Annual Report and Accounts 2014
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ANNUAL REPORT AND ACCOUNTS 2014 Merlin Entertainments plc Annual Report and Accounts 2014 WELCOME TO CONTENTS MERLIN ENTERTAINMENTS Financial highlights and key performance indicators Click the sections below to take you to the relevant page MERLIN ENTERTAINMENTS IS EUROPE’S LEADING AND THE WORLD’S SECOND-LARGEST VISITOR ATTRACTION OPERATOR. OUR AIM IS TO DELIVER MEMORABLE EXPERIENCES TO MILLIONS OF VISITORS STRATEGIC REPORT FINANCIAL STATEMENTS ACROSS OUR GROWING PORTFOLIO OF MIDWAY ATTRACTIONS AND THEME PARKS. WE ARE DRIVEN BY SIX GROWTH DRIVERS AND OUR UNIQUE CREATIVE AND PRODUCTION RESOURCE ‘MERLIN WELCOME TO MERLIN ENTERTAINMENTS 2 TABLE OF CONTENTS 103 CONTENTS 3 CONSOLIDATED INCOME STATEMENT 104 MAGIC MAKING’ WHICH SITS AT THE HEART OF EVERYTHING WE DO. OUR STRATEGY AND BUSINESS MODEL 4 CONSOLIDATED STATEMENT Merlin at a glance 4 OF COMPREHENSIVE INCOME 105 Merlin’s brands 6 CONSOLIDATED STATEMENT Strategy and global presence 8 OF FINANCIAL POSITION 106 FinancialhighlightsandKPIs(1), (2), (3) At the end of Merlin’s growth drivers 10 CONSOLIDATED STATEMENT 2010 2011 2012 2013 2014 December 2014, 2014 year in review 12 OF CHANGES IN EQUITY 107 Merlin operated: CHAIRMAN’S STATEMENT 14 CONSOLIDATED STATEMENT OF CASH FLOWS 108 CHIEF EXECUTIVE’S REPORT 16 NOTES TO THE ACCOUNTS 109 Visitors Revenue OPERATIONAL REVIEW - MIDWAY ATTRACTIONS 22 MERLIN ENTERTAINMENTS PLC 62.8m +4.9% £1,249m +4.8% OPERATIONAL REVIEW - LEGOLAND PARKS 26 COMPANY FINANCIAL STATEMENTS 157 OPERATIONAL REVIEW - RESORT THEME PARKS 30 NOTES TO THE MERLIN ENTERTAINMENTS PLC MERLIN MAGIC MAKING 34 COMPANY FINANCIAL STATEMENTS 158 TEAM MERLIN 38 RISKS AND UNCERTAINTIES 42 ADDITIONAL INFORMATION GROUP FINANCIAL REVIEW 48 41.0 46.5 54.0 59.8 62.8 801 933 1,074 1,192 1,249 CORPORATE SOCIAL RESPONSIBILITY 54 SHAREHOLDER INFORMATION 162 FINANCIAL RECORD 163 Underlying EBITDA Underlying operating profit CORPORATE GOVERNANCE GLOSSARY 164 £411m +5.3% £311m +7.1% CORPORATE GOVERNANCE STATEMENT 60 BOARD OF DIRECTORS 61 CORPORATE GOVERNANCE REPORT 64 AUDIT COMMITTEE REPORT 68 DIRECTORS’ REMUNERATION REPORT 74 256 296 346 390 411 198 222 258 290 311 NOMINATION COMMITTEE REPORT 93 DIRECTORS’ REPORT 94 Like for like revenue growth Basic EPS DIRECTORS’ RESPONSIBILITIES STATEMENT 97 +7.1% 16.0p (2013:15.1p (4)) INDEPENDENT AUDITOR’S REPORT 98 Return on capital employed Adjusted EPS 10.6% (2013:10.2%) 17.7p (2013:16.9p (4)) Non-financialKPIs(1), (5), (6), (7) 2013 2014 Customer satisfaction (5) ✔ ✔ Staff engagement (6) ✔ ✔ Footnotes to this Annual Report and Accounts: • Unless otherwise stated, the terms ‘Merlin’, ‘Merlin Entertainments’, ‘the Group’, ‘We’ and ‘Us’ refer to the Company (Merlin Entertainments plc) and, as applicable, its subsidiaries and/or (7) Health and safety ✔ ✔ interests in joint ventures. • Unless otherwise stated, references to ‘year’ or ‘2014’ mean the 52 week period ended 27 December 2014 and references to ‘2013’ or ‘previous year’ mean the 52 week period ended 28 December 2013. • References to visitors mean all individual visits to Merlin owned or operated attractions. • The terms ‘financial statements’, ‘consolidated financial statements’ and ‘accounts’ are used interchangeably. Footnotes (see page 3 for further footnotes to this Annual Report and Accounts): (1) The KPIs shown above are Merlin’s key financial and non-financial performance indicators. • Like for like growth refers to the growth between 2013 and 2014 on a constant currency basis using 2014 exchange rates and includes all businesses owned and opened before the start of 2013. (2) Figures presented for 2011 are based on underlying trading figures compiled on a 52 week basis for ease of comparison. Statutory numbers for 2011 were prepared on a 53 week basis. • EBITDA is defined as profit before finance income and costs, taxation, depreciation and amortisation and is after taking account of attributable profit after tax of joint ventures. (3) Group profit before tax for 2014 was £226 million (2013: £172 million). • In order to show the underlying business performance of the Group; enhance comparability from period to period and with other companies; and to provide information consistent with how (4) The 2013 EPS figures were affected by capital changes arising as part of the IPO in November 2013. it is measured internally, underlying information presented excludes exceptional items that are classified separately within the financial statements (see note 2.2 to the financial (5) Source - customer satisfaction surveys: measure is based on 90%+ rating as ‘satisfied’ or ‘very satisfied’. statements on page 114 for further details). (6) Source - annual employee surveys: measure is based on 80%+ rating for ‘staff engagement’ (see page 39 for further details). • Return on capital employed is based on underlying operating profit after taking account of a normalised long term tax rate. (7) Source - internal health and safety reports: measure is based on a reduction in ‘business related incidents’ per 100,000 visits. • Percentages are calculated based on figures before rounding and are then rounded to one decimal place. 2 3 Merlin Entertainments plc Annual Report and Accounts 2014 Main Contents Indoor attractions located in OUR STRATEGY city centres or resorts and business model MIDWAY 42%(1) 92 ATTRACTIONS 21 COUNTRIES OUR VISION IS TO BECOME THE 4 CONTINENTS 1-2 HOUR EXPERIENCE WORLDWIDE LEADER 5 GLOBAL CHAINABLE BRANDS AND IN BRANDED, ‘SHREK’S ADVENTURE!’ UNDER DEVELOPMENT LOCATION BASED ENTERTAINMENT. MIDWAY ATTRACTIONS Merlin’s unique creative Outdoor attractions with rides and and production shows, complemented with themed resource accommodation LEGOLAND PARKS 6 ATTRACTIONS (1) 5 COUNTRIES 31% 3 CONTINENTS 1-3 DAY EXPERIENCE LEGO THEMED ACCOMMODATION, RIDES, Sitting at the heart SHOWS AND INTERACTIVE EXPERIENCES of everything 3 NEW PARKS IN DUBAI, JAPAN AND we do SOUTH KOREA UNDER DEVELOPMENT Find out more on pages 34 to 37 RESORT 27%(1) Merlin has two core products: THEME PARKS THEME PARKS 6 (2) Midway attractions, which Theme Parks, which ATTRACTIONS UK, GERMANY, ITALY are typically smaller, indoor are larger multi-day 1-3 DAY EXPERIENCE attractions located in city destination venues, ACCOMMODATION, RIDES, SHOWS AND centres or resorts. increasingly with on-site INTERACTIVE EXPERIENCES AROUND themed accommodation. A CENTRAL THEME The Theme Parks are managed in two Operating Groups: Footnotes: (1) Based on 2014 revenue. LEGOLAND Parks and Resort Theme Parks. (2) Excludes Gardaland Waterpark. 4 5 Merlin Entertainments plc Annual Report and Accounts 2014 Main Contents OUR STRATEGY THEME PARKS and business model With Playful Learning at the heart of the experience, our six Insane fun is on offer at Thorpe Park, LEGOLAND resorts across Europe, the UK’s third biggest theme park North America and Asia offer a and acknowledged thrill capital for unique LEGO themed experience teenagers, young adults and older for families with children aged two families. The resort now includes Wild Adventure is at the MERLIN’S BRANDS to twelve years, often including the unique THORPE SHARK hotel, heart of Chessington World highly themed accommodation offering bite-sized rooms in a of Adventures Resort, with and based on interactivity, stunning waterfront location. exotic themed lands and imagination and family fun. rides mixed with amazing MIDWAY creatures from around the world. Guests can stay in the heart of the adventure at our Safari and Azteca resort hotels. Each of our three Eye observation The nine Dungeons are a unique Eleven LEGOLAND Discovery Centres attractions offers the ultimate bird’s mix of dark, historical horror are the ultimate LEGO indoor playground, Alton Towers Resort is the eye view, unparalleled and different and irreverent humour delivered with over two million bricks under one roof. UK’s number one theme every time, giving an Inspiring through set piece shows performed With Playful Learning at the heart of the park. Set in 500 acres of Perspective of the location’s by live actors, rides and spine experience, they create a fun filled and beautiful Staffordshire landscape and iconic landmarks. chillingly themed sets. Scary Fun is interactive environment where children countryside and boasting Gardaland Resort is Italy’s leading the goal, delivered daily to families, and parents are inspired to be creative. two themed hotels and an theme park. Located on the edge teenagers and young adults. Heide Park is Germany’s third indoor water park, it invites of Lake Garda, it boasts rides for all biggest theme park with rides and families, teenagers and ages set in a beautifully landscaped attractions appealing to all ages, young adults alike into a and themed world. Big Fantasy set in four lands of Extraordinary world of Fantastical Adventure is all around, including Adventure. The resort attracts Escapism. at the Gardaland hotel and visitors from all over Germany adjacent SEA LIFE. and beyond, who can stay in the Heide Park Adventure hotel or adjacent Holiday Village. ® Madame Tussauds’ heritage and the With 45 sites, SEA LIFE is the world’s breathtaking artistry of the figures Jousting, knights, princesses, biggest aquarium brand, built around the at our 18 sites differentiate it from falconry, staged scenes by notion of Amazing Discoveries, and other wax attractions. Famous Fun is Madame Tussauds and the home to a variety of creatures from the heart of the experience, where Castle Dungeon all make shrimps and starfish to seahorses, rays, visitors are encouraged to interact Warwick the Ultimate sharks and seals. SEA LIFE campaigns with all the historical and celebrity Castle experience. actively on a variety of conservation issues figures from Napoleon to One prioritised around breeding, rescue and Direction and everything in between. protection of the marine environment. Merlin Entertainments plc Annual Report and Accounts 2014 Main Contents OUR STRATEGY IS TO CREATE A HIGH GROWTH, HIGH RETURN, FAMILY ENTERTAINMENT COMPANY BASED ON STRONG BRANDS OUR STRATEGY AND A GLOBAL PORTFOLIO THAT IS NATURALLY BALANCED and business model AGAINST THE IMPACT OF EXTERNAL FACTORS.