Two Companies in the Leisure Industry - Coursework Example

?TWO COMPANIES IN THE LEISIURE INDUSTRY London Eye is an attraction in London that competes with other popular attractions such as Madame Tussaud’s in London and other locations in Europe, the London Planetarium, Warwick Castle, Alton Towers, Chessington World of Adventures and Thorpe Park. All these attractions have visitors locally, as well as those that are visiting from outside of the country would also make it one of their stopovers. It is possible to classify London Eye in the leisure industry since people are coming there to spend some of their leisure time, while enjoying the skylines of the popular city of London. Hence, in addition for being a leisure getaway for the locals, it is also a tourist attraction directly competing with the above mentioned attractions. The idea conceived by a husband and wife architecture team in 1989 and with the backing of British Airways it took them one and half year to complete the project. The London Eye in particular under the operation of the Tussauds Group that is in charge of other popular attractions mentioned earlier. The London Eye had outdone other London attractions in visitors number, which is at around 3.5 million a year (Barfield, 2007). As the tallest Ferris wheel in Europe and worldwide, it has few competitors that are taller. The tallest Ferris wheel is located in Singapore and it stands 165 meters, while the London Eye stands at 135 meters making it the third tallest Ferris wheel after Star of Nanchang at 160 meters. The 32 sealed and air-conditioned capsules can hold 25 people and allow them enough room to walk around. One complete round takes around 30 minutes and because of the involved slow speed, passengers can walk on and off the capsules without it stopping to accommodate them. The current owner as mentioned earlier is the Tussauds Group that was able to buy out British Airways and Marks Barfield, the family who were among the lead architects. The Tussauds Group after its purchase in 2007 by Merlin Entertainment and currently London Eye is officially knows as the Merlin Entertainment London Eye and the British Airways brand name is slowly giving way to the new brand name (Mann et. al, 2001) (BBC News). It is a successful attraction attested by the fact that since its opening around 30 million people had ridden in its capsules. The new owner is also leaving its print on the Ferris wheel by opening 4D theatre. It does not mean London Eyes did not have financial problems since it was besieged financially in the outset and later on, since some of the land it stands on belonged to other sources that had demanded a huge amount of rent, from 64.000 pound a year to 2.5 million pounds a year (Reece, 2001). However, the mayor of London had intervened and was able to obtain a 25 year lease on behalf of the Ferris wheel that will cost it around 500.000 pounds a year. Arena Leisure Plc Arena Leisure Plc is also another UK company based in London and it operates seven of the UK’s horse racing tracks. The company that started in 1997 also has under its wings golf courses, hotels and an interest of at least 47% stake At The Races making is in charge of at least 25 % of the horse racing business in the UK. The company claims that it has three main divisions namely racing, it operates the known UK race tracks, catering, it creates its own events and cater for others’ events, and At The Races is broadcasting what takes place in the UK and Irish horse racing. Its racing divisions consists of seven tracks and it is from this ownership the 25% share of the racetrack control comes from. In addition, the company is involved in leisure activity that it avails through Lingfield Park Marriott Hotel and a country club with an 18-hole golf club. Its catering division is in charge of catering at the seven horse racing tracks. While its catering division is in charge of catering at the seven horseracing tracks, it has successfully won the bid to provide catering at some of the 2012 Olympic games. The company’s major competitors are Gala Coral Group Limited, which is mostly in the betting and bingo business, Gaming International Ltd., greyhound racing and race betting, Northern Racing LTD, operates nine race tracks. The industry the company competes in are gaming, arts, entertainment and recreation, gambling, media, radio and TV broadcasting. A comparative business analysis using horizontal change and financial ratio comparisons for 2006 and 2007. Since London Eye is owned by Merlin Entertainment Group this is the information available on the company’s performance (Merlin Entertainment). Total number of visit to attractions 27.5 m - 112% up on 2006 - visits for the full year 2007 were 32.4 million 155% Increase in revenue 2007 over 2006 - € 712.9 million up € 433.7 million – like for like revenue growth of 9% on core business (excluding Gardaland/Tussauds acquisitions) Group EBITDA (excluding non-recurring items) of €251.8 million, up €175.5 million on 2006 (230%) 15% EBITDA growth on Merlin core business – excluding Gardaland/Tussauds acquisitions EBITDA growth on four LEGOLAND Parks alone since acquisition is 80% - from €37.5m (2004) to €65.1m Group operating profit €180.2 million, up €128.2 million (246%) on 2006. Cash generated from operations of €226.4 million, up €153.4 million (210%) on previous year Capital investment of €99.5 million during the year Repayment of bank debt in the year of €916.4 million Cash at bank and in hand at year end of €62.5 million Source: Company Website The following information is for Arena Leisure Plc traded on the London Stock Exchange. Financial Information: 2006-2010 Year ended 31 December 2006 (365) ?m 2007 (365) ?m 2008 (366) ?m 2009 (365) ?m 2010 (365) ?m Revenue 45.26 57.92 64.83 65.24 63.98 Expenses 38.93 53.07 57.70 60.85 59.92 EBIT 5.54 5.77 7.44 5.32 5.41 EBITDA 7.59 8.38 10.81 8.80 9.20 Operating profit 6.33 4.85 7.13 4.81 4.06 Investment income -0.61 -0.22 0.31 0.52 1.35 Exceptional items 0.01 0.32 0.21 0.42 0.13 Net interest 0.20 -0.16 -3.43 -1.20 -1.79 Pre-tax profit 5.82 5.84 4.02 4.12 3.62 Tax - - - - - Profit after tax 5.82 5.84 4.02 4.12 3.62 Minority interests -0.03 -0.09 -0.07 -0.09 -0.11 Available for dividends 5.85 5.94 4.08 4.21 3.73 Ordinary dividends 1.64 1.86 2.00 - 1.38 Retained profit 4.21 4.08 2.08 4.21 2.35 Per share data 2006 p 2007 p 2008 p 2009 p 2010 p DPS 0.45 0.51 0.55 - 0.38 Reported EPS 1.60 1.63 1.12 1.16 1.02 Other data 2006 2007 2008 2009 2010 Number of employees 214 414 378 346 360 Market cap at B/S date ?m 211.24 174.82 90.14 91.05 96.51 Non-UK turnover Conclusion There are not much similarities in what the two companies are doing except that both are dealing with leisure activity where those who bet on whatever Arena Leisure Plc is availing could also visit the attractions the Merlin Entertainment Group is running that are among the best in London. REFRENCES Arena Leisure Plc - The largest operator of UK horseracing fixtures, www.arenaleisureplc.com/ BBC News, Tussauds firm bought in ?1bn deal, news.bbc.co.uk/2/hi/business/6419019.stm Mann, A. P.; Thompson, N.; Smits, M. (2001). "Building the British Airways London Eye". Proceedings of the ICE – Civil Engineering 144 (2): 60–72. doi:10.1680/cien.2001.144.2.60. Marks Barfield Architects. (2007) Eye: The story behind the London Eye Black Dog Publishing, London UK Merlin Entertainments, leading name in location based, family ...www.merlinentertainments.biz/ Reece, Damian (6 May 2001). "London Eye is turning at a loss". The Daily Telegraph. http://www.telegraph.co.uk/finance/2717120/London-Eye-is-turning-at-a-loss.html. Read More