Euro Disney S.C.A Fiscal Year 2015 Annual Results

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Euro Disney S.C.A. reported on November 5, 2015 its results for fiscal year 2015. The resort revenues increased 9% due to higher volumes and guest spending in both theme parks and hotels, reflecting the success of the Group’s long term strategy.

The real estate revenues decreased by €21 million due to fewer transactions compared to the prior year.

Costs and expenses increased 8% reflecting higher Resort activity and the Group’s continued commitment to improve the guest experience.

Following completion of the Mandatory Tender Offer, The Walt Disney Company via it’s subsidiaries  EDL Holding Company, LLC, EDI and EDLC owned together 643,497,755 Company’s shares, representing 82.15% of the Company’s share capital and voting rights.

The full results document can be downloaded here, and the highlights are below.

EURO DISNEY S.C.A. Reports Fiscal Year 2015 Results

  • Resort revenues increased 9% due to higher volumes and guest spending in both theme parks and hotels, reflecting the success of the Group’s long term strategy
  • Real estate revenues decreased by €21 million due to fewer transactions compared to the prior year
  • Costs and expenses increased 8% reflecting higher Resort activity and the Group’s continued commitment to improve the guest experience
  • EBITDA increased by €28 million and net loss was reduced by €12 million primarily due to a one-time gain related to the early termination of a lease agreement

(Marne-la-Vallée, November 5, 2015) Euro Disney S.C.A. (the “Company”), parent company of Euro Disney Associés S.C.A. (“EDA”), operator of Disneyland® Paris, reported today the results for its consolidated group (the “Group”) for the fiscal year 2015 which ended September 30, 2015 (the “Fiscal Year”).

Commenting on the results, Tom Wolber, Président of Euro Disney S.A.S., said:

“We are pleased to announce solid revenue growth for fiscal year 2015, reflecting higher theme park attendance, hotel occupancy and guest spending, which we believe reflects the benefits of our long term strategy. This strategy also implies incurring higher costs as we continue to improve the guest experience and invest in our Cast.

This year, we further enriched our guest offerings with new entertainment experiences, such as Frozen Summer Fun and the Jedi Training Academy. We have also continued with the implementation of our hotel and park refurbishment program in preparation of the upcoming celebration of Disneyland Paris’s 25th anniversary in 2017. In addition, we completed €1 billion in capital increases as part of a recapitalization and debt reduction plan announced in October 2014 to enable us to continue to execute against our strategy of investing in the guest experience.

As we implement in parallel our numerous enhancement and refurbishment projects ahead of the 25th anniversary celebration in 2017, I would also like to take a moment to recognize the talent and commitment of our Cast Members who are fully mobilized to provide an excellent guest experience.”

Resort operating segment revenues increased by €114.7 million to €1,365.9 million from €1,251.2 million in the prior year.

Theme parks revenues increased 11% to €801.7 million from €720.9 million in the prior year due to a 6% increase in average spending per guest to €53.66 and a 5% increase in attendance to 14.8 million. The increase in average spending per guest resulted from higher spending on admissions, food and beverage and merchandise. The increase in attendance was due to more guests visiting from the United Kingdom, France and Spain.

Hotels and Disney Village® revenues increased 8% to €526.2 million from €489.2 million in the prior year due to a 4.0 percentage point increase in hotel occupancy to 79.4%, a 3% increase in average spending per room to €237.88 and a 5% increase in Disney Village revenues. The increase in hotel occupancy resulted from 85,000 additional room nights sold compared to the prior year due to more guests visiting from the United Kingdom and France. The increase in average spending per room was due to higher daily room rates and higher spending on food and beverage, partly offset by lower spending on merchandise. The increase in Disney Village revenues was attributed to higher resort volumes.

Other revenues decreased by €3.1 million to €38.0 million from €41.1 million in the prior year, mainly due to lower lease revenues following the termination of a lease agreement related to office space located in the Walt Disney Studios® Park.

Real estate development operating segment revenues decreased by €21.3 million to €7.2 million from €28.5 million in the prior year due to lower land sale activity. Given the nature of the Group’s real estate development activity, the number and size of transactions vary from one year to the next.

Direct operating costs increased 8% compared to the prior year, resulting from costs associated with higher resort volumes, costs related to the enhancement of the guest experience, including depreciation of new assets with notably a new attraction based on the Disney Pixar movie Ratatouille, and an increase in labor rate.

Marketing and sales expenses increased 5% compared to the prior year mainly due to higher labor costs and media rate inflation.

General and administrative expenses increased 12% compared to the prior year primarily due to higher labor costs, mainly resulting from an increase in labor rate, new positions for social programs in line with regulatory obligations and agreements as well as technology initiatives.

Other Income / (Expense)

During the Fiscal Year, the Group received from The Walt Disney Company (France) S.A.S. a €24.5 million fee for the termination, before the contractual term, of a lease agreement related to office space located in the Walt Disney Studios® Park.

Net Financial Charges

Net financial charges decreased 8% compared to the prior year primarily due to lower interest expense on borrowings that were reduced as a direct result of the recapitalization and debt reduction plan announced on October 6, 2014 (the “Recapitalization Plan”, see section “Recapitalization Plan” hereafter for more information). This decrease was partially offset by a lower amount of capitalized interest expense as well as one-time costs related to the Recapitalization Plan.

Net Loss

For the Fiscal Year, the Group’s net loss amounted to €101.9 million, compared to a net loss of €113.7 million for the prior year. Net loss attributable to owners of the parent and non-controlling interests amounted to €84.2 million and €17.7 million, respectively.

Cash Flows

Cash and cash equivalents as of September 30, 2015 were €248.6 million, up €199.3 million compared to September 30, 2014.

Free cash flow used for the Fiscal Year was €64.7 million compared to €66.7 million used in the prior year.

Cash generated by operating activities for the Fiscal Year totaled €69.1 million compared to €78.2 million generated in the prior year. This decrease resulted from higher working capital requirements, including a change in the timing of payment of royalties and management fees during the Fiscal Year, partly offset by cash proceeds from a one-time gain related to the early termination of a lease (see section “Other Income / (Expense)” above for more information). During the Fiscal Year, the timing of royalties and management fees payment has been modified to quarterly payments, as defined in the original agreements, compared to an annual payment in the prior year. Cash used in investing activities for the Fiscal Year totaled €133.8 million, compared to €144.9 million used in the prior year. This decrease was mainly due to the repayment of cash advances received by the Group from Les Villages Nature de Val d’Europe S.A.S.

Cash generated by financing activities for the Fiscal Year totaled €264.0 million, compared to €38.0 million generated in the prior year.

During the Fiscal Year, before the implementation of the Recapitalization Plan, the Group drew €100.0 million from a standby revolving credit facility of €250.0 million. The same amount was drawn in the prior year. As part of the Recapitalization Plan, the Group received €422.8 million of cash following the capital increases of the Company and of EDA. This amount was partly offset by €251.4 million repayments on borrowings and standby revolving credit facilities1 previously granted by The Walt Disney Company (“TWDC”). In fiscal year 2014, an amount of €61.7 million was repaid on TWDC borrowings, including the standby revolving credit facility.

Recapitalization Plan

During the Fiscal Year, the Group implemented the recapitalization and debt reduction plan announced on October 6, 2014, which amounted to approximately €1 billion. The Recapitalization Plan aimed at improving the Group’s financial position and enabling it to continue investing in Disneyland® Paris so as to improve the guest experience.

The main elements of this Recapitalization Plan are presented below:

  • cash infusion of €422.8 million, made through capital increases of the Company and of EDA;

 

  • conversion of €600 million of debt owed to indirect subsidiaries of TWDC into equity through capital increases of the Company and of EDA;

 

  • deferral of all amortization payments of loans granted by indirect subsidiaries of TWDC until a revised maturity date in December 2024 (previously 2028); and

 

  • repayment of €250.0 million drawn under the standby revolving credit facilities granted previously by TWDC, maturing in 2015, 2017 and 2018, replaced by a single €350.0 million revolving credit facility maturing in December 2023.

During the Fiscal Year, the Company completed share capital increases as part of the Recapitalization Plan. Following these share capital increases, EDL Holding Company, LLC, Euro Disney Investments S.A.S. (“EDI”) and EDL Corporation S.A.S. (“EDLC”) reported that their interests in the Company crossed certain thresholds. As a result, they were required to launch a mandatory tender offer for the Company’s shares that they did not own (the “Mandatory Tender Offer”). This Mandatory Tender Offer was completed on September 24, 2015, and its results were published on September 29, 2015.

Following completion of the Mandatory Tender Offer, EDL Holding Company, LLC, EDI and EDLC owned together 643,497,755 Company’s shares, representing 82.15% of the Company’s share capital and voting rights.

Following completion of the Mandatory Tender Offer, and as announced, shareholders having the status of eligible shareholders (other than EDL Holding Company, LLC, EDI and EDLC) have the possibility to acquire, under certain conditions, at a price of 1.25 euro per share, a portion of the Company’s shares previously subscribed by EDI and EDLC in the context of the capital increases reserved to those entities (as part of the Recapitalization Plan) and completed during the second quarter of the Fiscal Year (the “Rights to Acquire Company’s Shares”). The exercise period of the Rights to Acquire Company’s Shares began on October 12, 2015 and will end on November 10, 2015.

The collective ownership of TWDC, through its subsidiaries, following completion of this anti-dilution mechanism will be announced on November 18, 2015.

For more details on the terms and conditions regarding the status of eligible shareholders, the allocation and the exercise of the Rights to Acquire Company’s Shares as well as the different steps of the Recapitalization Plan, please refer to the press releases and the other related documents, which are available on the Group’s website.


DEFINITIONS

EBITDA corresponds to earnings before interest, taxes, depreciation and amortization. EBITDA is not a measure of financial performance defined under IFRS, and should not be viewed as a substitute for operating margin, net profit / (loss) or operating cash flows in evaluating the Group’s financial results. However, management believes that EBITDA is a useful tool for evaluating the Group’s performance.

Free cash flow is cash generated by operating activities less cash used in investing activities. Free cash flow is not a measure of financial performance defined under IFRS, and should not be viewed as a substitute for operating margin, net profit / (loss) or operating cash flows in evaluating the Group’s financial results. However, management believes that free cash flow is a useful tool for evaluating the Group’s performance.

Theme Parks attendance corresponds to the attendance recorded on a “first click” basis, meaning that a person visiting both parks in a single day is counted as only one visitor.

Average spending per guest is the average daily admission price and spending on food, beverage, merchandise and other services sold in the parks, excluding value added tax.

Hotel occupancy rate is the average daily rooms occupied as a percentage of total room inventory (total room inventory is approximately 5,800 rooms).

Average spending per room is the average daily room price and spending on food, beverage, merchandise and other services sold in hotels, excluding value added tax

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