INTRODUCTIONMERLIN ENTERTAINMENTS PLC : Introduction TO toMERLIN Merlin Entertainments ENTERTAINMENTS PLC MARCH 2019 CONTENTS 1. Investment Case 2. Introduction to Merlin 3. Six Strategic Growth Drivers 4. Brands and Assets 5. Financial Dynamics and Performance 6. Board and Management 7. Attraction numbers and glossary MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 2 1. INVESTMENT CASE MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 3 Investment Case STRATEGIC STATEMENT Since creation in 1999, Merlin’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” We see five key aspects to our Investment Case... MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 4 Investment Case (1) ATTRACTIVE MARKET FUNDAMENTALS Continued market growth through increasing disposable incomes, and ever-greater value being placed on time together with friends and family 1. OVERALL GROWTH IN …2. GROWING IMPORTANCE OF LEISURE SPEND… SHORT BREAKS… 2025 2016 944 4.1% CAGR 5.0% CAGR 7.4 2015 629 1996 2.8 3. GROWTH IN INTERNATIONAL TOURISM UK Short breaks US Leisure and tourism 1400 spend ($bn) holidays (m) 1200 3.8% CAGR 2007-17 1000 800 600 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sources: 1: Euromonitor Passport 2: ONS Data 1996 – 2016 International tourist arrivals (m) 3: World Tourism Organization (UNWTO) MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 5 Investment Case (2) PORTFOLIO AND BRANDS Merlin has a portfolio of world class brands and iconic assets, diversified by geography, customer demographic and attraction type BALANCED PORTFOLIO WORLD CLASS BRANDS AND ASSETS UK 17% NORTH 31% RD AMERICA 3 PARTY 1 Geography CONTINENTAL (revenue) EUROPE 25% APAC 27% 28% 38% Attraction OUTDOOR DOMESTIC 3RD PARTY 1 Customer type 2 (revenue) INDOOR demographic TOURIST 62% 72% 1 Based on 2018 Revenue RD RD 2 Based on sample of visitors answering the question “What is our home country?” 3 PARTY 3 PARTY MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 6 Investment Case (3) MULTIPLE GROWTH LEVERS Our Six Strategic Growth Drivers drive growth through existing portfolio of attractions, and through the opening of new attractions. 1. PLANNED 2. EXPLOITING 3. DEVELOPING OUR INVESTMENT CYCLES IN STRATEGIC SYNERGIES THEME PARKS INTO THE EXISTING ESTATE (page 18) DESTINATION RESORTS (page 17) (page 19) 4. OPENING NEW 5. OPENING NEW 6. STRATEGIC MIDWAY ATTRACTIONS LEGOLAND PARKS ACQUISITIONS (page 20) (page 21) (page 23) MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 7 Investment Case (4) FINANCIAL AND INVESTMENT DISCIPLINE Disciplined approach to capital investment, a strong balance sheet and strong cash generation. Cost efficiency programme underway. Net Debt / ROCE1 Op. FCF1 EBITDA1 8.9% £345m 2.4x Phasing 2019 2020 2021 2022 Cumulative annualised 10 20 30 35 savings (£m) Exceptional operating (16) (11) (4) - costs to achieve (£m)2 Type of saving Back office c.£20m Operational c.£15m 1 based on 2018 2 c£4m exceptional charge in 2018. Excludes c£25m capital investment over 2019-21 related to Finance and HR systems, previously announced MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 8 Investment Case (5) BEING A FORCE FOR GOOD Merlin’s commitment and strong social conscience drives our approach to business responsibility. WE CARE ABOUT ANIMAL CONSERVATION AND WELFARE We operate to world class welfare standards through our animal care WE CARE ABOUT OUR network and support the work of the PLANET SEA LIFE trust to protect marine life WE KEEP PEOPLE SAFE We recognise that our operations impact and habitats across the world. AND SECURE upon the environment and that effective We are dedicated to delivering best in management is essential for sustainable class health, safety and security (HSS) business success. We are committed to standards. minimise the potentially harmful effects of such activity. WE CARE ABOUT PEOPLE We harness the enthusiasm of our employees to demonstrate and reinforce our core ‘Merlin Way’ values, especially how ‘we care’. MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 9 Investment Case 2. INTRODUCTION TO MERLIN MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 10 Introduction to Merlin PROGRESS SINCE 2013 IPO Visitors EBITDA Adjusted EPS 67.0m £494m 22.9p (+7.2m) (+27%)1 (+36%)1 >1,800 31 Two New accommodation New Midway attractions New LEGOLAND rooms parks As at 29 December 2018 1 Reported currency MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 11 Introduction to Merlin WORLD OF ATTRACTIONS Key Existing Merlin attractions Existing UK attractions 2018 new attractions MIDWAY ATTRACTIONS THEME PARKS Amazing Discoveries Famous Fun Playful Learning Continental Europe: 1 United Kingdom: 1 Asia Pacific: 2 Playful Learning Fantastic Escapism Wild Adventure United Kingdom: 11 United Kingdom: 2 United Kingdom: 2 Asia Pacific: 1 United Kingdom: 1 United Kingdom United Kingdom Continental Europe: 18 Continental Europe: 4 Continental Europe: 3 Continental Europe: 2 North America: 8 North America: 7 North America: 11 North America: 2 Asia Pacific: 9 Asia Pacific: 10 Asia Pacific: 4 Asia Pacific: 3 \\\\\\\\\\ Asia Pacific: 11 Asia Pacific: 11 Asia Pacific: 2 Scary Fun Eye Opening Big Fantasy Extraordinary Insane Fun Ultimate Castle United Kingdom: 5 United Kingdom: 2 Adventure Adventure United Kingdom United Kingdom Continental Europe: 3 Asia Pacific: 1 Italy Germany North America: 1 Asia Pacific: 1 United Kingdom: 1 Asia Pacific: 1 As at 29 December 2018 1We announced on 22 February 2019 the disposal of our Ski Resorts to Vail Resorts Inc. MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 12 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 113 Attractions in 22 countries LEGOLAND PARKS RESORT THEME PARKS 8 Parks in 7 countries 6 Parks in 3 countries Indoor attractions located in city LEGO themed accommodation, rides, shows Accommodation, rides, shows and centres, shopping malls or resorts and interactive experiences interactive experiences around a central theme. 40.4m 15.6m 11.0m Visitors Visitors Visitors 1 1 1 £650m £636m £360m Revenue (39% of Group) Revenue (39%) Revenue (22%) ….Supported by Merlin Magic Making, our unique, in-house creative resource…. 1 Excludes IFRS 15 2018 visitor and revenue numbers Attraction numbers as at 29 December 2018 MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 13 Introduction to Merlin MERLIN MAGIC MAKING (MMM) - The unique resource sitting at the heart of Merlin, supporting all our attractions with specialists in four areas: 1. Finding the magic 2. Creating the magic Utilising consumer insight and research, Driving innovation across the Group, MMM MMM’s experienced research teams find creates the high-class compelling propositions new business opportunities, ranging from across the existing estate and new attractions. the strategic roll out of the Midway estate This includes creating Merlin’s very own in- to potential acquisitions house intellectual property and working with 3. Producing the IP partners on new concepts magic 4. Delivering the magic MMM takes these creative ideas and then MMM’s project management teams produce uses its in-house production facilities to world class attractions for our guests to produce amazing content for all our enjoy. They deliver all of Merlin’s major attractions across each Operating Group. existing estate capital projects and new MMM makes LEGO models, wax figures Midway attractions , the latter being handed and attraction theming, also working over to the New Openings team who closely with our animal specialists to manage the opening are responsible for ensure that Merlin provides the best operations in the first 18 -24 months of animal care possible as we source trading. creatures for display in our attractions. MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 14 STRONG GUEST SATISFACTION KPI’S GUEST SATISFACTION KPI AHEAD OF TARGET • Guest feedback is monitored daily by local 100% and central Product Excellence teams • Touchscreens within the attractions 90% target capture >1m direct responses from guests 90% each year • Third party review sites are also monitored carefully 80% 2008 2018 • Reports and attraction rankings are shared across the organisation IMPROVEMENT IN OTHER KPI’s VS 2017 NET PROMOTER SCORE VALUE FOR MONEY ‘TOP BOX’ Touchscreen data, based upon 2018 results 1 – Value for Money scores are measured as a % of visitors reporting they do not believe they have had good value for money MERLIN ENTERTAINMENTS PLC : Introduction to Merlin Entertainments 15 Introduction to Merlin STRONG GUEST SATISFACTION KPI’S (CONT.) Increasing focus on secondary Guest KPI’s given Guest Satisfaction metric remains well above target MERLIN NET PROMOTER SCORE, NET PROMOTER SCORES, BY INDUSTRY 2013-18 Department / Speciality Stores Merlin 60% 57% Tablet Computers Brokerage / Investments Online Entertainments Online Shopping Smartphones Airlines Laptop Computers 50% Auto Insurance Grocery / Supermarkets Hotels Credit Cards Shipping Services Home / Contents Insurance 40% Cell Phone service 2013 2014 2015 2016 2017 2018 Banking Software & Apps Life Insurance