RNS Number:7155P
Deep-Sea Leisure PLC
18 January 2007
News Release
18 January 2007
New attractions enhance visitor experience
Deep Sea Leisure PLC, the leisure company which runs two aquariums in the UK
featuring marine life, announces its preliminary results for the year ended 31
October 2006.
Highlights
* Pre-tax profit for the year ended 31 October 2006 was #1.417 million
(2005 - #1.650 million) on turnover of #6.473 million (2005 - #6.566
million)
* Investment in new attractions has enhanced visitor experience. Deep Sea
World, in Edinburgh, ran highly successful temporary exhibitions and Blue
Planet, in Chester, opened Reef Magic submerging visitors into a live Coral
Reef.
* New attractions and additional revenue streams will be unveiled during
the coming year to extend the aquariums appeal.
* Deep Sea Leisure was the winner of the Leisure Reports Tourism,
Attractions and Entertainments Operator of the Year 2006
For further information please contact:-
Sue Elaiho, Finance Director
Deep Sea Leisure plc 0151 357 8804
Roland Cross, Director
Broadgate 020 7726 6111
18 January 2007
Chairman's Statement
The year under review has proved exacting with results affected by the
unseasonably warm weather, pressure on consumer spending and the impact of sharp
rises in energy costs.
In spite of these factors the business made a healthy pre-tax profit of #1.417
million for the year ended 31 October 2006 (#1.650 million 31 October 2005), on
turnover of #6.473 million (#6.566 million - 31 October 2005). The Board is not
recommending a final dividend.
We continually strive to enhance the visitor experience and the past year has
been no exception. For the first time, Deep Sea World ran temporary exhibitions
as part of the normal entrance price to great success attracting over 66% of
visitors. Blue Planet opened Reef Magic submerging visitors into a live Coral
Reef enabling them to experience the beauty of this unseen world. Further
enhancements are planned for the coming year.
Whilst the aquariums are seen as 'rainy day' in-door attractions, the board is
conscious of the need to develop other revenue streams which are not weather
dependent. This includes diving, education and corporate revenue. Blue Planet
became the only aquarium in the world to be awarded the National Geographic Dive
Centre Status and both aquariums became full members of the British and Irish
Association of Zoos and Aquariums ("BIAZA"). Membership of BIAZA is only granted
after consideration once the aquariums comply with excellent standards of animal
welfare, education and conservation work.
Reflecting the contribution of all staff to the business, Deep Sea Leisure was
winner of the Leisure Reports Tourism, Attractions and Entertainments Operator
of the Year 2006 and I would like to thank staff for their contribution in
making customers' visit so rewarding and memorable.
A Barrachina
Chairman
OPERATIONAL AND FINANCIAL REVIEW
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. Deep Sea World passed its
interim inspection in June of 2006 and Blue Planet Aquarium passed its full
inspection in January 2007.
MANAGING THE BUSINESS
The strategy is straightforward. 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.
The Oceans comprise over 70% of the total surface of this great planet of ours
and provides approximately 70% of the net oxygen we breathe. And yet the Oceans
remain largely unexplored and mysterious. We know more about the moon than we do
about the sea floor.
Deep Sea Leisure believes it is at the front line of promoting greater
understanding of this magical and mysterious world. We seek to offer a glimpse
into the wonders of our magical oceans' made possible by our enthusiastic and
informed team, through presentations, interpretation and exhibits that captivate
and inspire visitors to protect our oceans: the greatest challenge of future
generations.
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 the domestic market 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).
There is an increasing awareness of all things green from re-cycling to global
warming. The green agenda surrounds us. As climate change is being accepted as "
best science" individuals are changing their behaviour to less damaging forms of
consumption and lifestyle. As we become more affluent demand is shifting towards
wanting a real experience.
Both our aquariums are perfectly positioned to offers visitors a captivating
experience and investment decisions are taken with this demand in mind.
INVESTING IN THE FUTURE
Expenditure during 2006 saw an extension of the business at Deep Sea World. For
the first time the aquarium has run temporary exhibitions in a new temporary
structure. The exhibitions were included in the normal entrance price and over
66% of our visitors attended the exhibitions. The first ran over the busy Easter
period entitled "Sharks - Myths and Reality". The second a BBC exhibition
entitled "Sea Monsters" ran over the summer season.
Further investment at Deep Sea World has been made improving the general visitor
environment which has included new signage and interpretation and new flooring.
At Blue Planet Aquarium we opened Reef Magic - a live coral exhibit which
includes as its centre piece a 360 degree acrylic tank housing over 200 captive
bred clown fish. Coral reefs are often called rain forests of the Ocean because
they are amongst the richest marine eco systems in species, productivity, bio
mass, structural complexity and beauty. Reefs are highly complex and contain an
amazing diversity of marine life. Sadly human behaviour is upsetting the
delicate balance of coral reefs around the world and the impact on the
environment is only now becoming apparent.
Reef Magic submerges the visitor into a live Coral Reef and provides our
visitors with a real opportunity to experience the normally unseen beauty of
this underwater world.
Other investments at Blue Planet Aquarium have been directed to ensuring
compliance with the Disability Discrimination Act and in providing a better
working environment for our staff.
We have also made a substantial investment in new hardware and software in the
front of house electronic points of sale (EPOS). As well as ensuring the safety
and security of our front of house financial operations it has also improved
customer service through speed and ease of operation. The system went live in
February 2006.
The new EPOS is a fully integrated system and has made collation and reporting
of key management information easier. Work is continuing in this area to improve
internal controls in areas such as stock control and scheduling of resources.
Further benefit is therefore expected to accrue in the year ahead.
The new EPOS also allowed the business to introduce e-ticketing i.e. tickets
that can be purchased online. Websites for both aquariums were redesigned and
investment in this area is now an ongoing and integral part of the businesses
marketing and communication strategy.
RESOURCES
OUR PEOPLE
As stated in our mission we want to deliver excellent customer service and have
a motivated team to do this. The board would like to thank all management and
staff for their contribution to the business and the entertainment and education
of our visitors. It is testament to the dedication and commitment of our staff
that we were winners of Leisure Reports Tourism, Attractions and Entertainments
Operator of the Year 2006.
Blue Planet Aquarium also received recognition of their commitment to access for
all in an award from the North West Development Agency for positive action.
Staff turnover is traditionally high in the leisure industry but I am pleased to
report that staff turnover has reduced significantly on last years levels.
2006 2005
Total Staff Turnover 28.9% 41.1%
These results have been achieved as a result of the implementation of a range of
Human Resource policies including:-
* Competency based recruitment.
* Ongoing learning and development through the company's All Aboard program
actively promoting both vocational and academic learning. Managers have
been afforded the opportunity to attend a management training course and
sharing of best practice across the business is now common place and
includes members of the team visiting other attractions across the group
supported by our parent company.
* Involvement of staff in the business through consultative committees.
* Promotion of an inclusive culture and valuing of diversity in our
business.
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
2006 2005 2006 2005
Actual No. 2,453 2,293 3,439 3,604
No. of Species 310 291 202 212
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.
In August 2006 both aquariums became full members of BIAZA. BIAZA (British and
Irish Association of Zoos and Aquariums) represents the best zoos and aquariums
in Britain and Ireland. Membership may be granted after careful consideration of
the aquariums conduct and compliance with excellent standards of animal welfare,
education and conservation work.
Deep Sea World also works with the Scottish SPCA who are Scotland's leading
animal welfare organisation. Their objectives are to prevent cruelty to animals
and promote kindness and humanity in their treatment.
Blue Planet Aquarium has good links with the Marine Conservation Society a UK
charity dedicated to caring for our seas, shores and wildlife. A number of
events have run at the aquarium during the year in support of the society.
Blue Planet Aquarium is also proud of joining the NWDA's (North West Regional
Development Agency) regional action plan on Climate Change and has introduced
environmental policies on waste management, sustainable use and re-cycling.
Both aquariums will continue to take part in community initiatives in their
respective locations.
PRINCIPAL RISKS
As a business serving the domestic market, our business 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.
The business has overdraft facilities amounting to #500,000 in place with
Natwest Bank.
Cashflow Risk
The company has a strong cash balance and finances its operations through a
mixture of retained profits and bank borrowings. The Company has a bank loan
from Natwest Bank at a floating rate of interest based on the Bank of England
base rate.
FUTURE DEVELOPMENTS
As both of our aquariums draw on their local communities for customers it is
important to encourage repeat visitation by building ongoing sustainable
relationships.
The new EPOS solution phase two includes the implementation of a customer
relationship management system. This together with our commitment to using our
websites to communicate with customers will ensure that we remain in the hearts
and minds of the community.
We will continue the use of temporary exhibitions at Deep Sea World and will use
targeted website promotions across both aquariums to promote visitation. We will
also use an ongoing events calendar.
In improving the education product we are working with other education providers
to ensure that the education experiences are aligned to the national curriculum
and we will continue to add value to the experience to benefit both teachers and
children.
We will continue to build upon our successful range of diving experiences by
introducing new courses and we intend to make it even easier for customers to
purchase our diving products by selling dive vouchers online through a dedicated
diving website.
In the retail and catering business we will be working with our parent
organisation to reduce costs and will also exploit the management information
provided by EPOS to better inform our purchasing decisions and stockholdings.
FINANCIAL REVIEW
RESULTS FOR THE YEAR
The financial year covers the 12 months to 31 October 2006. Results for the year
are reported under UK GAAP and there have been no changes in accounting policy.
#000 2006 2005
Turnover 6,473 6,566
Gross Profit 5,642 5,751
Admin Expenses (4,241) (4,073)
Operating Profit 1,401 1,678
Net Interest 16 (28)
Profit before Taxation 1,417 1,650
Tax (450) (528)
Profit returned for financial year 967 1,122
-------- --------
Earnings per share 5.03p 5.84p
PROFIT BEFORE TAX - 2003-2006
This year under review has been a challenging one for the business. Recovery in
consumer spending has been slow and this along with other factors such as high
levels of household debt, rising energy costs and moderate wage increases have
impacted on visitor numbers and spending power of those visitors.
The steady rise in unemployment has also curbed aggregate consumer spending
growth which is a key driver of the hospitality and leisure business in which
Deep Sea Leisure operates.
With base rates rising, unemployment continuing to rise and the continued high
level of consumer debt the outlook remains challenging.
Turnover is driven by visitor numbers and this year in addition to consumer
spending they have also been affected by the sustained period of hot and dry
weather spell in June and July. Over the year under review, visitor numbers fell
by 6.4% and 3.4% at Blue Planet and Deep Sea World respectively.
Summer 2006 was one of the warmest on record for the UK with average
temperatures 1.5 degrees C above the expected average. July in particular saw
record breaking hot days. Also important for the aquariums the summer season was
also dry with only 82% of the average rainfall. As aquariums are perceived as
being somewhere to visit on rainy cool days this adversely affected visitor
numbers.
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 2,565 (2.1%) 1,401 (0.7%)
Retail 523 (6.7%) 371 (1.3%)
Catering 560 1.6% 376 (1.8%)
Other 432 1.3% 245 10.2%
-------- -------- -------- --------
Total 4,080 (2.3%) 2,393 (0.1%)
-------- -------- -------- --------
Gross Profit 3,605 (2.0%) 2,037 1.7%
REVENUE PER VISITOR (RPV)
Blue Planet Aquarium Deep Sea World
RPV Variance to RPV Variance to
# Prior Year # Prior Year
Entrance 7.61 4.6% 6.56 2.9%
Retail 1.55 (0.3%) 1.74 2.3%
Catering 1.66 5.1% 1.76 1.7%
Other 1.28 7.6% 1.15 13.9%
-------- -------- -------- --------
Total 12.10 4.4% 11.21 3.6%
We have however managed to mitigate the visitor number performance through
managing the revenue per visitor. Modest entrance price increases were
implemented prior to the main summer season. In catering we have seen the
benefit at Blue Planet Aquarium of the investment made in 2005 in new kitchen
and restaurant facilities. This combined with an improvement in the quality of
product and speed of service minimised the loss of revenue due to the downturn
in visitor numbers.
The growth in other revenue stems from our diving experiences which have
delivered the fifth consecutive year of growth, this year achieving a 9.6%
growth on 2005. Both aquariums work with PADI (professional association of dive
instructors) who offer the most widely recognised diving certification in the
world. Blue Planet Aquarium recently won an award for Excellence from PADI in
relation to the in-house designed Shark Awareness experience and the Aquarium
was also awarded National Geographic Dive Centre Status during the year, the
only aquarium in the world to achieve such a status.
In payroll costs the increases in the national minimum wage has adversely
affected the business due to the number of staff paid on or around minimum wage.
However through control of staff numbers compared to visitor numbers actual
increases in these costs have been limited to just 3%.
Increases in utilities of around 10%, in particular electricity, have hit the
expenditure in the business.
FINANCING AND CASHFLOW
Capital repayments of #945k were paid on the company's development loan which
leaves a balance of #945k due to be repaid in May 2007 (#315k) and October 2007
(#630k).
The company has a strong cash position with a year end cash balance of #3,527k.
This is a positive cash inflow of #391k during the year. Interest is charged on
the loan at 1% above Natwest base rates. Interest is receivable at a rate of
Natwest base rates minus 1%.
GRANTS
During the year #223k of grant income has been released to the profit and loss
account. Blue Planet Aquarium received the final grant from the Church
Commissioners (#87k after expenses) concerning the construction of the access
road into the aquarium. Also #112k of funding received previously from Scottish
Enterprise Fife relating to redevelopment at Deep Sea World has been released to
the profit and loss account with the balance of #26k to be released in 2007.
TAXATION
The business utilised its remaining corporation tax losses during 2005 and
therefore all profits are now subject to corporation tax.
CORPORATE
During the year Net-Ein the majority shareholder in Deep Sea Leisure increased
its shareholding by 14.5% to hold 18,883,321 shares representing 98.35% of the
company's equity share capital.
Sue Elaiho, Finance Director
Profit and loss account
For the year ended 31 October 2006
Note 2006 2005
#000 #000
Turnover 6,473 6,566
Cost of sales (831) (815)
Gross profit 5,642 5,751
Administrative expenses (4,241) (4,073)
-------- --------
Operating profit 1,401 1,678
Interest receivable and similar income 121 120
Interest payable and similar charges (105) (148)
-------- --------
Profit on ordinary activities before taxation 1,417 1,650
Tax charge on profit on ordinary activities (450) (528)
-------- --------
Profit retained for the financial year 967 1,122
-------- --------
Earnings per ordinary share (basic and diluted) 5.03p 5.84p
======== ========
Turnover and operating profits arise wholly from continuing operations.
Statement of Total Recognised Gains and Losses
For the year ended 31 October 2006
2006 2005
#000 #000
Profit retained for the financial year and total
recognised gains and losses relating to the year 967 1,122
Prior year adjustment - (171)
-------- --------
Total recognised gains and losses since last Annual Report 967 951
======== ========
Balance sheet
As at 31 October 2006
31 October 2006 31 October 2005
#000 #000 #000 #000
Fixed assets
Tangible fixed assets 15,664 16,245
Current assets
Stock 151 123
Debtors 85 107
Cash at bank and in hand 3,527 3,136
-------- --------
3,763 3,366
Creditors: amounts falling due
within one year (2,317) (2,333)
-------- --------
Net current assets 1,446 1,033
-------- --------
Total assets less current
liabilities 17,110 17,278
Creditors: amounts falling due
after more than one year - (1,083)
Provisions for liabilities and charges (2,220) (2,274)
Deferred income (2,581) (2,579)
-------- --------
Net assets 12,309 11,342
======== ========
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 4,444 3,477
-------- --------
Shareholders' funds - equity 12,309 11,342
======== ========
S J Elaiho
Director
Cash flow statement
For the year ended 31 October 2006
2006 2005
#000 #000
Reconciliation of operating profit to net cash inflow from
operating activities
Operating Profit 1401 1,678
Depreciation charges 880 802
(Increase)/decrease in stocks (28) (13)
(Increase)/decrease in debtors 22 (26)
Increase in creditors (4) 64
Decrease in deferred income (223) (111)
Sundry adjustments 16 -
-------- --------
Net cash inflow from operating activities 2,064 2,394
======== ========
Cash flow statement
Net cash inflow from operating activities 2,064 2,394
Returns on investments and servicing of finance 20 (28)
Tax paid (495) (247)
Capital expenditure (340) (468)
-------- --------
Cash inflow before financing 1,249 1,651
Financing (945) (945)
Church Commissioners grant 87 -
-------- --------
Increase in cash 391 706
======== ========
Reconciliation of net cash flow to movement in net
funds/(debt)
Increase in cash 391 706
Cash outflow from movement in net debt 945 945
Non cash outflows 138 -
-------- --------
Change in net (debt)/funds resulting from cash flows 1,474 1,651
-------- --------
Movement in net (debt)/funds in the year 1,474 1,651
Net debt at beginning of year (1,108) (543)
-------- --------
Net funds/(debt) at end of year 2,582 1,108
======== ========
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 2006 or
year ended 31 October 2005 but is derived from these accounts. Statutory
Accounts for the previous financial period ended 31 October 2005 have been
delivered to the Registrar of Companies and those for the financial year
ended 31 October 2006 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 21 February 2007 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
18 January 2007 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
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