Merlin Entertainments: General Discussion

[Tom]

Just for the nay sayers, regardless of how things are spun, the negatives are:

• Loss before tax of -£492m, an increase of -£278m on 2023.
• Operating loss of -£132m, a £304m negative swing on 2023's £172m operating profit.
• Revenue of £2057, a drop of £68m on 2023.
• Underlying profit of £285m, a drop of £123m from 2023.

By all measures, they are massively down on performance.

 

[Hid]

Just for the nay sayers, regardless of how things are spun, the negatives are:

• Loss before tax of -£492m, an increase of -£278m on 2023.
• Operating loss of -£132m, a £304m negative swing on 2023's £172m operating profit.
• Revenue of £2057, a drop of £68m on 2023.
• Underlying profit of £285m, a drop of £123m from 2023.

By all measures, they are massively down on performance.

Remember this is a business its not the same as your home life savings when they are down they still have cash to spare just have to be more strategic with it. Also the reason businesses release these is to try a get lower tax rates

 

[GooseOnTheLoose]

By all measures, they are massively down on performance.

Apart from visitor numbers, where they are up 1.1%. Not all measures. Most, not all.

 

[Tom]

Apart from visitor numbers, where they are up 1.1%. Not all measures. Most, not all.

I'd argue that's the least relevant against a backdrop of the other figures. It's probably costing you more to maintain the parks.

 

[Jb85]

Remember this is a business its not the same as your home life savings when they are down they still have cash to spare just have to be more strategic with it. Also the reason businesses release these is to try a get lower tax rates

To try to get lower tax rates. Please do explain what you mean as your whole sentence makes no sense.

By the way - I am a chartered accountant…..

 

[Hid]

To try to get lower tax rates. Please do explain what you mean as your whole sentence makes no sense.

By the way - I am a chartered accountant…..

By releasing their figures and showing they are loosing money could help gain lower tax rates by going down in tax brackets

 

[Islander]

By releasing their figures and showing they are loosing money could help gain lower tax rates by going down in tax brackets

My guy, he’s literally just told you he’s a chartered accountant. Chances are he knows what he’s talking about… I’d stop digging

 

[Jb85]

By releasing their figures and showing they are loosing money could help gain lower tax rates by going down in tax brackets

Figures would be subject to audit anyway. You cannot just make a number up, present it and calculate tax. But anyhow a loss in itself wouldn’t lower the tax rates. You can carry forward a tax loss though into profitable periods. And even then there is far more going on than just tax rates.

What’s interested my though is as a % of revenue EBITDA return on resort theme parks is the lowest % in the group and gateway makes far more money - yet seems to be seeing the bigger cuts.

 

[GooseOnTheLoose]

I'd argue that's the least relevant against a backdrop of the other figures. It's probably costing you more to maintain the parks.

Agreed, but you did say against all measures. Visitor numbers is a measure and it is up.

 

[rob666]

Are visitor numbers inflated by cheap passes though...do they count every visit?
That would explain visitor numbers up...revenue down.
Love those cheap passes in the race to the bottom.

 

[Dave]

.What’s interested my though is as a % of revenue EBITDA return on resort theme parks is the lowest % in the group and gateway makes far more money - yet seems to be seeing the bigger cuts.

Probably because resort theme parks are the major hook for the MAP product and they would be petrified to sell the parks and someone else make a success out of them.

I also think although the overall profitability of gateway is good there were individual assets performing badly, as these are relatively small it’s easier to cut the poor performers out of gateway rather than mess with RTP’s. Add the that closing a gateway attraction is more noticeable than internal savings in a big beast of a theme park.

 

[GooseOnTheLoose]

Are visitor numbers inflated by cheap passes though...do they count every visit?
That would explain visitor numbers up...revenue down.
Love those cheap passes in the race to the bottom.

Yes and yes. There was an increase in promotions and discounts. In addition to increasing spend on advertising.

The calculated move here was to keep visitor numbers increasing, and maintaining market share. Visitor numbers and market share are their key metric, it's the one which shareholders care about. You can continue to run up debt, or break even, as long as your business is seen to be growing. Growth at all costs.

 

[rob666]

Even when the overall spend on each visit is down...not a great business model.
Flask of hot dogs anyone.

 

[GooseOnTheLoose]

Even when the overall spend on each visit is down...not a great business model.
Flask of hot dogs anyone.

In fairness, I never said it was a good business model. I think it's well known that I'm hardly the first to defend capitalist economic principles.

Food and Beverage outlets are not considered in Merlin's reporting anymore, as they're outsourced and accounted for by their respective franchise holders. Merlin's secondary spend revenue will derive primarily from merchandise; sweets, snacks and drinks sold in their shops; Fastrack. I presume that they get a cut for each photo / photo pass sold.

It's the same trap / metric that was used to justify the enormous spending seen by Uber, Netflix, Deliveroo and most other tech business / high profile startups of the last decade. Current profitability isn't the target, current revenue doesn't even matter that much, as long as it can all be justified by market size and growth. The theory being that continuous growth will eventually bring future profitability. The bottom falls out if market share starts to shrink, which is why we saw Netflix's overvaluation nosedive a few years ago

 

[Quantum]

Are visitor numbers inflated by cheap passes though...do they count every visit?
That would explain visitor numbers up...revenue down.
Love those cheap passes in the race to the bottom.

Yes let's ramp up those tickets prices and make it more unaffordable for families.

How about keeping parks open longer and not serving prison food to guests at ridiculous prices. They could even improve ride availability but no lets charge clusters more for an increasingly poor experience

 

[rob666]

No, keep the ticket prices at a fair rate, but get rid of the extra cheap season passes.
Prison food?
Source required...
Come on, we gave up on those comments a year ago didn't we?
Standard theme park food at theme park prices, and a couple of quid cheaper than Drayton aren't we?

 

[Quantum]

I don't mind paying a premium price for a high quality product. When we get to that point fair enough but until then try and keep the customers in the parks spending money.

Arramark also supply food to prisons, I'm sure customers are after something better than sub standard food at inflated prices

 

[GooseOnTheLoose]

Arramark also supply food to prisons, I'm sure customers are after something better than sub standard food at inflated prices

They do not. They provide catering services to prisons. The food supply contract for HMPPS is with the Booker Group, owned by Tesco.

 

[jon81uk]

Yes let's ramp up those tickets prices and make it more unaffordable for families.

The ticket prices are reasonably fair, £29-39 for a full day out is pretty good value really and comparable to many other things.

Issues are the discount vouchers giving a further 25% off these prices and the annual passes causing additional visits meaning the park isn't likely covering its costs.

 

[Squiggs]

Standard theme park food at theme park prices, and a couple of quid cheaper than Drayton aren't we?

I'm not sure whether that is true any more, certainly not in any significant way.

It certainly used to be true when both parks had an internal catering teams, but if you compare the prices at X-Position Food at Alton Towers, they have lots of comparable items to the menus at Drayton Manor, shared by Goose earlier in the week, and almost all of them are cheaper at Drayton Manor (e.g. Margarita Pizza is £14 at DMP and £15 at AT, Fish and Chips are £14.40 at DMP and £15.25 at AT).

I'm sure someone more eagle eyed than I will be able to spot some examples the other way round, but it does seem to be broadly the case that AT is more expensive than DMP, even before you take into account that X-Position is food trucks, whereas most of DMP's offering are in restaurants. And also judging by the calorie counts the portions are possibly larger at DMP (though not necessarily, as portion size is only one factor that might affect the calorie count)


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