Additional variable savings in Midway in Potential further response to London trading 2017 savings Medium/longer term opportunity through further benchmarking, procurement and automation 12 |
CAPITAL EXPENDITURE Continued growth in New Business Development capex 2016-20 Strategy Unit cost £202m Highly dependent upon model. Fully 4 new parks 28 owned c£250m or mgmt contract nil. Typically £5-8m. 40 new attractions Some variation 26 dependant upon brand. c£150k. Large £120m 2,000 new rooms variation across 55 4 accommodation types. 19 £m 21 Majority is growth in Broadly in line with nature, i.e. new 93 depreciation. rides and features or 76 expansionary. H1 2016 H1 2017 Existing estate Accommodation Midway LLP Development 13 |
CASHFLOW Cash flow reflects seasonality December 2016 Net Debt (1,025) Net Cash flow (99) (34) New Finance Lease (117) 70 Non-cash movement (4) FX 9 June 2017 Net Debt (1,236) Existing estate 93 New business development 109 (214) 144 Other Investments (1) 12 Total 214 (21) (99) (50) 6 H1 2017 EBITDA Working Capital Cash Tax Capex and other Net financing Dividends paid Other Net cash flow and other investments costs movements (1) During the period the Group invested £12 million in LEGOLAND Dubai Hotel LLC, which is the company developing the hotel at LEGOLAND Dubai. 14 |
SUMMARY AND OUTLOOK Good progress on milestones Strong contribution from NBD in 2017 Continued development of pipeline Remain cautious on near-term outlook for Midway London Full year profit in line with expectations, despite trading uncertainty Normalisation of phasing and one-offs Continued cost focus Long-term outlook remains positive 15 |
Q&A
APPENDIX
NET DEBT Credit Ratings £ millions, unless 1 July 31 Dec 25 June stated 2017 2016 2016 S&P: BB, stable outlook Interest-bearing loans 1,283 1,152 1,087 and borrowings Moody’s: Ba2, stable outlook Cash and cash equivalents (250) (215) (101) 1,033 937 986 Finance lease obligations 203 88 86 Net Debt 1,236 1,025 1,072 18 | Actual currency
MIDWAY FINANCIALS £ millions, unless stated H1 2017 H1 2016 Statutory visitors 1 (m) 18.9 18.7 Revenue per capita (£) 15.23 13.80 Visitor revenue 287 258 Other revenue 13 12 Total revenue 300 270 Like for like growth (0.4)% (0.2)% EBITDA 89 91 Margin 29.7% 33.6% Operating Profit 57 64 Margin 18.8% 23.6% Existing Estate Capex 28 22 % of revenue 9.4% 8.3% 19 | Actual currency 1 Statutory visitors, excluding joint ventures and management contracts Definitions are provided in the appendix
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