TOP TEAM
MERLIN ENTERTAINMENTS
The world’s second largest visitor attraction operator doesn’t just run itself, as the company’s top team attests. Kathleen Whyman fi nds out how they do it
ANDREW CARR, CHIEF FINANCIAL OFFICER
How was 2009 fi nancially?
We’re very happy with the progress we made, particularly in the context of a year of tough macro conditions and concerns about consumer confi dence. We released our 2009 results recently
and these show strong and resilient growth – a 16 per cent rise in global sales to £769m (US$1.2bn, 883m) and a 16.6
per cent jump in profi ts to £239m ($367.5m, 274m). It’s also our ninth straight year of double digit percentage growth in histori- cal EBITDA in our core businesses, which is testament to the fact that we run our attractions tightly and effi ciently. Visitor numbers across the company’s 61 attrac- tions worldwide were also up 10 per cent to 38.5 million.
What about Merlin’s ownership?
We’ve always said that we’d like to see this company fl oat if we feel market conditions are right. However, we also have a respon- sibility to pursue different opportunities to provide a viable exit on sale of business to Blackstone, therefore the IPO route is only one of several that could be executed
See interview with Merlin’s chief executive, Nick Varney, on page 20
growing the existing business. For that we apply a level of capital expenditure roughly equal to our depreciation charge onto the existing estate. That’s the money we continuously invest into the theme parks, Legolands and midways to retain the level of quality and customer service and bring in new features, which ensures growth for the existing estate. That’s priority one. Priority two is the midway attraction roll-
to realise that ambition. However, while I expect 2010 will be an important year for Merlin, we have an excellent relationship with our primary shareholder, Blackstone, which has always gone on record to say it’s in no desperate rush, it doesn’t have to have an exit in 2010.
How do you prioritise funding?
Merlin’s growth strategy is broken into three key pieces. Our core strategy is
out programme. We have a tried and tested programme which aims to roll out four or fi ve of these a year. As an overlay to that, we’re working on resort positioning for the bigger theme parks with the introduction of accommodation and second gates. Thirdly, we’re always in the market for
very targeted acquisitions which fi ll gaps or extend the estate. With acquisitions, such as Cypress Gardens (soon to become Legoland Florida), we need to feel that we can afford them within the funding capacity of the business. We have a rigorous proc- ess of investment appraisals and expect new investments to achieve a 20 per cent return on capital, which is very ambitious. This is a key factor in our choice of new
opportunities. We look for those that will deliver the highest returns on capital, tak- ing into account the quantum of money we’re putting into a particular project.
How much bigger can Merlin get?
24
Merlin’s core strategy is growing its existing business, including its Legoland parks
Read Attractions Management online
attractionsmanagement.com/digital
There’s no reason why there should be a ceiling to that. The issue is, we want to con- tinue growing the business, but we don’t want to grow it simply by acquiring things to bulk it out. Our growth is planned and balanced. There are a number of leisure groups that we believe have bought assets just to grow their global scale without there being any real strategy behind it. We’re not going to compromise our strategy of building a broad-based, high quality enter- tainment group by buying, or opening, anything just because it becomes available.
AM 2 2010 ©cybertrek 2010
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