Merlin Entertainments: General Discussion

[venny]

They have your money already. They don’t care.

 

[GooseOnTheLoose]

Some notes from the 2024 report.

From 2025, Legoland Parks, RTPs and Gateway attractions will no longer operate as separate entities. Instead they will be managed by four regions: North America; UK; Europe; Asia-Pacific. The idea is to give a more cohesive experience, and share best practices, across the attractions.

• Visitor numbers increased overall, with 62.8 million people (up 1.1%).
• Revenue is down 3.2% from 2023, £2.053 billion.
• Underlying operating profit is down to £285 million in 2024, compared to £408 million in 2023.
• Total operating profit swung from £172 million in 2023, to a loss of £132 million in 2024.

Merlin attributes these numbers to challenging market headwinds, affecting the entire entertainment leisure industry, and impacting discretionary consumer spending. Visitors have less spare cash to spend on attractions.

An increase in promotions and discounts, were part of the adaptions Merlin has made. In addition to increasing spend on advertising, from £90 million in 2023, to £100 million in 2024.

The calculated move here was to keep visitor increasing, and maintaining market share.

Rising operational costs were a major factor in the losses, in addition to inflationary wage increases. Staff expenses increased from £545 million to £575 million. Some central teams, such as data and digital, also saw increases investment.

The biggest hit and factor though, which is largely outside of Merlin's control, was foreign currency exchange rates. Merlin is a UK based business and was particularly struck by a very weak Pound, especially as it operates globally. Without currency movements, revenue would only be 0.7% lower, not the 3.2% reported at the top. That's a £52 million difference right there, just from currency swings.

Impairment charges totalled £384 million. This isn't cash going out of the door, but an accounting adjustment relating to the perceived value of long term assets. It's Merlin signalling that some of their larger bets, particularly on new resorts, aren't paying off as quickly as they hoped. They have to re-evaluate the future earning potential.

Impairment charges hit hardest in these areas:

• £191 million relates to existing brands.
  • £163 million relates specifically to Madame Tussaud's.
  • £48 million for gateway attractions more broadly.
• £110 million for Legoland New York.
• £35 million for Legoland Korea.

The reports state that the newer Legoland parks "trading below initial expectations and will take longer than planned to reach operating maturity".

Guest top box satisfaction, those who were "Very Satisfied", increased to 73% from 72% in 2023. Net promoter score, which is how likely people are to promote them, improved too. Employee engagement score also increased to 69% favourable, from 68% the year before, from a survey response rate of 86%.

Merlin have stated that they are are still committing to long term investment plans for their attractions.

ESG takeaways

• £2 million invested in 50 green energy projects.
  • The energy generated from these schemes has been enough to power the London Eye for 8,000 cycles (whatever that means).
• Legoland Windsor's new Woodland Village is their first carbon neutral accomodation.
• The instalment of 28 recycling reverse vending machines in their UK parks.
• Investments have been made in shading, misters for heatwaves and flood defences.
• Funding of 16 new global conservation projects worldwide.

Identified Risks and Strategies

Cost inflation is a constant battle. This will be addressed through strategic pricing, trying to make more costs variable rather than fixed. Redesigning capital projects to manage spending, without hurting the guest experience, requires constant vigilance.

Cyber related activity is a huge risk, considering their large customer data set. Multilayer technical controls, in addition to targeted staff training and regular updates to the board on the cyber threats landscape are their controls here.

Liquidity and cashflow will be managed with detailed cash forecasting, maintaining strong relationships with lenders.

Merlin completed a large debt refinancing early in 2025, issuing $410 million in new notes, to repay $400 million in older ones. This gives them financial flexibility and shows that they can access capital, whilst staying compliant with their financial covenants.

Foreign exchange translation is a bit of a headache, creating a lot of volatility on paper. It will be managed, moving forward, by presenting constant currency figures; showing underlying results without the currency swings. They also match their borrowings with the currency where they operate.

Merlin is facing complex financial and operational challenges. They are actively adapting, innovating and investing. I look forward to 2025's results, this time next year.

TLDR
No. You're not having one @rob666. I've just distilled a 117 page report for you. This post is a TLDR. Go back and read it. 🪿

 

[Hid]

Some notes from the 2024 report.

From 2025, Legoland Parks, RTPs and Gateway attractions will no longer operate as separate entities. Instead they will be managed by four regions: North America; UK; Europe; Asia-Pacific. The idea is to give a more cohesive experience, and share best practices, across the attractions.

• Visitor numbers increased overall, with 62.8 million people (up 1.1%).
• Revenue is down 3.2% from 2023, £2.053 billion.
• Underlying operating profit is down to £285 million in 2024, compared to £408 million in 2023.
• Total operating profit swung from £172 million in 2023, to a loss of £132 million in 2024.

Merlin attributes these numbers to challenging market headwinds, affecting the entire entertainment leisure industry, and impacting discretionary consumer spending. Visitors have less spare cash to spend on attractions.

An increase in promotions and discounts, were part of the adaptions Merlin has made. In addition to increasing spend on advertising, from £90 million in 2023, to £100 million in 2024.

The calculated move here was to keep visitor increasing, and maintaining market share.

Rising operational costs were a major factor in the losses, in addition to inflationary wage increases. Staff expenses increased from £545 million to £575 million. Some central teams, such as data and digital, also saw increases investment.

The biggest hit and factor though, which is largely outside of Merlin's control, was foreign currency exchange rates. Merlin is a UK based business and was particularly struck by a very weak Pound, especially as it operates globally. Without currency movements, revenue would only be 0.7% lower, not the 3.2% reported at the top. That's a £52 million difference right there, just from currency swings.

Impairment charges totalled £384 million. This isn't cash going out of the door, but an accounting adjustment relating to the perceived value of long term assets. It's Merlin signalling that some of their larger bets, particularly on new resorts, aren't paying off as quickly as they hoped. They have to re-evaluate the future earning potential.

Impairment charges hit hardest in these areas:

• £191 million relates to existing brands.
  • £163 million relates specifically to Madame Tussaud's.
  • £48 million for gateway attractions more broadly.
• £110 million for Legoland New York.
• £35 million for Legoland Korea.

The reports state that the newer Legoland parks "trading below initial expectations and will take longer than planned to reach operating maturity".

Guest top box satisfaction, those who were "Very Satisfied", increased to 73% from 72% in 2023. Net promoter score, which is how likely people are to promote them, improved too. Employee engagement score also increased to 69% favourable, from 68% the year before, from a survey response rate of 86%.

Merlin have stated that they are are still committing to long term investment plans for their attractions.

ESG takeaways

• £2 million invested in 50 green energy projects.
  • The energy generated from these schemes has been enough to power the London Eye for 8,000 cycles (whatever that means).
• Legoland Windsor's new Woodland Village is their first carbon neutral accomodation.
• The instalment of 28 recycling reverse vending machines in their UK parks.
• Investments have been made in shading, misters for heatwaves and flood defences.
• Funding of 16 new global conservation projects worldwide.

Identified Risks and Strategies

Cost inflation is a constant battle. This will be addressed through strategic pricing, trying to make more costs variable rather than fixed. Redesigning capital projects to manage spending, without hurting the guest experience, requires constant vigilance.

Cyber related activity is a huge risk, considering their large customer data set. Multilayer technical controls, in addition to targeted staff training and regular updates to the board on the cyber threats landscape are their controls here.

Liquidity and cashflow will be managed with detailed cash forecasting, maintaining strong relationships with lenders.

Merlin completed a large debt refinancing early in 2025, issuing $410 million in new notes, to repay $400 million in older ones. This gives them financial flexibility and shows that they can access capital, whilst staying compliant with their financial covenants.

Foreign exchange translation is a bit of a headache, creating a lot of volatility on paper. It will be managed, moving forward, by presenting constant currency figures; showing underlying results without the currency swings. They also match their borrowings with the currency where they operate.

Merlin is facing complex financial and operational challenges. They are actively adapting, innovating and investing. I look forward to 2025's results, this time next year.

So really a case of short term pain for long term gain.

The cost of living crisis really hitting people hard hopefully should be resolved in next few years