INTRODUCTION TO MERLIN ENTERTAINMENTS PLC MARCH 2018 MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments CONTENTS 1. Summary Investment Highlights 2. Introduction to Merlin 3. Six Strategic Growth Drivers 4. Brands and Assets 5. Financial Dynamics and Performance 6. Board and Management MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 2 SUMMARY INVESTMENT HIGHLIGHTS A global leader in Structurally Capital discipline location based attractive and strong cash entertainment markets flow 66 million visitors, with Growth in leisure spend, Group ROCE of 9.1% over 120 attractions in international travel and £315 million operating 25 countries1 short breaks free cash flow2 Exclusive, global license to own and Global success operate Leader in themed with Midway roll LEGOLAND parks accommodation out Opportunity for 20 c.3,500 rooms, with 110 attractions1 with parks longer term strong pipeline significant roll out potential 1 As at 30 December, 2017 2 EBITDA less Existing Estate Capex MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 3 Summary Investment Highlights PROGRESS SINCE 2013 Visitors EBITDA EPS 66.0m £474m 20.5p (+6.2m) (+22%)1 (+21%)1 >1,200 24 Two New accommodation New Midway attractions New LEGOLAND rooms Parks 1 Reported currency MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 4 Summary Investment Highlights 2. INTRODUCTION TO MERLIN 5 Introduction to Merlin WORLD OF ATTRACTIONS Merlin is a global leader in location based entertainment, with 66 million visitors, in over 120 attractions, across 25 countries 29 SEALIFE THE DUNGEONS LEGOLAND GARDALAND WARWICK Amazing Discoveries Scary Fun Playful Learning Big Fantasy CASTLE United Kingdom: 13 United Kingdom: 5 United Kingdom: 1 Adventure Ultimate Castle Continental Europe: 18 Continental Europe: 3 Continental Europe: 2 Italy United Kingdom North America: 8 North America: 1 North America: 2 Asia Pacific: 9 Asia Pacific: 3 LEGOLAND MADAME ALTON TOWERS HEIDE PARK OTHERS DISCOVERY CENTRE TUSSAUDS Fantasical Escapism Extraordinary Little BIG City: 1 Playful Learning Famous Fun United Kingdom Adventure Shrek’s Adventure: 1 United Kingdom: 1 United Kingdom: 2 Germany Ski Resorts: 2 Continental Europe: 3 Continental Europe: 4 Tree Top Walks: 2 North America: 10 North America: 7 WILD LIFE: 2 Asia Pacific: 4 Asia Pacific: 10 Key THE EYE BRAND CHESSINGTON THORPE PARK Eye Opening WORLD OF Insane Fun Existing Merlin attractions United Kingdom: 2 ADVENTURES United Kingdom Existing UK attractions North America: 1 Wild Adventure Asia Pacific: 1 United Kingdom 2017 new attractions MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 6 Introduction to Merlin STRATEGIC STATEMENT Since the creation of Merlin in 1999, the Company’s Strategic Statement has been: “TO CREATE A HIGH GROWTH, HIGH RETURN, FAMILY ENTERTAINMENT COMPANY BASED ON STRONG BRANDS AND A GLOBAL PORTFOLIO THAT IS NATURALLY BALANCED AGAINST THE IMPACT OF EXTERNAL FACTORS” MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 7 Introduction to Merlin UNIQUE PORTFOLIO OF FAMILY ENTERTAINMENT BRANDS AND ICONIC ASSETS Merlin operates two main product types, split across three Operating Groups…. MIDWAY THEME PARKS ATTRACTIONS 110 Attractions in 22 countries LEGOLAND PARKS RESORT THEME PARKS 8 Parks in 7 countries 6 Parks in 3 countries Predominantly indoor attractions Leading global brands aimed at families with National brands aimed at families, located in city centres, resorts and younger children. Synergistic relationship teenagers and young adults with themed shopping malls providing visits of with LEGO. accommodation. Leading market positions. shorter duration 40.7m 15.3m 10.0m Visitors Visitors Visitors £656m £609m £329m Revenue (41% of Group) Revenue (38%) Revenue (21%) ….Supported by Merlin Magic Making, our unique, in-house creative resource. MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 8 Introduction to Merlin Finding the magic Creating the magic Utilising consumer insight and Driving innovation across the Group, research, MMM finds new business MMM creates the highest class opportunities, ranging from the compelling propositions for the strategic roll out of the Midway estate existing estate and new attractions. to potential acquisitions. This includes creating Merlin’s very own in-house intellectual property. Merlin Magic Making (MMM) is the unique resource that sits at the heart of everything Merlin does Producing the magic Delivering the magic MMM takes creative ideas and then MMM’s project management teams produces amazing content for our produce world class attractions for our attractions, making LEGO models, wax guests to enjoy. figures and attraction theming. We deliver all of Merlin’s major The Merlin Animal Welfare existing estate capital projects and Development (MAWD) team ensures new Midway attractions before they that Merlin provides the best animal are handed over to the New Openings care possible as we source creatures team to manage the opening and first for display in our attractions. 18 -24 months of trading. 9 BALANCED PORTFOLIO Through our six Strategic Growth Drivers, we have built a portfolio balanced by geography, customer type and attraction type Visitors by tourist / domestic1 Portfolio by weather exposure2 Domestic 31% 63% of revenue from Outdoor Not reliant upon ‘fly-in’ 39% sites open all year Tourist market round Indoor 61% 69% Revenue by Geography Pre-booked revenue3 18% Europe Pre-booked Americas Long term ambition for Increased pre-booked 41% equal split of revenue revenue reduces site- 50% Merlin Passes APAC 55% across three regions level volatility Other 27% 9% 1 Based on touchscreen data, from a sample of 2017 visitors 2 Total revenue, 2017 3 Total admissions revenue, 2017 MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 10 Introduction to Merlin MARKET CONTEXT Merlin operates in a fundamentally attractive marketplace, Sources: benefiting from a number of structural growth drivers. https://www.wttc.org/- /media/files/reports/economic- impact-research/regions- Increasing City centre Short 2017/world2017.pdf leisure tourism breaks spend Growth in leisure time Source: and expansion of middle https://www.e- Global Travel & Tourism classes has driven Cultural and financial unwto.org/doi/pdf/10.18111/978 expected to grow by 9284419029 increased international factors driving growth in c4% CAGR (inflation- tourism. 1.8 billion short breaks and adjusted) over 2017- international arrivals ‘staycations’ as opposed 20271 expected in 2030 – to the traditional two- threefold increase on week holiday 2000 levels2 1 World Tourism and Travel Council, Economic Impact research, 2017 2 UNWTO World Tourism Highlights, 2017 MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 11 Introduction to Merlin SIX STRATEGIC GROWTH DRIVERS Against this attractive market backdrop, Merlin has six strategic growth drivers 1. EXISTING ESTATE 2. STRATEGIC 3. SHORT BREAK CAPEX SYNERGIES POSITIONING • Something new in every • Leveraging the scale of the • Adding a range of themed attraction, every year Group through Group accommodation to our • Driving growth in capacity, promotions, procurement theme parks visitation and pricing and e-commerce 4. MIDWAY ROLL OUT 5. NEW LEGOLAND 6. STRATEGIC • Balance openings between PARKS ACQUISITIONS core brands in developed • Combining our • Disciplined approach to markets, and new brands / operational expertise with acquisitions in a emerging markets LEGO’s worldwide fragmented market popularity MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 12 Strategic Growth Drivers Being a Force for Good Corporate Social Responsibility – The Merlin Way Merlin’s Magic Wand • Celebrating 10 years of our charity • Over 500,000 tickets for children facing challenges of serious illnesses, disability and adversity since 2008 • Over 30 Magic Spaces projects open across the globe • Global network of attractions involved Sustainability and the Environment • Carbon emissions reducing in line with 2% target • Electricity usage ahead of target) • 20 energy efficiency projects delivered across sites SEA LIFE and WILD LIFE Conservation • Focus on protecting sea turtles through our Team Turtle campaign and pledge website • Our funding has helped to develop a mechanism to protect sea turtles from accidental capture in fishing nets through the simple use of LED lights – this could help save thousands of turtles Accessibility • Working with external advisor • Investing in training and driving awareness • Continual feedback and improvements 3. SIX STRATEGIC GROWTH DRIVERS 14 Strategic Growth Drivers #1 EXISTING ESTATE CAPEX Operating Group Capex Cycle Rationale • High level of ‘first time’ tourist visitors Up to 5 years means less emphasis on big capex new N.B. Highest ‘peak’ is c.£5m Smooth cash Midway Attractions features but most are needs • Investment level and cycle dependent on below £1m size, location and target market • Strategic development / growth of 4-year LEGOLAND parks via themed ‘lands’ (e.g. Smooth LEGOLAND utilisation of (peak, low, medium, low) LEGO Friends, NINJAGO) Parks in-house N.B. ‘Peak’ is c.£7m • Less emphasis on high capex thrill rides Benefits resources due to younger audience 4-year • Need for new rides and shows on regular Smooth Resort Theme Parks (peak, low, medium, low) basis, particularly for teen segment EBITDA N.B. ‘Peak’ is c.£12m • Family attractions less capex intensive development MERLIN ENTERTAINMENTS PLC : Introduction