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Euro Disney S.C.A., parent company of Euro Disney Associés S.C.A. ("EDA"), operator of Disneyland® Paris, reported today the results of its consolidated group for the first six months of fiscal year 2011 which ended March 31, 2011.
• Total Revenues increased 8% to € 559 million, due to higher Resort volumes and average spending per room
• EBITDA increased € 18 million to € 25 million
• Net loss narrowed by € 15 million to € 99 million
• Repayment of € 46 million of debt during the First Half
Commenting on the results, Philippe Gas , Chief Executive Officer of Euro Disney S.A.S, said:
“As we head into our important second semester, we are encouraged to end the first semester with our fourth consecutive quarter of growth in Resort revenues. We increased our attendance by 5% while essentially maintaining guest spending in the parks, and also improved both hotel occupancy and guest spending per room. We are encouraging our guests to book further in advance of their vacation by providing them with early-booker discounts and they are responding favorably. This has given us greater business visibility and allows us to better manage demand. We continue to focus on delivering a high quality, unique Disney experience for our guests. We recently launched the Disney Magical Moments Festival , our new annual celebration. I would also like to recognise our Cast Members who are dedicated to bringing the Disney magic to life for our guests .”
Seasonality
The Group's business is subject to the effects of seasonality and the annual results are significantly dependent on the second half of the year, which traditionally includes the high season at Disneyland® Paris. Results have been unfavorably impacted due to a shift in the Easter vacation period for some of our key markets to the second semester.
Consequently, the operating results for the First Half are not necessarily indicative of results to be expected for the full fiscal year.
Revenues by Operating Segments
Resort operating segment revenues increased by 6% to € 547.7 million from € 517.3 million in the prior-year period.
Theme parks revenues increased by 5% to € 300.4 million from € 287.3 million in the prior-year period due to a 5% increase in attendance to 6.9 million. This increase in attendance resulted from more guests visiting from France and Belgium, partially offset by a decline in visits from the Netherlands. Average spending per guest remained stable compared to the prior-year period.
Hotels and Disney® Village revenues increased by 11% to € 228.2 million from € 205.3 million in the prior-year period, mainly due to a 6% increase in average spending per room to € 200.64, combined with a 3.8 percentage points increase in hotel occupancy to 83.4%. The increase in average spending per room was due to higher spending on food and beverage and an increase in daily room rates. The increase in hotel occupancy resulted from 40,000 more room nights sold compared to the prior-year period, due to more guests visiting from France, and higher business group activity. Other revenues , which primarily include participant sponsorships, transportation and other travel services sold to guests, decreased by € 5.6 million to € 19.1 million compared to € 24.7 million in the prior-year period. This decrease was primarily due to lower sponsorship revenues and a legal settlement gain in the prior-year period.
Real estate development operating segment revenues increased € 9.4 million to € 11.4 million, compared to € 2.0 million in the prior-year period. This increase is due to a greater number of transactions compared to the prior-year period.
Costs and Expense
Direct operating costs increased € 22.1 million compared to the prior-year period, mainly due to volume-related resort and real estate development costs, labor rate inflation and costs related to new content.
Marketing and sales expenses increased € 4.2 million compared to the prior-year period, primarily due to higher advertising rates, a change in the timing of marketing and sales initiatives and labor rate inflation.
Net Financial Charge
Financial income increased € 0.6 million due to higher average cash and cash equivalents and higher short term interest rates compared to the prior-year period.
Financial expense decreased € 0.9 million due to lower average borrowings compared to the prior-year period.
Net Loss
For the First Half, the net loss of the Group amounted to € 99.5 million compared to € 114.5 million for the prior-year period. Net loss attributable to equity holders of the parent amounted to € 82.9 million and net loss attributable to minority interests amounted to € 16.6 million. The decrease of the Group's net loss is due to the increased revenues and the improved operating margin compared to the prior-year period.
Cash flows
Cash and cash equivalents as of March 31, 2011 were € 323.7 million, down € 76.6 million compared with September 30, 2010, and up € 40.2 million compared with March 31, 2010. These variances resulted from:
Free cash flow used for the First Half was € 31.2 million compared to € 11.8 million used in the prior-year period.
Cash flow generated by operating activities for the First Half totaled € 6.4 million compared to € 28.1 million generated in the prior-year period. This decrease resulted from increased working capital requirements, partly offset by the improved operating performance during the First Half. Last year, changes in working capital benefitted from the unconditional deferral into long-term debt of € 25.0 million of royalties and management fees, while no such benefit occurred this year.
Cash flow used in investing activities for the First Half totaled € 37.6 million compared to € 39.9 million used in the prior-year period.
Cash flow used in financing activities corresponds principally to the repayment of the debt and totaled € 45.4 million for the First Half compared to € 45.0 million used in the prior-year period.
The Group has covenants under its debt agreements which limit its investments and financing activities.
The Group also has defined annual performance objectives. In fiscal year 2010, the Group did not meet its performance objectives and had to defer € 45.2 million of royalties and management fees due to The Walt Disney Company ("TWDC") and interest due to the Caisse des dépôts et consignations into long-term subordinated debt.
As a result of utilizing these deferrals available to the Group with respect to fiscal year 2010, the Group’s recurring annual investment budget (1) for fiscal year 2011 and thereafter is permitted up to 3% of the prior fiscal year's adjusted consolidated revenues (2)
On March 31, 2011, the Group obtained lenders’ agreement to increase the recurring annual investment budget from € 37 million to € 81 million for fiscal year 2011, and up to 5% of the prior fiscal year's adjusted consolidated revenues (2) for fiscal year 2012.
For fiscal year 2011, if compliance with these financial performance covenants cannot be achieved, the Group will have to appropriately reduce operating costs, curtail a portion of planned capital expenditures and/or seek assistance from TWDC or other parties as permitted under the debt agreements. Although no assurances can be given, management believes the Group has adequate cash and liquidity for the foreseeable future based on existing cash positions, liquidity from the € 100.0 million line of credit available from TWDC, and the provisions for the conditional deferral of certain royalties and management fees and interest.
Click here to read full report and attachments (PDF file) Click here to read the Interim Report (PDF file) Click here to read the Analysts Presentation (PDF file)
UPDATE ON RECENT AND UPCOMING EVENTS
Disney Magical Moments Festival
The Disney Magical Moments Festival was launched in April. It celebrates bringing the Disney magic to life for families and friends. Guests will have even more opportunities this year to share magical Disney moments with their favorite Disney characters.
Scheduled Debt Repayments
The Group plans to repay € 77.5 million of its borrowings in the last six months of fiscal year 2011, consistent with the scheduled maturities.
(1) Including both capital investments and fixed asset rehabilitations, which are either treated as an expense or capitalized as fixed assets under IFRS.
(2) Adjusted consolidated revenues correspond to consolidated revenues under IFRS, excluding participant sponsorships and after removing the effect of certain differences between IFRS and French accounting principles.
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