RNS Number:4838L
Deep-Sea Leisure PLC
10 January 2008
News Release
10 January 2008
Preliminary results for the year ended 31 October 2007
Deep Sea Leisure PLC, the leisure company which runs two aquariums in the UK,
Blue Planet in Chester and Deep Sea World in Edinburgh, featuring marine life,
announces its preliminary results for the year ended 31 October 2007.
Highlights
* Pre-tax profit for the year ended 31 October 2007 was �1.319 million
(2006 - �1.417 million) on turnover of �6.535 million (2006 - �6. 473 million)
* The board is not recommending a final dividend
* Administration expenses have increased significantly reflecting higher
utilities costs and recalculation of management fee paid to the company's parent
company.
* Both aquariums continue to expand range of activities to diversify
revenue streams
* Blue Planet celebrates its 10th birthday in 2008 and events will be
held throughout the year to mark the occasion. Liverpool's status as 'City of
Culture' should also benefit aquarium
* Deep Sea World awarded Gold Award under Visit Scotland's Green
business scheme in recognition of the aquariums energy efficient manner of
conducting business.
For further information please contact:-
Sue Elaiho, Finance Director
Deep Sea Leisure plc 0151 357 8804
Roland Cross, Director
Broadgate 020 7726 6111
Neil Baldwin
Brewin Dolphin (NOMAD) 0845 270 8610
Chairman's statement
As a company, our two aquariums have a high seasonality with most visits taking
place around the major holiday periods of Easter, Bank holidays and the school
terms. The performance over the past year was influenced by the weather during
these key holiday periods which affected visitor numbers to our indoor
attractions. The business returned a pre-tax profit of �1.319m for the year
ended 31 October 2007 (�1.417m - 31 October 2006) on turnover of �6.535m
(�6.473m - 31 October 2006). The Board is not recommending a dividend.
At our peak periods, an unseasonably warm Easter adversely affected visitor
numbers, though this was largely counterbalanced by an unusually wet July;
resulting in a performance slightly beneath that achieved in 2006. We managed
to maintain our gross profit, however higher administration costs reduced profit
before tax year on year.
The Board sees the forthcoming year as presenting opportunities for the further
development of the Group.
Blue Planet Aquarium celebrates its 10th birthday in 2008 and events will be
held throughout the year to mark the occasion and encourage repeat visitation.
Blue Planet Aquarium should also benefit from Liverpool's status as "City of
Culture" in 2008, and the increased visitors to the City. We are also
continuing to expand the range of experiences at our Aquariums - such as diving
and our "crew for a day" packages - and to diversify our revenue streams.
A Barrachina
Chairman
10 January 2008
The directors present their report and the audited financial statements of the
Company for the year ended 31 October 2007.
PRINCIPAL ACTIVITIES AND REVIEW OF THE BUSINESS
Deep Sea Leisure owns and operates two public aquarium visitor attractions. Deep
Sea World located in Fife, close to Edinburgh opened in 1983 and Blue Planet
Aquarium located in Ellesmere Port near Chester opened in 1998.
The company is majority owned by the Aspro Group which was created in 1991 with
the aim of becoming the leading European leisure and entertainment consortium
and is currently regarded as one of the top three operators. Predominantly
Spanish owned, the Group operates across several European countries operating
across a wide range of parks including aquariums, water parks, zoological parks,
marine zoos, botanical parks and bird sanctuaries.
CUSTOMER BASE
The customer base for both aquariums include families, education groups,
individuals interested in marine life and the environment, corporate clients
and, uniquely in the UK, qualified and unqualified divers who participate in our
range of dive experiences.
The majority of visitors to both aquariums live within a two hour drive time and
this allows us to draw on significant domestic populations in the North West of
around 6.8 million and in Scotland of 5.1 million.
REGULATORY ENVIRONMENT
In addition to the usual regulations governing a business we are also required
to have a Zoo Licence and to comply with the Zoo Licensing Act 1981 (amended).
Zoo inspectors are required to assess compliance in accordance with the
Secretary of States Standards of Modern Zoo Practice. The Standards are designed
to ensure that the welfare of animals in zoos is protected, that zoos are safe
places for the public to visit and that zoos participate in appropriate
conservation and public education measures.
Both aquariums fully comply with the standards. Blue Planet Aquarium passed its
full inspection in January 2007.
MANAGING THE BUSINESS
We are focused on growing the business by constantly improving the quality of
our visitor experience whilst simultaneously seeking to influence customer
behaviour to persuade visitors to become advocates of living sustainably by
connecting with them on an intellectual and emotional level.
Our mission is
"To offer fun in parks which are safe and environmentally friendly and guarantee
a high quality of service with customers served by a motivated team, to ensure
they are satisfied and want to return"
This mission statement is embodied in our strategy, which looks for
opportunities to acquire well-established parks offering a diverse range of
services in key areas, and a potential for further optimisation of operations
that is at all times firmly supported by Management Excellence. We continue to
improve and develop our existing premises and facilities, assess and implement
new attractions and seek full optimisation of technical and human resources.
MARKET OPPORTUNITY
The growth area in which we operate is in day trips and short breaks often
themed around shopping, culture, heritage or attractions. This market is
characterised by visitors wanting to "do" and be active and proactive.
(Tomorrow's Tourism Today - Executive Summary Department Culture, Media and
Sport). Both aquariums are well placed to serve this market appealing to a wide
range of ages and fitting in with something to do on a short break. Although
families are still the largest proportion of visitors to the aquariums,
anecdotal evidence does suggest a change in the make up of visitors with an
increase in the 55+ age group and additionally this age group visiting with
grandchildren.
Concern about the environment is of growing importance and as the science behind
global warming becomes more generally accepted all businesses are being targeted
to reduce their environmental impact. This has a two fold effect on Deep Sea
Leisure. Sustainable tourism is in its infancy but there is an expectation
amongst consumers that it will become increasingly important in future. This is
supported by qualitative research conducted by Visit England. As an organisation
educating and raising awareness of environmental matters of vital importance and
we are uniquely placed to show visitors the hidden underworld of our rivers and
oceans.
The main mode of transport to the aquariums however is by car. With rising fuel
costs and worries of the environmental impact the business is taking action to
improve public transport access to the attractions. In the case of Deep Sea
World by offering a joint promotional ticket with Scotrail. Further actions are
planned at Blue Planet Aquarium in the coming year to make it easier for our
customers to use the excellent rail links in North West England.
Liverpool Capital of Culture in 2008 presents an opportunity to Blue Planet
Aquarium with an influx of 2 million visitors expected into the region. To this
end the aquarium intends to increase its presence in the city during 2008.
INVESTING IN THE FUTURE
At Deep Sea World we continued with the temporary exhibition strategy which we
successfully engaged in last year. This year the exhibition was entitled "
Dinomites" linked to the popular BBC series Walking with Dinosaurs. The
exhibition was free to enter being incorporated into the normal admission
ticket. The exhibition proved very popular particularly with our younger
visitors and attendance levels of up to 70%.
Significant investment in the moving walkway at Deep Sea World was also
undertaken to rectify operational issues. Deep Sea World has one of the longest
underwater tunnels in the world at 112 metres in length and it is an integral
part of the attraction.
We continued the project started last year in improving the visitor environment
with new flooring and carpeted panels. The improvement in the environment has
been well received by visitors and also by Visit Scotland in their two yearly
report where Deep Sea World retained its 4 star rating.
No major investment was carried out at Blue Planet Aquarium during the year
although some small projects were completed. The entrance turnstiles were
replaced ensuring the control of visitor numbers within the aquarium to remain
compliant with fire safety requirements. Following several power cuts during the
year the aquarium has taken delivery of a generator from another attraction
within the parent company and this is to be commissioned to become part of the
aquariums live stock support system.
A diver communication system has also been purchased to comply with diving
regulations but also in a secondary use to enhance the presentations to
visitors.
The investment in the EPOS last year is now bearing fruit in particular showing
an increase in online sales of 258% (March - October 2006 v same period in
2007). The company's online strategy has continued with improvements in both
aquariums websites with all marketing material driving potential customers to
the websites.
RESOURCES
OUR PEOPLE
Despite the good results achieved last year in reducing staff turnover the
picture this year shows a return to 2005 levels of staff turnover. Labour
turnover in the sector is high when compared to other sectors and the industry
records an average of 30%-33% with many large organisations reporting 60%-80%
turnover. Whilst a relatively high level of turnover is something the business
is used to operating with in non management positions, this year the business
has also seen higher turnover in management positions. Some has been due to
normal reasons such as relocation for personal reasons but there has also been a
proportion of management turnover relating to pay. Average earnings have
increased in the sector above trend rates driven by increased opportunities and
skilled staff shortages.
Our employees are critical to our future business success and the business has
implemented a plan to reduce turnover going forward. This includes reviewing
benefits as well as pay and the introduction of a new induction procedure for
all employees.
The board would like to thank all management and staff for their hard work and
the team has continued to offer a high level of customer service and positive
feedback from customers supports this.
2007 2006
Total Staff Turnover 44.3% 28.9%
THE FISH
The company follows a prudent approach in its accounting treatment of fish
stocks and believes that such costs should be written off as they are incurred.
Though not valued in the balance sheet our biological assets - predominantly
fish are a key business resource.
Blue Planet Aquarium Deep Sea World
2007 2006 2007 2006
Actual No. 3,274 2,453 3,446 3,439
No. of Species 408 310 196 202
Deep Sea Leisure has in place animal welfare policies which include an
acquisition policy. This has been reviewed by the Ethical Review Committee
established in 2005 in accordance with the Secretary of States Standards of
Modern Zoo Practice.
Blue Planet Aquarium has formalised its links with the Marine Conservation
Society be becoming a corporate benefactor which along with financial
contributions means that we support the initiatives of the society and encourage
our visitors to support the MCS. In June 2007 Blue Planet Aquarium hosted a
charity gala dinner in aid of the Marine Reserves Now Campaign organised by MCS.
The campaign lobbied the government to establish protected marine conservation
zones and a marine planning system.
Deep Sea World has been awarded a Gold Award under Visit Scotland's Green
business scheme. This is in recognition of the aquariums energy efficient manner
of conducting its business. Working with Fife Council a recycling point has been
located at the aquarium which is for the use of the business and the
neighbouring village.
The business is committed to conducting its business in a sustainable manner and
encourages its customers and suppliers to follow suit.
PRINCIPAL RISKS & UNCERTAINTIES
As a business serving the domestic market, it has a high seasonality with most
of our visits taking place around the major holiday periods of Easter, Bank
Holidays, Summer school holidays and half terms.
It is imperative, therefore, that we manage our business with this in mind and
staffing and stock levels are monitored accordingly.
The weather also impacts on our visitor numbers. The perception that the
aquariums are in-door attractions means that when the weather is wet and cool
visitor numbers increase and the converse is true during bouts of hot sunny
weather particularly when they occur at the key holiday periods.
To counter this uncertainty we continue to develop other non-weather dependent
aspects of our business such as diving experiences, education and corporate
revenue streams. We have also added outdoor attractions to each aquarium to
counter the perception that we are an indoor only attraction.
Exposure to Price, credit, liquidity and cash flow risk
Price Risk
Price risk may occur where the admission prices for competitor visitor
attractions are discounted compared to the aquariums admission prices. Admission
prices for a wide range of local and national competitors are reviewed annually
as part of the company's budgeting process and thereafter competitor prices are
monitored on a monthly basis.
Credit risk
The nature of the company's business means that credit is granted to a very
small number of corporate customers who demonstrate an appropriate payment
history and satisfy credit worthiness procedures.
Liquidity Risk
The business mitigates liquidity risk by cash generation from its operations.
Cash flow Risk
The company has a strong cash balance and finances its operations through a
mixture of retained profits and bank borrowings. The Company has now repaid its
bank loan from Natwest.
FUTURE DEVELOPMENTS
Blue Planet Aquarium celebrates its 10th birthday in 2008 and seasonal events
will be held throughout the year to mark the occasion and encourage repeat
visitation. In addition 2008 is The EAZA (European Association of Zoo's and
Aquaria) Year of the Frog which aims to raise awareness of the Amphibian
extinction crisis. The aquarium has one of the largest collections of frogs in
the UK and a successful breeding programme.
A charity gala evening will once again be hosted by Blue Planet Aquarium in
support of the Marine Conservation Society.
Capex investment at the aquarium will centre on activities to grow catering
revenue streams as well as improving shop security. Deep Sea World is to invest
in an indoor themed children's play area which will run and be charged for
separately to the main aquarium. Capital expenditure will be invested in
improving the building ensuring compliance with health and safety.
Both aquariums introduced two new activities during the summer and it is
intended to grow both of these new revenue streams. Crew Member for a Day allows
children between the ages of 7 and 16 to join our crew for the day, feeding fish
and giving a presentation to our visitors as well as our meeting the divers.
Bubblemaker is a PADI course purely for children. The session teaches children
to use Scuba equipment in the safety of our holding pools.
Revenue from our dive experiences continues to be a valuable revenue stream and
we will continue to expand the range of experiences and course we offer. The
business will work with appropriate partners in promotional offers such as
Scotrail in the case of Deep Sea World.
The level of business conducted via the internet continues to outperform
expectations and will be an important part of the aquariums marketing and
communications strategy. Building relationships with our customers using our
websites will be important in encouraging repeat visitation.
Aside from the operational developments stated above the company will be
changing the basis of its accounting from UK GAAP to be compliant with
International Financial Reporting Standards (IFRS). The company is required to
switch to International Accounting Standards in the financial statements ended
31 October 2008 and any interim accounts within that period, including
comparatives for the current period. The major differences between UK GAAP and
IFRS associated with Deep Sea Leisure pertain to classification of lease land
and the valuation of livestock
FINANCIAL REVIEW
RESULTS FOR THE YEAR
The financial year covers the 12 months to 31 October 2007. Results for the year
are reported under UK GAAP and there have been no changes in accounting policy.
�000 2007 2006
Turnover 6,535 6,473
Gross Profit 5,688 5,642
Admin Expenses (4,514) (4,241)
Operating Profit 1,174 1,401
Net Interest 145 16
Profit before Taxation 1,319 1,417
Tax (301) (450)
Profit for financial year 1,018 967
-------- --------
Earnings per share 5.30p 5.03p
PROFIT BEFORE TAX - 2003-2007
2003 - �1,161m
2004 - �1,654m
2005 - �1,650m
2006 - �1,417m
2007 - �1,319m
Turnover is driven by visitor numbers which in turn are influenced by the
weather. The aquariums attract more visitors during cooler, wetter weather
particularly if this coincides with school holidays. The weather in the year
under review has not followed normal trends. Quarter one performed as expected
and visitor numbers were slightly above expectations. However quarter two
(Feb-April) which included the important Easter holiday period saw the warmest
mean temperatures on records with well above average sunshine and little
rainfall. In the month of April alone visitor numbers were down by 28%.
Conversely in July the UK experienced rainfall significantly above average and
visitor numbers were up by 36%. Some normality returned for the remainder of the
year and the business performed just short of expectations. Visitor numbers
ended up being 5% down on the previous year due to the poor weather related
performance over the key Easter holidays.
Despite the reduction in visitor numbers turnover was up on the previous year by
0.9% supported by admission price increases at both aquariums.
Admin expenses have increased significantly in part due to a change in the basis
of calculation in relation to the management fee payable to the company's parent
company Net Ein. Above inflation cost increases in utilities accounts for an 8%
increase in costs but personnel costs were held to just a 1.3% year on year
increase despite the national minimum wage increase.
SOURCES OF TURNOVER AND GROSS PROFIT
Blue Planet Aquarium Deep Sea World
Turnover Variance to Turnover Variance to
�000 Prior Year �000 Prior Year
Entrance 2,634 2.7% 1,452 3.6%
Retail 528 (2.5%) 350 (5.7%)
Catering 546 0.9% 379 2.1%
Other 425 (1.8%) 221 (9.8%)
-------- -------- -------- --------
Total 4,133 1.3% 2,402 0.4%
-------- -------- -------- --------
Gross Profit 3,635 0.8% 2,054 0.8%
REVENUE PER VISITOR (RPV)
Blue Planet Aquarium Deep Sea World
RPV Variance to RPV Variance to
� Prior Year � Prior Year
Entrance 8.23 8.1% 7.06 7.6%
Retail 1.65 6.4% 1.70 (2.2%)
Catering 1.71 3.0% 1.85 5.1%
Other 1.32 3.1% 1.08 (6.1%)
-------- -------- -------- --------
Total 12.91 6.7% 11.69 4.1%
The growth in entrance revenue has been achieved by increases in admission
prices and the introduction of a new corporate membership scheme which allows
business to bulk buy tickets at a discounted rate.
Retail at Blue Planet Aquarium has performed well driven by consistency in
service and a product buying strategy in part assisted by the parent company.
Deep Sea World retail was affected by some stock shortages and some stock
management issues now rectified.
Both aquariums have seen strong performances in catering with the introduction
of new service points. In the case of Deep Sea World the introduction of a new
speciality ice cream and juice outlet as well as improved signage and service in
the main restaurant were responsible for the increases in spend per visitor. At
Blue Planet Aquarium the introduction of a premium product fair trade coffee bar
along with locally made ice cream saw spends increase over the summer.
Other revenue at Blue Planet Aquarium benefited from the introduction of a new
simulator ride acquired on a 50/50 profit share whilst dive revenue at both
aquariums experiencing the first dip in sale in 6 years.
FINANCING AND CASHFLOW
A final capital repayment of �945,000 was paid on the company's development loan
leaving the business with no outstanding loans.
The business has lent a fellow group company Aspro-Ocio �2,500k. The first of
the loan agreements entered into in March 2007 was for the sum of �2,000k and
interest has been charged at a rate of 5.25% for the duration of the loan. A
second loan agreement entered into in May 2007 provided Aspro-Ocio with a
further �500k and interest has been charged at a rate of 1% above Bank of
England base rate. Both of the loans were due to be repaid in full by Aspro-Ocio
by 30 September 2007. However an extension to both loans was agreed and a new
interest rate set at Bank of England base rate less 0.25%. The loans are due to
be repaid in March 2008.
Although overall cash has gone down due to the loans to Aspro-Ocio there has
been a positive influx of cash excluding this transaction of �581k. Interest is
receivable at a rate of Natwest base rates minus 1%.
GRANTS
During the year �140k of grant income has been released to the profit and loss
account.
TAXATION
The business utilised its remaining corporation tax losses during 2005 and
therefore all profits are now subject to corporation tax.
DIVIDENDS AND TRANSFER TO RESERVES
The results for the year are shown in the attached financial statements. The
directors have not recommended a dividend (2006: �nil) and the profit for the
year of �1,018,000 (2006: �967,000) is transferred to reserves.
S J Elaiho
Director
10 January 2008
2007 2006
�000 �000
Turnover (continuing operations) 6,535 6,473
Cost of sales (847) (831)
----------------------------
Gross profit 5,688 5,642
Administrative expenses (4,514) (4,241)
----------------------------
Operating profit 1,174 1,401
Interest receivable and similar income 206 121
Interest payable and similar charges (61) (105)
----------------------------
Profit on ordinary activities before taxation 1,319 1,417
Tax charge on profit on ordinary activities (301) (450)
----------------------------
Profit for the financial year 1,018 967
----------------------------
Earnings per ordinary share (basic and diluted) 5.30p 5.03p
----------------------------
Statement of Total Recognised Gains and Losses
For the year ended 31 October 2007
There are no recognised gains and losses other than the profit of �1,040 attributable to the
shareholders for the year ended 31 October 2007.
31 October 2007 31 October 2006
�000 �000 �000 �000
Fixed assets
Tangible fixed assets 14,834 15,664
Current assets
Stock 141 151
Debtors 2,631 85
Cash at bank and in hand 1,608 3,527
--------------- ---------------
4,380 3,763
Creditors: amounts falling due
within one year (1,517) (2,317)
--------------- ---------------
Net current assets 2,863 1,446
--------------- ---------------
Total assets less current liabilities 17,697 17,110
Provisions for liabilities and charges (1,929) (2,220)
Deferred income (2,441) (2,581)
--------------- ---------------
Net assets 13,327 12,309
--------------- ---------------
Capital and reserves
Called up share capital 960 960
Share premium account 5,902 5,902
Capital redemption reserve 1,003 1,003
Profit and loss account 5,462 4,444
--------------- ---------------
Shareholders' equity 13,327 12,309
--------------- ---------------
The financial statements were approved by the Board of Directors on 10 January
2008 and were signed on its behalf by:
S J Elaiho
Director
2007 2006
�000 �000
Cash flow statement
Net cash inflow from operating activities 2,016 2,064
Returns on investments and servicing of finance 124 20
Tax paid (535) (495)
Capital expenditure and financial investment (2,579) (340)
----------------------------
Cash inflow before financing (974) 1,249
Financing (945) (945)
Church Commissioners grant - 87
----------------------------
Increase/(decrease) in cash (1,919) 391
----------------------------
Reconciliation of net cash flow to movement in net funds/(debt)
Increase/(decrease) in cash (1,919) 391
Cash outflow from movement in net debt 945 945
Non cash outflows - 138
----------------------------
Change in net funds resulting from cash flows (974) 1,474
Net funds at beginning of year 2,582 1,108
----------------------------
Net funds at end of year 1,608 2,582
----------------------------
Notes
1. The board is not recommending a payment of a final dividend.
2. The financial information set out on the previous pages does not
constitute the Company's Statutory Accounts for the year ended 31 October 2007
or year ended 31 October 2006 but is derived from these accounts. Statutory
Accounts for the previous financial period ended 31 October 2006 have been
delivered to the Registrar of Companies and those for the financial year ended
31 October 2007 will be delivered following the Company's Annual General Meeting
which will be held at Blue Planet Aquarium, Cheshire Oaks, Ellesmere Port,
Cheshire, CH65 9LF on 20 February 2008 at 12.00 noon. The Auditors have
reported on those accounts: the reports were unqualified and did not contain any
statements under section 237(2) or (3) of the Companies Act 1985.
3. Copies of the annual report and accounts will be posted to shareholders
on 22 January 2008 and will be available for inspection at The Blue Planet
Aquarium, Cheshire Oaks, Ellesmere Port, Cheshire, CH65 9LF from the same date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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