Merlin Entertainments PLC Annual Report 2022

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FY2022 Annual Report · Merlin Entertainments PLC

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Registered number 12057312

MOTION JVCO LIMITED
ANNUAL REPORT AND ACCOUNTS 2022

CONTENTS

At the end of 2022 the Group
operated:

142

attractions

with

5,342

rooms

countries

Strategic report

KPIs

At a glance

Chief Executive’s introduction

Business model

Growth drivers

Financial and operating review

Principal risks

Corporate social responsibility

Section 172 statement

Governance

Corporate governance

Directors’ report

Directors’ responsibilities statement

Independent auditor’s report

Financial statements

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the accounts

Motion JVco Limited Company financial statements

Notes to the Company financial statements

Additional information

Glossary

Other financial information

103

105

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

KPIs

55.1m

£1,960m

VISITORS
2022 53 weeks(2): 56.4m

+56.3%

REVENUE
2022 53 weeks(2): £2,006m

+55.4%

These figures are reported
on a 52 week basis

These figures are reported
on a 53 week basis

2022
2021
2020
2019 (1)

35.2

22.1

55.1

67.0

2022
2021
2020
2019 (1)

1,261

629

1,960

1,740

£385m

UNDERLYING
OPERATING PROFIT
2022 53 weeks(2): £415m
2021: £132m

£356m

TOTAL
OPERATING PROFIT
2022 53 weeks(2): £386m
2021: £130m

£136m

PROFIT BEFORE TAX
2021: loss of £(94)m

GUEST SATISFACTION

HEALTH AND SAFETY

EMPLOYEE ENGAGEMENT

Providing a high quality of experience for our guests is
our core purpose, and we are proud that we again
maintained the same high score of 94% as in 2021.
This is based on guest satisfaction surveys where our
target is a score over 90%, and is testimony to the
hard work and commitment of our teams across
the business.

We continue to monitor our guests’ views, engaging
with them directly and on social media to measure the
quality of their experience and drive improvements.

See more on page 7.

As trading levels increased during 2022, our COVID-
19 countermeasures remained dynamic and able to
adapt to differing local government restrictions.

In 2022 more than 18,000 people completed our
‘The Wizard Wants to Know’ employee
engagement survey, a response rate of 84%.

The overall strength of our health and safety
performance is evidenced by the continued low level
of our Medical Treatment Case (MTC) rate, that
captures the rate of guest injuries requiring external
medical treatment relative to 10,000 guest visitations.

This measured 0.01 for 2022, having remained
constant at 0.02 from 2019 through 2021.

See more on pages 25 to 26.

Our overall engagement score was 68%, an
encouraging increase of 5% on the previous year.

We are grateful to our teams for completing the
survey, and pleased that they have given us so much
valuable feedback to take forward as we continue
to work to improve engagement further.

See more on page 24.

How we report our results
Motion JVco Limited (the Company) has been the parent company of the Merlin Entertainments Limited group of companies (Merlin, Merlin Group), since acquiring
the Merlin Group in November 2019. Where the strategic report refers to longer term historical activities and strategic initiatives, these should be read as referring
to the continuing Merlin business as if the Company had been the parent company in that period. Details on the period under review (‘52’ and ‘53’ week data) and
the performance measures used are set out in the Financial and operating review on page 18. Terms used throughout this document are defined in the Glossary on
pages 103 to 104.

(1)

(2)

2019 comparative data for the Merlin Entertainments Group has been included to provide a more meaningful comparison of performance to trading prior to the COVID-19 pandemic. This has
been extracted from the audited 2019 Merlin Entertainments Limited Annual Report and Accounts.
This year we are reporting on the 53 weeks to 31 December 2022. Profit metrics are provided on a 53 week statutory basis in the financial statements. Consistent with Merlin’s approach in
previous years, we also present unaudited ‘52 week’ information for 2022 where we think it will provide a more direct comparison of performance.

MOTION JVCO LIMITED

AT A GLANCE

ANNUAL REPORT AND ACCOUNTS 2022

A GLOBAL LEADER IN LOCATION
BASED, FAMILY ENTERTAINMENT

MERLIN IS EUROPE’S NUMBER ONE AND THE WORLD’S SECOND-LARGEST
VISITOR ATTRACTION OPERATOR AND OPERATES 142 ATTRACTIONS,
24 HOTELS AND SIX HOLIDAY VILLAGES IN 25 COUNTRIES AND ACROSS
FOUR CONTINENTS.

Our vision

To be the global leader in location based entertainment.

Our purpose

To deliver memorable experiences to our millions of visitors by creating lasting connections and moments of joy for families and friends
around the world.

Our strategy

To build a high growth, high return family entertainment company based on strong brands and a global portfolio that is naturally balanced
against the impact of external factors, all delivered by the most passionate team of people whose mission it is to spread joy and happiness to
the world.

Merlin operates two distinct types of visitor attractions, organised into three
Operating Groups.

Midway Attractions are high quality, branded, predominantly indoor
attractions with a typical one to two hour dwell time located in city centres,
shopping malls or resorts. We have high quality, chainable brands and are the
only company to successfully operate the Midway model on a global scale.

Theme Parks are larger multi-day outdoor destination venues, incorporating
on-site themed accommodation.



LEGOLAND Parks are aimed at families with younger children and have
LEGO as the central theme. Highly themed accommodation is central to
our strategy to develop the customer offering. Merlin holds the global,
exclusive rights to the LEGOLAND brand.
Resort Theme Parks are national brands aimed at families, teenagers and
young adults, with themed accommodation at all locations. They have high
brand and customer awareness in their local markets and include the
leading theme parks in the UK, Italy and Northern Germany.

Our three Operating Groups are supported by our unique in-house business
development, creative, project management and production group, Merlin
Magic Making, which includes teams across Europe, North America and the
Asia Pacific region. Merlin Magic Making is responsible for driving innovation
across our Group and creating compelling propositions for our attractions;
developing new concepts into commercially viable attractions; producing
compelling content such as LEGO models, wax figures and attraction theming;
and constructing new attractions and investment projects, including new hotels
and rides.

Our portfolio of assets and brands is highly diversified across geography,
attraction type, brand and customer demographic and well balanced between
indoor and outdoor attractions and international and domestic visitation. We
also partner with third party intellectual property (IP) owners to create new
brands which complement the portfolio and broaden our appeal across all key
target demographics.

Our footprint across 25 countries provides a high degree of diversity and a
strong platform to benefit from long term growth in leisure spending.

We have demonstrated the strength of this diversified business model over
many years, where the drivers of our performance have been;


investment in our existing estate, increasingly including third party and
internally created IP. These investments increase capacity, provide
compelling new propositions to guests, and improve guest satisfaction;
rolling out new Midway attractions to drive revenue growth, often
with a ‘cluster’ focus and in locations that continue our
geographic diversification;
developing new LEGOLAND resorts under a combination of operating
models. LEGOLAND New York opened in 2021, LEGOLAND Korea
opened in the year and three resorts are currently under construction
in China;
transforming our theme parks into destination resorts by adding a broad
range of themed accommodation and other ‘second gate’ attractions to
improve guest satisfaction and drive multi-day visitation;
developing our operating model as our scale has increased - generating
revenue from promotions and marketing with an increasing focus on yield
management; improving our customers’ online ‘digital journey’; and
operating more efficiently and flexibly. In doing this we maintain our focus
on providing a high quality of experience to our guests; and
acquisitions, ranging from large scale transformational transactions to
smaller add-on deals.



MOTION JVCO LIMITED

AT A GLANCE

ANNUAL REPORT AND ACCOUNTS 2022

A GLOBAL LEADER IN LOCATION
BASED, FAMILY ENTERTAINMENT

A GLOBAL PORTFOLIO OF ATTRACTIONS AND ACCOMMODATION, REACHING
ALL TARGET DEMOGRAPHICS

MIDWAY ATTRACTIONS (Global brands)

SEA LIFE

Madame Tussauds

Dungeons

LEGO/LEGOLAND
Discovery Centres

Eye

Peppa Pig World of Play

Peppa Pig Theme Park

(see Glossary on page 104)

Other

Total

LEGOLAND PARKS

Total

RESORT THEME PARKS

Continental
Europe

Americas

Asia Pacific

Total

Brand
Demographics

Families and
city centre tourists

Teenagers,
young adults and

city centre tourists

Families

City centre tourists

Pre-school families

126

Windsor, UK
(209 rooms)

Billund, Denmark
(578 rooms)

California, USA
(500 rooms)

Dubai, UAE
(250 rooms)

Günzburg, Germany

(509 rooms)

Florida, USA
(468 rooms)

Johor, Malaysia
(263 rooms)

New York, USA
(250 rooms)

Nagoya, Japan
(252 rooms)

Chuncheon,
South Korea
(154 rooms)

10 parks
3,433 rooms

Families

Alton Towers

Gardaland Resort,

Resort, UK
(694 rooms)

Italy

(475 rooms)

Heide Park Resort,

Germany

(329 rooms)

Chessington World
of Adventures

Resort, UK
(254 rooms)

Warwick Castle,
UK (67 rooms)

THORPE PARK

Resort, UK
(90 rooms)

Total

6 parks
1,909 rooms

Families,
teenagers

and young adults

Families

Teenagers and
young adults

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

CHIEF EXECUTIVE’S INTRODUCTION

STRONG MOMENTUM AND READY
FOR THE FUTURE

2022 overview
On behalf of the amazing, driven and passionate colleagues working across
140+ attractions in 25 countries, I am grateful to be writing this introduction
to the 2022 annual review in my new role as Chief Executive of Merlin
Entertainments. Whilst I assumed the role towards the end of last year, I am
aware of and inspired by the tremendous amount of hard work and passion
across the organisation, which saw Merlin deliver a robust year in 2022. I’d
like to take this opportunity to thank the Board for the opportunity to lead
the world’s second largest location based entertainment company and Nick
Varney for his vision, commitment to growth and his leadership of Merlin
Entertainments. It is a privilege to recognise the whole team’s achievements
in building a foundation for future growth.

In 2022 Merlin saw further significant recovery and continued progress,
despite the ongoing challenges of the global COVID-19 pandemic in most
geographical locations, as well as the ongoing war in Ukraine. Our global
teams have shown great commitment and resilience throughout the year,
despite the challenging operating environment, which has been further
exacerbated by the recruitment issues seen across many frontline industries
including attractions and hospitality.

We continue to focus on strong business growth and invest for the future,
with the launch of new attractions together with investment in new
products and rides across our existing estate. The performance of our
attractions is driven by our commitment to the values at the heart of
Merlin’s success; to continue to bring families and friends together to create
lasting memories, fun and connection, all while striving to build the greatest
place to work in the world.

2022 was also a year when we saw further staff engagement with a rise in
responses to our annual staff survey, further expansion of our inclusion and
diversity strategy and ongoing ‘Fun for Everyone’ accessibility work, which
saw even more effort being made to ensure that our teams and attractions
offer fun for everyone.

2022 trading
We welcomed 55 million visitors to our attractions in 2022 (2021: 35 million),
with revenue on a 52 week basis of £1,960 million, an increase of
£699 million on 2021. For the 53 weeks to 31 December 2022, reported
revenue was £2,006 million.

Strong consumer demand was driven by guests being keen to spend time
together with friends and family, resulting in elevated revenues per visitor,
and high average room rates in our accommodation portfolio, which
supported strong trading in North America, the UK, and in parts of
Continental Europe. Our domestically-focused brands have traded strongly,
and international tourism started to build real momentum in some of the
key city destinations.

COVID-19 related restrictions were much less significant than in 2021.
Government restrictions generally eased during Q1 and from the end of
March substantially all of the portfolio remained open. International tourism
in some locations also continued to recover. There were variations by
geography, most notably in China where restrictions caused significant
disruption and lower levels of outbound Chinese tourism continued to have
a wider impact on the rest of the Asia Pacific estate.

Over the last two years we have opened two new LEGOLAND resorts.
LEGOLAND New York, which opened in summer 2021 after a series of
COVID-19 related delays and into a challenging labour market, is
trading positively.

Our latest major investment, LEGOLAND Korea, opened in May 2022 as the
country was exiting from its most severe COVID-19 wave. The LEGOLAND
Korea hotel opened as planned in July. Initial trading has been encouraging,
despite the lingering impact of the pandemic, supporting what will be a
continued focus on the resort positioning of the attraction. We remain
positive about the long term prospects of these resorts.

We also focused on our growing roster of global Intellectual Property (IP)
partners, where the US provides a key growth market. In 2022 we opened
the Peppa Pig Theme Park Florida; our first standalone Peppa Pig theme park,
this ‘second gate’ attraction (adjacent to LEGOLAND Florida Resort)
highlights Merlin’s strong portfolio in the pre-school IP market. This was
followed in Europe with the opening at Gardaland Resort of the first ride
under our multi-territory IP agreement with Sony Pictures Entertainment, to
develop themed rides and resort areas under the ‘Jumanji’ film franchise IP. In
August we announced that Chessington World of Adventures Resort is set to
open a themed land ‘World of Jumanji’ in spring 2023.

The recovery in visitation and our implementation of revenue management
initiatives drove revenue growth compared to pre-pandemic levels, while tight
cost control, ongoing efficiency initiatives, and government support received
in the year have offset continued cost pressures. Our underlying EBITDA
totalled £641 million on a 52 week basis, and £671 million for the 53 weeks
to 31 December 2022 (2021: £379 million), with positive operating cash flows
of £622 million in the year (2021: £459 million).

Outlook
As we move into 2023, we will build on Merlin’s unique platform, while
evolving alongside the world around us. We will work to increase our
emphasis on and deliver several significant initiatives around revenue
management. We will also increase our focus on data and data driven
decision making, begin to shift more towards a digital and direct marketing
approach and begin the improvement processes and structural changes to
further increase revenues per visitor in food and beverage and retail.

We will look to add to our portfolio of partners with world class IP, engage
in the immersive entertainment space, and look to make strategic investments
where there is the opportunity to unlock growth. We are aware of the
power of our partnership with such an incredible force for good as we find in
the LEGO brand and their employees, matching our footprint around the
world. We will continue to collaborate, listen and build on the platform we
have been entrusted with.

Given our continued recovery and strong brands, we believe this is a time to
grow, and as such are investing in our people as well as our attractions. We
believe there is significant growth ahead and will continue to take advantage
of our talented executive team, brilliant creative teams and our unmatched
reach and scale, to continue to drive magical experiences for guests and
driving the business.

Strategic developments
Our strategy remains to offer amazing experiences across a range of exciting
brands, diversified by target audience, dwell time and geography, and by
partnering with global brands such as Peppa Pig, Jumanji, and of course LEGO.

We continue to pursue opportunities to expand our brands, formats and
geographic diversification. We are working with partners to develop three
LEGOLAND resorts in China over the next five years in Shanghai, Shenzhen,
and Sichuan province.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

CHIEF EXECUTIVE’S INTRODUCTION

STRONG MOMENTUM AND READY
FOR THE FUTURE

Employee engagement
Our people are what makes Merlin so special and are our competitive
advantage. We continue to be proud of our global employees as they deliver
magical and memorable experiences to millions of guests.

More than 18,000 people completed our ‘The Wizard Wants to Know’ staff
engagement survey in 2022, a significant increase on the 2021 survey and with
a really high response rate of 84%. Our overall engagement score was 68%, an
encouraging increase of 5% on the previous year. We are grateful to our
teams for completing the survey and pleased that they have given us so much
valuable feedback to take forward as we continue to work to improve
engagement further.

Our recently introduced long term incentive plans, aligned to the strategic
objectives of our shareholders, provide incentive structures for our
management teams and include outstanding contribution and long service
awards that are available to all employees.

More Magic awaits…

Scott M O’Neil
Chief Executive Officer
17 March 2023

Health, safety and security
The health, safety and security (HSS) of our guests and employees remains
our number one priority.

We have maintained a high level of performance across our operations, with
our COVID-19 countermeasures remaining dynamic and able to adapt to
differing states of government restrictions, dependent on the specific
country or territory. The overall strength of our performance in this area is
evidenced by continued strong HSS KPI scores in 2022.

Guest satisfaction
We have maintained, and in many cases improved, our customer satisfaction
and brand measures, in our focus on delivering memorable experiences to
our guests. We are proud that we again maintained our consistently high
customer satisfaction score of 94% despite the challenges of tight labour
markets, which is testimony to the hard work and commitment of our teams
across the business. We continue to monitor our guests’ views by engaging
with them directly, on social media, and by monitoring online reviews.

Guest accessibility continues to be a key area of focus, as we expand our
efforts to allow all of our guests to enjoy as much of the Merlin experience
as possible. These efforts are informed by our guests and disability advisors
and have included training programmes in disability confidence for our
teams, reviewing our existing rides to enhance their accessibility, and
working with ride manufacturers to improve accessibility on new rides.

Diversity and inclusivity
In 2022 we continued our focus on equality and diversity in celebrating our
culture of belonging. Our four regional task forces delivered regional plans to
support our global diversity and inclusion goals, as well as driving meaningful
change to our teams and wider communities at a site level.

Over half of Merlin’s global workforce is female and as such we are focused on
ensuring we drive change at all levels across the Company. Of our top ten
attractions globally, half are currently run by women. These include our
LEGOLAND resorts in the UK, Germany, and New York, as well as
Gardaland Resort and Alton Towers Resort.

We are proud that our commitment to equality is demonstrated throughout
our culture and are focused on creating the greatest place to work and a
true sense of belonging. We are also committed to ensuring our Merlin
Board and senior management teams continue to promote diversity and
inclusivity and are delighted that our most recent Executive Committee
member is a proud member of the LGBTQ+ community.

MOTION JVCO LIMITED

BUSINESS MODEL

COMPETITIVE STRENGTHS
AND A STRONG CULTURE

ANNUAL REPORT AND ACCOUNTS 2022

COMPETITIVE STRENGTHS IN A LONG TERM
ATTRACTIVE MARKET ENVIRONMENT

A unique portfolio of strong brands and iconic assets
We operate a unique global portfolio of brands and iconic assets which are
widely recognised by consumers, enabling us to differentiate our attractions
from unbranded operators.

Our LEGOLAND parks benefit from a mutually synergistic relationship with
LEGO, the world’s number one toy brand(1). Our Midway attractions portfolio
includes chainable brands such as SEA LIFE and Madame Tussauds, while the
Resort Theme Parks attractions are standalone national brands in their
respective markets.

Together, the strength and breadth of this portfolio enable us to offer
compelling propositions through a wide variety of visitor experiences across a
broad range of geographies. This allows us to attract a wide range of target
demographic groups from families with young children, teenagers, young adults
to older adults. It also provides a degree of resilience to short term trading
shocks arising from a particular geography, brand, or demographic.

Intellectual Property (IP) partnerships
Merlin’s global reach and multi-format expertise means we are well placed to
benefit from the growing opportunities to partner with leading owners of
intellectual property (IP) content, enabling us to deliver memorable experiences
to our visitors and offer our partners opportunities to increase engagement
with their customers.

Most significant is our core global, multi-product and exclusive relationship with
the LEGO Group, where we hold the global, exclusive rights to the
LEGOLAND brand under the licencing and co-operation agreement with
KIRKBI, our largest shareholder (see page 8).

We have multiple other IP agreements, ranging from local relationships for
specific attractions, to global, multi-product relationships. These include our
multi-territory exclusivity arrangement to develop a range of attractions based
on the Peppa Pig brand, one of the best known pre-school IPs in the world.

A unique portfolio of skills
Our three Operating Groups are supported by other teams including our in-
house innovation and product delivery group, Merlin Magic Making (MMM),
which includes teams across Europe, North America and the Asia Pacific region.
Together they capture a unique combination of skills, including research,
creative, production and project management. We also have specific resources
within the Operating Groups that are dedicated to researching future
opportunities, searching out locations for potential new attractions and
negotiating with local landlords, developers and civic bodies.

MMM create compelling propositions and develop new concepts into
commercially viable attractions. Our in-house production capabilities include
bespoke content such as wax figures, attraction theming and LEGO model
production, thereby creating efficiencies and reducing costs. Other Merlin
teams have in-house ethical animal welfare expertise.

We manage any scale of construction project ranging from individual rides and
attractions in our existing estate, new Midway attractions across the globe,
through to the development of full-scale LEGOLAND resorts, the latter led by a
senior management team who pursue potential new locations through a range of
ownership models.

We can also leverage Merlin’s extensive experience to provide an opportunity
for investors to develop location based entertainment offerings, and to take on
the operation of other parties’ attractions under management contracts.

Efficient and synergistic operating model
We continue to focus on operational excellence, delivering memorable
experiences for our guests, simplifying our operations and maximising the
synergies afforded by our scale.

We have re-engineered how we operate to be more flexible as guest volumes
change, applying dynamic pricing and promotional strategies. These manage
visitor numbers through periods of high and low attendance volume, extend the
length of stay, encourage repeat visits, and enhance overall revenue.

Maintaining tight control over attraction capacities during peak season and
lowering peak day volumes delivers an improvement in the guest experience,
increases rides per guest, reduces queuing, and improves average guest spends.
Where we can leverage the expertise of third parties, we may partner with
specialist outsourcing providers in areas such as our food and beverage offerings.
In 2022 we have entered into such a partnership with Aramark for our UK
theme parks, LEGOLAND California Resort and LEGOLAND Florida Resort.

We have also been transforming our support functions through shared service
centre initiatives such as our recent finance transformation project, which now
supports over two thirds of the Group.

Our scale also allows us to benefit from procurement cost efficiencies within
clusters, countries, or regions, while in certain territories our Merlin Annual Pass
and Merlin Monthly Membership enable our customers to visit all attractions
within a particular country.

Long term attractive market environment
We continue to believe that Merlin operates in an attractive marketplace,
benefiting from underlying growth characteristics and favourable dynamics, such
as long term increases in leisure spending, including in emerging economies.

This is underpinned by our long term belief in international tourism, where
there has been a strong recovery during 2022. We continue to see long term
growth opportunities from tourism more widely, which benefits our resorts and
drives visitation to our gateway city locations, where we operate our Midway
attraction clusters.

We also expect to see continuing growth in domestic short break holidays.
Merlin is increasingly well-positioned to meet this demand through our offering
of themed, on-site accommodation and ‘second gate’ attractions that extend the
duration of our visitors’ stay. Accommodation offerings also enable greater cross-
selling opportunities, drive improved levels of guest satisfaction, and lead to
increases in pre-bookings, revenue visibility and positive working capital. Our
domestically-focused resort positioning also provides a partial hedge against the
impact of macro-economic or geopolitical volatility on international tourism.

(1)

Source - Kidz Global Brand Trends Report Spring 2022

MOTION JVCO LIMITED

BUSINESS MODEL

COMPETITIVE STRENGTHS
AND A STRONG CULTURE

ANNUAL REPORT AND ACCOUNTS 2022

OUR CULTURE

OUR GUESTS AND OUR PEOPLE

Merlin’s business model is underpinned by our entrepreneurial culture, an
effective corporate governance framework, and a strong sense of how
important it is to operate as a responsible business. ‘The Merlin Way’ sets out
these values which are embedded throughout the business. We are proud of
the inclusive environment we create for all the people who work at Merlin and
focus significant effort in driving a culture of accountability and fairness.

Corporate governance
Merlin believes that effective corporate governance is the foundation of a well-
run company and maintains high standards of governance across the Group. We
recognise that a strong governance framework is fundamental to the execution
of Merlin’s strategic objectives, underpinned by a clear purpose and well
understood culture and values.

More details are set out on pages 31 to 34.

Health, safety and security
Merlin is dedicated to delivering best in class health, safety and security (HSS)
standards that are clearly understood and implemented across the Group. This
involves adopting industry leading standards, reinforcing a rigorous safety culture
and demanding complete commitment from our teams.

As business and consumer activity increased in 2022, Merlin’s COVID-19
countermeasures remained dynamic and able to adapt to differing states of
government restrictions, dependent on the specific country or territory. We
remained focused on ensuring that Merlin’s core HSS programmes and standards
continued to be suitable and applied at those attractions that were emerging from
multiple years of COVID-19 related lockdowns and restrictions.

The overall strength of our HSS performance is evidenced by the continued low
levels of Medical Treatment Case rates (relating to guests and employees).

More details are set out on pages 25 to 26.

Business responsibility
Merlin has an ethical operating culture. Our attractions operate responsibly at
the heart of their communities, maintaining high animal welfare standards and
contributing to local economies.

We recognise that our operations impact upon the environment and are
committed to managing our environmental impacts. In 2023 we will adopt the
reporting requirements set out by the Task Force on Climate-Related Financial
Disclosures (TCFD).

Guests
In 2022 we maintained our focus on providing a high quality of experience for our
guests, and continued to monitor their views, engaging with them directly and on
social media to measure the quality of their experience and drive improvements.

We have again reported strong customer satisfaction measures, which underpins
our confidence in continued demand for high quality, branded location
based entertainment. This is despite the impact of continuing employment cost
pressures from tight labour markets and the consequential impact on the capacity
of our attractions and the product offering. These results are as follows:



Touchscreens at our attractions measure our guest satisfaction scores.
We are proud that we maintained the same guest satisfaction score
of 94% as in 2021, well ahead of our 90% benchmark. Our ‘Top Box’
measure that indicates when guests are ‘very satisfied’ increased
compared to 2021.
‘Net Promoter’ scores measure whether a guest would recommend our
attractions. This metric also increased in the year.

The Merlin Board and senior management undertake regular site visits to
ensure that the guest experience is in line with guest expectations, and we
also use the ‘Yext’ platform to monitor online guest reviews and help inform how
we improve our attractions. Customer insight has also helped us as we make
significant progress on guest accessibility.

Employees
Our people are what makes Merlin so special, and we continue to be proud of
our global employees as they deliver magical and memorable experiences to
millions of guests.

In 2022 we again ran our ‘The Wizard Wants to Know’ employee engagement
survey. More than 18,000 people completed the survey, a response rate of 84%.
Our overall engagement score was 68%, an encouraging increase of 5% on the
previous year.

In 2022 we continued our focus on gender equality, ethnic diversity, and our
inclusion strategy ‘Everyone Matters at Merlin’. Our four regional task forces
delivered regional plans to support our global diversity and inclusion goals as well
as driving meaningful change to our teams and wider communities at site level.
We are proud that our commitment to equality is demonstrated throughout our
culture and are focused on creating the greatest place to work and a true sense
of belonging. We are also committed to ensuring our Merlin Board and senior
management teams continue to promote diversity and inclusivity.

We partner with two charities. Merlin’s Magic Wand provides memorable
experiences to children faced with the challenges of serious illness, disability, and
adversity. The SEA LIFE TRUST works to protect marine life and habitats across
the world, also operating two marine sanctuaries.

See more on page 24.

More details are set out on page 29.

MOTION JVCO LIMITED

BUSINESS MODEL

COMPETITIVE STRENGTHS
AND A STRONG CULTURE

ANNUAL REPORT AND ACCOUNTS 2022

OUR INVESTORS

Since November 2019 the Group has been controlled by a consortium of three
principal long term investors with the capability to support Merlin’s growth
ambitions. The consortium work together in accordance with the formal
Shareholder Investment Agreement set out at the time of the transaction. The
Shareholder Investment Agreement sets out the Board’s terms of reference and
‘matters reserved’, being certain limited matters, which require the consent of
the major shareholders. Their investment is held in the Company.

Details of the investor consortium are set out below and details of their
representation on the Board of Directors are set out on pages 33 to 34.



KIRKBI – KIRKBI A/S is the Kirk Kristiansen family’s private holding and
investment company founded to build a sustainable future for the family
ownership of the LEGO brand through generations. KIRKBI’s work is
focused on three fundamental tasks all contributing to enabling the Kirk
Kristiansen family to succeed with the mission to inspire and develop the
builders of tomorrow. KIRKBI works to protect, develop and leverage the
LEGO brand across all the LEGO branded entities. They are committed to
a long term and responsible investment strategy to ensure a sound
financial foundation for the owner family’s activities as well as contributing
to sustainable development in the world. They are dedicated to support
the family members as they prepare for future generations to continue the
active and engaged ownership as well as supporting their private activities,
companies and philanthropic work. KIRKBI’s investment activities include
investments in energy transition, circular plastic and significant long term
investments in listed and privately held companies as well as real estate
investments in Denmark, Switzerland, Germany and the UK. See
www.KIRKBI.com for more information.
Blackstone – one of the world’s leading investment firms, that seeks to
create positive economic impact and long term value for investors, the
companies in which it invests, and the communities in which it works.
Blackstone’s asset management businesses had $975 billion in assets under
management as at 31 December 2022 across a range of investment
vehicles. Blackstone has long-standing experience investing in location
based entertainment businesses, like Merlin, as well as the wider
hospitality, travel and leisure sector. Blackstone’s investment in Merlin has
been made through its long-dated Core Private Equity Strategy, which
invests in high-quality businesses for typically ten to 15 or more years.
Canada Pension Plan Investment Board (CPP Investments) – a professional
investment management organisation that manages the CPP Fund in the
best interest of the more than 20 million contributors and beneficiaries of
the Canada Pension Plan. CPP Investments is governed and managed
independently of the Canada Pension Plan and at arm’s length from
governments. As at 31 December 2022, the Fund totalled C$536 billion,
including approximately C$25 billion of assets invested in the United
Kingdom, and net investments of C$146 billion in private equity. CPP
Investments’ private equity team is a committed long term investor with
permanent capital, a focus on sizeable investments alongside aligned
partners, the ability to invest across the full spectrum of ownership, and
the ability to shape the duration and underwriting approach of investments
to support longer-date returns on investment initiatives.

MOTION JVCO LIMITED

GROWTH DRIVERS

HOW WE DRIVE
GROWTH

ANNUAL REPORT AND ACCOUNTS 2022

EXISTING ESTATE GROWTH, DRIVEN BY ACCESS TO POWERFUL INTELLECTUAL PROPERTY

We make regular, targeted investments to update and refresh the existing
estate, to grow demand and, where applicable, to increase capacity at
our attractions.

We are increasingly able to develop these investments in partnership with leading
intellectual property owners to provide an immersive, themed experience for
our visitors.

Each attraction has a planned investment cycle with varying capex levels over
several years. These help to smooth overall expenditure across the portfolio
and ensure investments are funded from operating free cash flow. Our theme
parks require relatively higher capital expenditure due to the scale and nature of
new rides and attractions, and the drive to attract repeat visitors. Midway
attractions require relatively lower capital expenditure due to the smaller scale
of the attractions.

In April 2022 we opened ‘JUMANJI - The Adventure’ at Gardaland Resort in Italy,
the first ride to be opened as part of our multi-territory exclusivity agreement
with Sony Pictures Entertainment, to develop and operate attractions, rides, lands,
retail outlets and themed hotel rooms based on the studio’s ‘Jumanji’ film
franchise. Chessington World of Adventures Resort is also set to open a themed
land ‘World of Jumanji’ in spring 2023.

At LEGOLAND California Resort, in May 2022 we opened ‘LEGO Ferrari Build
and Race’. Featuring a life-size LEGO Ferrari F40 model, this interactive attraction
puts visitors ‘in the driver’s seat’ as they use their creativity and imagination to
build, test and race LEGO Ferraris.

NEW LEGOLAND RESORT DEVELOPMENTS

We have a successful track record of developing and operating LEGOLAND
parks globally, where we have two core operating and investment models.

Firstly, in more proven locations, we follow an 'owned and operated’ model,
securing the land and developing the infrastructure ourselves. The original parks
that Merlin acquired in 2005 were all developed in this way, as were
LEGOLAND Florida which we opened in 2011, and LEGOLAND New York,
that opened in 2021. LEGOLAND Korea, which opened in May 2022, has also
been developed under this model (with support from the local province).

Secondly, we work with a local partner, marrying their capabilities and expertise
with our strengths and experience to both parties’ mutual benefit. Typically, the
funding for the capital investment is provided by a third party and we operate
the park under a management contract. We currently operate LEGOLAND
Malaysia and LEGOLAND Dubai under this model.

We are actively working with a number of partners to develop new
LEGOLAND parks, with three previously announced resorts planned to open
in China in the next five years. These projects are as follows;


LEGOLAND Shanghai Resort in the Jinshan District of Shanghai – being
developed via a joint venture company, under a co-operation agreement
with the Shanghai Jinshan District Government, CMC Inc. and KIRKBI.
LEGOLAND Shenzen Resort, being developed with Hazens Holdings.
LEGOLAND Sichuan Resort, being developed with Global Zhongjun
Cultural Tourism Development Co. Ltd.




We may also pursue hybrid opportunities which could involve Merlin investing an
element of equity in the project.

EVOLUTION OF THEME PARKS INTO DESTINATION RESORTS

We continue to transform our theme parks into destination resorts, extending
visitor market reach and enhancing revenues from a number of sales channels.
These include primary admissions (including multi-day tickets and second gate
admission fees), and commercial spend such as the sale of food and beverages,
retail merchandise, and souvenirs such as photos.

The themed accommodation offerings in our hotels and holiday villages continue
to be very successful. They provide an integral contribution to the overall visitor
experience, helping to drive pre-bookings, increase multi-day ticket sales and
improve guest satisfaction.

In early 2023 we announced the UK’s first LEGO themed holiday village at
LEGOLAND Windsor Resort. Set to open in spring 2024 the LEGOLAND
Woodland Village will feature 150 lodges, an on-site restaurant, and a family
entertainment hub.

There are also ongoing opportunities to add new visitor attractions at our theme
parks, for which additional admission fees are charged. These attractions, such as
waterparks, are referred to as ‘second gate’ attractions.

This is an increasing area of focus across the two theme park Operating Groups.
In 2021 we opened the LEGOLAND Water Park at the Gardaland Resort (the
first LEGO themed water park in Europe), and in early 2022 we launched our
first standalone Peppa Pig theme park, adjacent to LEGOLAND Florida Resort.

MOTION JVCO LIMITED

GROWTH DRIVERS

HOW WE DRIVE
GROWTH

CLUSTERING OF MIDWAY ATTRACTIONS

Our growth strategy includes the roll out of our chainable Midway attractions in
new locations and countries, often creating ‘clusters’, where we develop
multiple attractions in one location.

During 2022 we opened the following two new Midway attractions;


Peppa Pig World of Play Leidschendam - opened in February in
the Netherlands.
LEGO Discovery Centre Brussels - the first ‘next generation’ LEGO Discovery
Centre opened in Belgium in late June. In 2023 we will open a second
attraction with this new format at Springfield Town Center in
Washington D.C.



ANNUAL REPORT AND ACCOUNTS 2022

From March 2022 we took over a management contract for the ‘THIS IS
HOLLAND’ flying theatre experience, expanding our Amsterdam cluster. We
have also been awarded the management contract for the Sandcastle Waterpark
in Blackpool, the UK’s largest indoor waterpark.

We continue to see opportunities to open new Midway attractions, especially
using intellectual property as a central element of the attraction.

ACQUISITIONS AND NEW FORMAT OPPORTUNITIES

We continue to consider acquisitions of, or investments in, visitor attractions,
sites and brands that could strategically enhance our portfolio and enable us to
grow into new geographies. We believe that there remain further attractive
acquisition opportunities that would meet our investment criteria in the future.

We also develop new formats of attraction, where currently our focus is on
Peppa Pig branded attractions aimed at pre-school children. We have opened
five pilot indoor Peppa Pig World of Play attractions, and one standalone Peppa
Pig theme park that opened next to LEGOLAND Florida Resort in early 2022.

In April 2022 we completed the acquisition of the COEX Aquarium in Seoul,
South Korea, adding a further significant attraction to the SEA LIFE portfolio,
and consistent with our wider strategy to build clusters of Midway indoor
attractions in key gateway cities.

Later in the year we completed on the transaction to take over the operations
of Cadbury World in the UK, deepening our relationship with the UK’s largest
chocolate brand.

In early 2023 we announced we are developing our second Peppa Pig theme
park in the Dallas-Fort Worth area in north Texas, scheduled for opening
in 2024.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL AND OPERATING REVIEW

REVENUE GROWTH AND
FOCUS ON COSTS

Total
53 weeks ended
31 December
2022

Total
52 weeks ended
24 December
2022

Total
52 weeks ended
25 December
2021

Underlying
52 weeks ended
24 December
2022

Underlying
52 weeks ended
25 December
2021

Underlying
growth
(actual
currency)

£m

2,006

692

671

(285)

386

(250)

136

(47)

£m

1,960

662

641

(285)

356

(250)

106

(38)

£m

1,261

376

(246)

130

(224)

(94)

(46)

(140)

£m

1,960

662

641

(256)

385

(250)

135

(42)

£m

1,261

379

(247)

132

(224)

(92)

(46)

(138)

55.4%

74.3%

68.9%

(3.8)%

190.0%

Revenue

EBITDA excluding share-based payments

EBITDA

Depreciation, amortisation and impairment

Operating profit

Net finance costs

Profit/(loss) before tax

Taxation

Profit/(loss) for the year

See ‘How we report our results’ on page 18 for details of how we report our financial performance.

Introduction
In 2022 robust consumer demand, elevated revenues per visitor, and high
average room rates in our accommodation portfolio all supported strong
trading in North America, the UK, and in parts of Continental Europe. Our
domestically-focused brands have traded strongly and international tourism in
some locations also continued to recover.

COVID-19 related restrictions were much less significant than in 2021, with
government restrictions generally easing during Q1. From the end of March
substantially all of the portfolio remained open. There were variations by
geography, most notably in China where restrictions caused significant
disruption and lower levels of outbound Chinese tourism continued to have a
wider impact on the rest of the Asia Pacific estate.

The recovery in visitation, combined with our targeted approach to revenue
management, drove revenue growth compared to pre-pandemic levels.
Moreover, tight cost control, ongoing efficiency initiatives, and government
support received in the year have partly offset continued cost pressures.

Like other businesses in the leisure and hospitality sector, we continue to see
employment cost pressures in a number of locations. Our operational focus has
been on limiting the impact of this on the capacity of our attractions and the
product offering and ensuring we maintain the quality of the guest experience.
While utilities are not a significant proportion of Merlin’s cost base, these are
also subject to movements in wholesale energy prices.

Our latest major investment, LEGOLAND Korea, opened in May 2022 and
initial trading has been encouraging, with a focus on building the resort
positioning of the attraction.

We have shown positive operating cashflows, which we continue to monitor
closely. The Group’s liquidity position is strong, with leverage back to 2019
levels, the year prior to the COVID-19 pandemic.

The Group complied with all its covenants in the year. Under the terms of the
covenant waiver we agreed in June 2021, the Group’s financial leverage
covenant has been waived until Q3 2023. As part of this agreement the Group
is required to maintain a minimum liquidity of £75 million (to include amounts
undrawn from the revolving credit facility, and cash and cash equivalents).

Presentation of results
Motion JVco Limited (the Company) has been the parent company of the Merlin
Entertainments Limited group of companies (Merlin, Merlin Group), since
acquiring the Merlin Group in November 2019.

Underlying results and exceptional items
To present the underlying performance of the business more accurately, the
impacts of certain activities are reported within exceptional items. More details
on exceptional items can be found on page 13. Unless otherwise stated, the
commentary below refers to underlying results, that is, before the impact of
exceptional items.

The impact of the COVID-19 pandemic on our trading has all been reflected
within our underlying results. This includes the impact of government support
measures in certain territories.

Alternative performance measures
On page 18 we set out in more detail explanations of how we adopt certain
alternative performance measures to help present our trading performance in the
most helpful and meaningful way.

This year’s consolidated Group financial statements are prepared on a ‘53 week’
basis for the period ending 31 December 2022. In most years we report on a
’52 week’ period. In certain years an additional week is included to ensure that
the statutory financial year end date stays in line with the end of December. To
aid comparability, unless where stated, the trading commentary which follows is
on a 52 week basis.

All balance sheet, and therefore cash flow information, is reported as at the
statutory year end date and therefore represents a 53 week period in 2022
(2021: 52 weeks).

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL AND OPERATING REVIEW

REVENUE GROWTH AND
FOCUS ON COSTS

Performance summary
Reported revenue for the 53 weeks to 31 December 2022 increased to
£2,006 million. On a comparable 52 week basis, total revenue increased by
£699 million from £1,261 million to £1,960 million.

COVID-19 related restrictions were much less significant than in 2021, with
government restrictions generally easing during Q1. All of our seasonal
attractions in the UK, Continental Europe and North America opened as
planned, and at the end of March approximately 90% of our estate was open.
Since then, substantially all of the portfolio remained open. There were
variations by geography, most notably in China where attractions were closed
for significant parts of the year.

Many of the trading patterns seen in 2021 continued through 2022. Robust
consumer demand supported strong trading in North America, the UK, and in
parts of Continental Europe, most notably at our domestically-focused brands.
International tourism in some locations continued to recover, albeit
international travel remained suppressed more widely. Restrictions in China
caused significant disruption and lower levels of outbound Chinese tourism
continued to have a wider impact on the rest of the Asia Pacific estate.

In 2021 and 2022 we have opened two new LEGOLAND resorts. LEGOLAND
New York opened in summer 2021 after a series of COVID-related delays and
into a challenging labour market. Trading since opening has been positive, with
strong customer spends and positive satisfaction scores, despite the staffing
challenges. LEGOLAND Korea opened in May 2022 as the country was exiting
from its most severe COVID-19 wave with the LEGOLAND Korea hotel then
opening as planned in July. Initial trading has been encouraging and supports
what will be a continued focus on the resort positioning of the attraction.

Since the global COVID-19 pandemic began, we have taken steps to refine our
operating model, creating a lower and more flexible cost base that is better able
to react to any material changes in demand. As a result we have been able to
manage our costs actively as trading has improved. Our UK theme parks have
successfully transitioned to having food and beverage services provided by our
partner Aramark. For those attractions Merlin therefore reports revenues on a
‘net’ basis under the terms of the contract, and no longer records the value of
revenue received from customers, as is the case across much of the rest of the
estate. The resulting reduction in reported revenue in 2022 is circa £12 million,
with a negligible impact on EBITDA.

Staff expenses increased from £373 million to £531 million, due primarily to
significantly higher trading activity compared to the comparative period,
combined with lower levels of furlough and other support payments (2022:
£2 million, 2021: £19 million, see note 2.1 to the financial statements). Like
other businesses in the leisure and hospitality sector, we continue to see
employment cost pressures in several locations, with increases in minimum
wage levels and tight labour markets, albeit the absolute impact on costs in the
short term has been limited due to higher than normal vacancy levels. Our
operational focus has been on limiting the impact of this on the capacity of our
attractions and the product offering, to ensure we maintain the quality of the
guest experience.

Staff expenses include a £21 million (2021: less than £1 million) share-based
payment accounting charge in respect of management incentive plans
implemented in late 2021. These plans are aligned to the strategic objectives of
our shareholders and include outstanding contribution and long service awards
available to all employees. Further detail is provided in note 5.6 to the
financial statements.

Marketing costs increased from £30 million to £74 million as trading levels
increased, albeit the level of market demand has allowed us to operate in the
short term with marketing spends lower than normal.

Other operating expenses increased from £253 million to £363 million. This
reflects increased repairs and maintenance costs compared to 2021 when more
attractions were closed, and higher property costs which in 2021 benefited from
lower UK business rates.

Broader cost inflation continues to be a challenge. While utilities are not a
significant proportion of Merlin’s cost base, these have been subject to increases
in wholesale energy prices, most notably across the UK and Continental
Europe. The overall impact of energy prices has been minimal in 2022 due to
limited short term exposure to spot prices. However, contracts renewed in 2022
have resulted in significant price increases which are only partly offset by
government support packages. We are acting to minimise energy consumption
and limit the financial impact, although it is unlikely that these initiatives will have a
significant benefit in the short term.

Other than in relation to energy supply, our trading operations are not directly
affected by the war in Ukraine. Merlin has no attractions in the region, no
material Russian or Ukrainian suppliers or landlords, and very few staff that are
directly affected. Outbound Russian and Ukrainian international tourism at our
attractions is also negligible. However, this and other geopolitical and economic
factors, and in particular fuel and energy costs, could lead to reduced levels of
international tourism, lower guests’ disposable income, and put further
inflationary pressure on operating costs.

We continued to benefit from governmental support payments totalling
£33 million (2021: £19 million) for operating costs in certain jurisdictions (see
note 2.1 to the financial statements). These were primarily in respect of COVID-
19, including where claims were finally settled for previous years. Within the UK,
2021 trading benefited from a lower 5% VAT rate through to the start of
October, which then moved to 12.5%. There was a minor benefit at the start of
2022 before the rate returned to 20% in April.

Operating Group margins are also affected by the scale and mix of revenue in the
existing estate and the dilutive effect of new attractions and accommodation
launched in the year, as a result of the timing and costs associated with launch,
and the pace with which attractions reach maturity.

Net central costs of £65 million were £22 million higher than in 2021. This
primarily reflects a full year of share-based payment charges in respect of the
incentive plans created at the end of 2021, together with lower revenues from
the phasing of central development projects. Within our central functions, as in
the Operating Groups, we maintained our focus on managing the level of
underlying ongoing expenditure.

The trading recovery and our focus on cost management together drove
underlying EBITDA of £641 million on a 52 week basis and £671 million for the
53 weeks to 31 December (2021: £379 million).

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL AND OPERATING REVIEW

REVENUE GROWTH AND
FOCUS ON COSTS

Foreign exchange
Merlin is exposed to fluctuations in foreign currency exchange rates on
transactions and the translation of our non Sterling earnings.

Midway Attractions

In the second half of the year, Sterling experienced a material weakening,
particularly against the US Dollar. Given a significant proportion of our trading is
derived from the USA, the reported results showed a significant benefit arising
from translation to Sterling. Retranslating 2022 performance at 2021 rates
would result in a £59 million decrease in revenue and a £23 million decrease in
underlying EBITDA. We set this out in more detail by major currency on
page 105.

Operating profit
Underlying depreciation and amortisation charges increased by £9 million from
£247 million to £256 million for the year.

Visitors (m)

Revenue (£m)

Underlying
EBITDA (£m)
Underlying
EBITDA margin

Operating profit/
(loss) (£m)

2022
53 weeks

2022
52 weeks

2021
52 weeks

Growth
(actual
currency)

Like
for like
growth

28.7

631

249

27.9

610

234

16.8

344

66.1%

76.9%

102

129.5%

70.8%

39.5%

38.4%

29.6%

130

115

(10)

n/m

Depreciation charges have increased in respect of LEGOLAND New York, which
opened part way through 2021, LEGOLAND Korea, which opened in May, and
other new openings.

Merlin’s Midway attractions are predominantly indoor attractions that operate
year round, with trading volumes generally higher around holiday periods.

These are offset by lower charges for Resort Theme Parks. At the start of the
year the Group agreed terms with the landlord for Heide Park Resort,
following similar transactions that completed at the end of 2021 for the three
Resort Theme Parks in the UK. These agreements have secured our tenure at
these resorts until 2077, increasing lease liabilities and the associated right-of-use
assets. Compared to previous periods depreciation charges have reduced,
reflecting the right-of-use assets now being amortised over that longer period.

Exceptional items

2022
53 weeks
£m

2021
52 weeks
£m

Underlying profit/(loss) for the year

114

(138)

Exceptional items:

Within EBITDA

Within depreciation, amortisation and impairment

Income tax credit on exceptional items above

Profit/(loss) for the year

(29)

(3)

(140)

Exceptional items reported within EBITDA totalled £nil before tax credits (2021:
£3 million).

Exceptional items reported within depreciation, amortisation and impairment
totalled £29 million (2021: credit of £1 million before tax credits). These were
£22 million for two Midway attractions, following reviews of market and
economic conditions at those specific locations, and £7 million in respect of the
Group’s investment in the company operating LEGOLAND Dubai Hotel.

Further details can be found in note 2.2 of the financial statements.

Our Midway North America attractions traded strongly, where we operate
largely domestically-focused brands. Total revenues were ahead of pre-pandemic
levels, driven by elevated revenues per guest and recent attraction openings. On
a like for like basis, revenues for the year to date were broadly in line with pre-
pandemic levels. The North American estate has generally been open in both
2022 and the 2021 comparative period.

Within the Midway UK division, robust revenues per guest and domestic
demand drove positive trading. This was supported by a steady recovery in
inbound international tourism, primarily to our attractions in London.

Our Continental Europe attractions saw similar trends to the UK, albeit 2022
trading was affected for a longer period by restrictions in certain locations. In
2021 trading restrictions impacted the early part of the year and lifted later than
in the UK.

The Asia Pacific region was most negatively impacted by COVID-19 and evolving
governmental responses. Rolling restrictions and lockdowns in China caused
considerable disruption, albeit they started to ease later in the year. Significantly
lower levels of outbound Chinese tourism had a wider impact on the rest of the
Midway Asia Pacific estate. There was a continued recovery in Australia and
New Zealand, driven by domestic visitation and strong revenues per guest.

EBITDA margins have increased to 38.4% (52 weeks) compared to 29.6% in
2021. This reflects the recovery in visitation levels, the strong revenues per guest
as noted above, and short term savings in marketing expenditure. We have also
benefited from government support payments for operating costs, including
where claims have been settled in respect of previous years. We do not
anticipate such support to continue.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL AND OPERATING REVIEW

REVENUE GROWTH AND
FOCUS ON COSTS

LEGOLAND Parks

2022
53 weeks

2022
52 weeks

2021
52 weeks

Growth
(actual
currency)

Like
for like
growth

EBITDA margins have increased to 35.0% (52 weeks) compared to 32.1% in
2021. This reflects the strong revenues per guest as noted above, higher than
average staff vacancy levels, and short term savings in marketing expenditure,
offset by ongoing cost pressures. We have also benefited from government
support payments for operating costs, including where claims have been settled
in respect of previous years. We do not anticipate such support to continue.

48.3%

Resort Theme Parks

Visitors (m)

Revenue (£m)

Underlying
EBITDA (£m)
Underlying
EBITDA margin

Operating
profit (£m)

16.2

924

330

15.8

903

317

9.4

537

172

67.2%

68.3%

83.6%

35.7%

35.0%

32.1%

247

234

106

119.7%

The LEGOLAND parks in California and Florida in the US, and LEGOLAND
Japan, are normally open all year round. The three European parks in the UK,
Denmark and Germany typically open fully in the spring and trade through to
the autumn, with trading over the winter period more focused on
accommodation offerings and events. All parks see trading volumes higher
around holiday periods, particularly the main summer trading season. The
recently opened resorts at LEGOLAND New York and LEGOLAND Korea
will operate seasonally, closing over parts of the winter period.

In the US, our LEGOLAND resorts in California and Florida traded strongly,
with elevated revenues per guest and higher accommodation room rates. The
first standalone Peppa Pig theme park opened in February as a ‘second gate’
attraction adjacent to LEGOLAND Florida Resort. This new opening traded
ahead of expectations, helping drive total visitation to the resort ahead of the
equivalent period in 2019. LEGOLAND New York, which opened in 2021, was
closed over the winter season and opened on schedule in the spring.

Tight labour markets in the US have resulted in some staff shortages and
pressure on wages. Despite these challenges, trading was positive, with strong
customer spends and positive satisfaction scores.

Our European resorts all showed strong trading, with revenue management
initiatives supporting revenues per guest, leading to like for like revenues
increasing against 2019 trading. All resorts showed accommodation revenues
ahead of expectations, with demand for short breaks driving strong average
room rates. The two resorts located in Germany and Denmark both benefited
from the recovery in international tourist visitation.

Within the Asia Pacific region, LEGOLAND Japan built a more sustained
recovery through 2022, with positive momentum over peak season, although
trading remained below pre-pandemic levels. LEGOLAND Korea opened in
May 2022 as the country was exiting from its most severe COVID-19
wave. The LEGOLAND Korea hotel opened as planned on 1 July. Initial trading
has been encouraging with a focus on building the resort positioning of the
attraction.

Merlin has two LEGOLAND management contract locations. LEGOLAND
Dubai park was open throughout the year but has seen a slow recovery, with
visitor volumes significantly below pre-pandemic levels. A themed hotel at the
resort opened in January, developed in partnership with the park’s owners.
LEGOLAND Malaysia was open through the year.

2022
53 weeks

2022
52 weeks

2021
52 weeks

Growth
(actual
currency)

Like
for like
growth

11.5

450

157

11.4

446

155

9.0

374

148

26.5%

19.4%

4.9%

19.6%

35.0%

34.8%

39.6%

109

107

23.2%

Visitors (m)

Revenue (£m)

Underlying
EBITDA (£m)
Underlying
EBITDA margin

Operating
profit (£m)

The main trading period for the Resort Theme Parks attractions, all of which
are in Europe, normally starts during the early spring, with trading over the
winter period more focused on accommodation offerings and events. All parks
see trading volumes higher around holiday periods, particularly the main summer
trading season.

All resorts opened on schedule in the spring and trading was robust across the
Operating Group, which has now fully recovered and traded ahead of pre-
pandemic levels.

The overall performance was driven by the Operating Group’s two
largest resorts, Alton Towers Resort in the UK and Gardaland Resort in Italy.

Alton Towers Resort reported record revenue, driven by strong revenues per
guest, reflecting customer demand, our dynamic approach to revenue and
capacity management, and a strong product offering that included a successful
events programme. Demand for short breaks supported strong accommodation
room rates.

Gardaland Resort benefited from the combination of the recovery of
international tourist visitation, a robust domestic market, the impact of the new
‘JUMANJI - The Adventure’ ride, and a full year of trading from the LEGOLAND
Water Park that opened at the Resort in 2021.

EBITDA margins have fallen to 34.8% (52 weeks) compared to 39.6% in 2021.
This reflects ongoing cost pressures and inflationary impacts on areas such as
repairs and maintenance. Furthermore, within the UK resorts, 2021 trading
benefited from a lower 5% VAT rate across the peak trading season and up to
the start of October, when it then moved to 12.5%. There was therefore a less
significant benefit in 2022 as the rate returned to 20% in April.

These impacts are offset by the strong revenues per guest as noted above, higher
than average staff vacancy levels, short term savings in marketing expenditure,
and government support payments for operating costs.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL AND OPERATING REVIEW

REVENUE GROWTH AND
FOCUS ON COSTS

Finance costs
Net finance costs of £250 million were incurred in 2022 (2021: £224 million).

The increase reflects changes in interest rates on the Group’s interest-bearing
loans and borrowings, increased lease interest charges following the transactions
where we extended the tenure at our leasehold Resort Theme Park locations,
and lower levels of borrowing costs being capitalised following the completion
of LEGOLAND New York and LEGOLAND Korea. These are offset by foreign
exchange gains on non Sterling internal loan structures.

As set out in more detail below, in 2022 the Group entered into USD 600 million
of interest rate swaps, hedging USD LIBOR floating rate debt to 2026, and
EUR 700 million of interest rate caps maturing in 2026.

Profit before tax
As a result of the factors noted above, reported total profit before tax for the
53 weeks to 31 December 2022 was £136 million (2021: loss of £94 million).

Taxation
The total tax expense for the year was £47 million (2021: £46 million) which
represents a reported effective tax rate (ETR) of 34.6%. The underlying ETR,
excluding exceptional items, was 30.8%

The difference between this rate and the UK standard tax rate of 19.0% is
primarily attributable to the effect of tax rates in foreign jurisdictions and certain
non-deductible expenditure, offset by movements in uncertain tax provisions.
During the course of the year, the conclusion of tax authority enquiries has
enabled certain provisions to be released or reassessed.

In 2021 the effective tax rate was (48.9)%. The difference between this rate and
the UK standard tax rate of 19.0% was primarily attributable to the revaluation
of deferred tax liabilities, due to the change in the UK tax rate from 19% to 25%
from 1 April 2023, and the non-recognition of tax losses.

The impact of the European Commission’s finding relating to the UK’s
Controlled Foreign Company rules is further detailed in note 2.4. Charging
notices from HMRC were received for £28 million in 2021, which the Group was
legally obliged to pay. However, it is expected that this £28 million will ultimately
be recovered and it is therefore included as a non-current receivable in the
consolidated financial statements.

Significant factors impacting the Group’s future ETR include the Group’s
geographic mix of profits and changes to local or international tax laws. In the
3 March 2021 Budget it was announced that the UK tax rate will increase to
25% from 1 April 2023. This will have a consequential effect on the Group’s
future tax charge.

The Group has a tax policy that sets out our approach in the areas of
governance, risk management, tax planning and how we deal with tax authorities.
This is available on the Merlin website.

Further detail on taxation is provided in note 2.4 to the financial statements.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL AND OPERATING REVIEW

REVENUE GROWTH AND
FOCUS ON COSTS

2022
53 weeks
£m

2021
52 weeks
£m

Investing activities
A total of £195 million was incurred on capital expenditure in 2022 (2021:
£291 million).

Cash flow

Underlying EBITDA

Exceptional items

Working capital and other movements

Tax (paid)/received

Net cash inflow from operating
activities

Capital expenditure – existing estate

Capital expenditure – new business
development (NBD)

Other investing activities

Interest paid, net of interest received

Other

Net cash inflow/(outflow) before
changes in borrowings

Net changes in borrowings, including
shareholder loans

Net capital repayments of leases

Net cash inflow/(outflow) for the year

671

(29)

(20)

622

(140)

(55)

(31)

(275)

123

(16)

(33)

379

(3)

459

(72)

(219)

(7)

(231)

(70)

(29)

(34)

(133)

Operating cash flow
Net cash flow from operating activities for the year was an inflow of
£622 million (2021: £459 million), resulting from total EBITDA of £671 million, a
working capital outflow of £29 million and net tax payments of £20 million.

Working capital movements in the year of £(29) million related to a number of
factors. These included increased trade accounts receivable and higher inventory
levels as trading recovered, combined with lower levels of accruals. This was
offset by trading related increases in deferred income, together with the impact
of share-based payments and certain provisions.

In 2021 positive working capital movements of £78 million reflected the
recovery of trading activity against the much lower levels at the end of 2020, the
shift to online bookings, and a positive contribution from attractions that
opened in 2021 and where there was minimal working capital in prior periods.

In Q1 2021 the Group made payments to HMRC of £28 million in respect of
the European Commission’s review as to whether certain elements of the
UK’s Controlled Foreign Company rules partially represent State Aid. The
Group expects that this will ultimately be recovered (see note 2.4 for more
information). In Q3 2021 the Group received a first payment of £26 million
under the CARES Act in the US, in respect of carry back claims against taxes
paid in previous years.

Operating free cash flow (being underlying EBITDA less existing estate capital
expenditure) was an inflow of £531 million in 2022 (2021: inflow of £307 million).

Existing estate capital expenditure totalled £140 million (2021: £72 million). In
2021 there were significantly lower levels of activity than normal as a result of the
COVID-19 pandemic. While activity levels have increased, they have remained
suppressed to some extent through 2022.

New business development (NBD) investment totalled £55 million. The most
significant element of this was £33 million that related to the development of
LEGOLAND parks, primarily LEGOLAND Korea, which opened in the year. The
2021 comparative amount was £177 million which also included spend on
LEGOLAND New York. A further £6 million related to new accommodation
development across our theme park estate, £7 million was in respect of new
Midway attractions and £9 million in respect of other projects.

Other investing activities relates to the acquisition of the COEX Aquarium in
April 2022. In 2021 we invested £7 million in respect of the LEGOLAND
Shanghai Resort.

Financing activities – interest payments
Interest payments relate to the Group’s external debt and its lease arrangements.
They therefore reflect both the underlying level of those interest charges, as well
as the timing of when payments are made. Debt interest payments are made
quarterly and six monthly depending on the nature of the debt. In 2022 an
additional quarterly payment was included as a result of the impact of the
reporting period being on a 53 week basis.

The timing of lease payments varies depending on local practice. The Group’s
largest lease commitments are in the UK and are paid quarterly.

Financing activities – changes in borrowings
2022
The net change in borrowings totalled an outflow of £16 million primarily in
respect of mandatory quarterly repayments under the terms of the Group’s
banking facilities.

Capital repayments of leases are stated net of £6 million received from the
landlord as part of the agreement to secure tenure at the Heide Park Resort
(2021: £25 million in respect of the three UK Resort Theme Park locations - see note
5.4). The timing of payments reflects the factors noted above.

2021
The net change in borrowings totalled an outflow of £29 million, mainly from
the repayment of £15 million in respect of funding received in 2020 from
KIRKBI for the deferral of certain trading payments and a further £10 million
under the terms of the Group’s banking facilities.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL AND OPERATING REVIEW

REVENUE GROWTH AND
FOCUS ON COSTS

Net assets

Financing and capital structure
The key terms of the Group’s borrowing facilities are summarised as follows:

Property, plant and equipment

Right-of-use assets

Brands

Goodwill and other intangible assets

Investments

Working capital

Net external debt

Lease liabilities

Net derivative financial assets/(liabilities)

Corporate and deferred tax

Employee benefits

Other assets and liabilities

2022
£m

2,664

1,633

1,319

2,366

(265)

(3,541)

(1,612)

(414)

(200)

2021
£m

2,507

1,512

1,311

2,200

(328)

(3,369)

(1,458)

(2)

(365)

(7)

(139)

Net assets

2,000

1,886

The reported values of property, plant and equipment; goodwill and other
intangible assets; and net external debt, reflect the impact of foreign exchange
movements, mainly in respect of the weakening of Sterling compared to the
US Dollar.

Property, plant, and equipment increased by £157 million, primarily reflecting
capital additions and the retranslation of assets at different foreign exchange
rates, offset by depreciation charges.

The net derivatives value of £37 million relates to mark to market valuations
at the reporting date. These are primarily in respect of the interest rate swap
and cap transactions entered into during the period to hedge interest
rate exposures.

The increase in lease liabilities and related right-of-use assets reflects the
agreement that secured tenure until 2077 at Heide Park Resort, which
completed early in the reporting period. For more details see note 5.4.

Further analysis of working capital movements is provided in note 4.4 to the
financial statements.

Senior secured debt


€1,460 million and $1,342 million drawn facilities to mature in November
2026 entered into by the Company’s subsidiary Motion Finco S.à r.l. The
margins on these facilities are dependent on the Group’s adjusted leverage
ratio and at 31 December 2022 were at a margin of 3.0% (2021: 3.0%) for
EUR debt and 3.25% (2021: 3.25%) for USD debt over the floating interest
rates when drawn. The relevant floating interest rates are USD LIBOR,
which was 4.73% at 31 December 2022 (0.13% at 25 December 2021) and
EURIBOR, which was 2.20% at 31 December 2022 (nil% at 25 December
2021). The terms of the floating rate debt facility require a repayment of
0.25% of the outstanding principal amount of the USD borrowings every
three months.
€500 million 7.0% senior secured notes due 2025 entered into by the
Company’s subsidiary Motion Finco S.à r.l.
$400 million 5.75% senior notes due 2026 entered into by the Company’s
subsidiary Merlin Entertainments Limited.
A £400 million revolving credit facility to mature in May 2026, of which £nil
was drawn in cash at the end of the reporting period. £30 million was
utilised by way of establishing certain ancillary facilities, including letters
of credit.



Other senior debt


$410 million 6.625% senior notes due 2027 and €370 million 4.5%
senior notes due 2027 entered into by the Company’s subsidiary Motion
Bondco DAC.

A reconciliation of net debt is set out in the financial statements in note 5.1.

Interest rate hedging
The Group is exposed to interest rate risk on both interest-bearing assets and
liabilities. The Group has a policy of actively managing its interest rate risk
exposure using a combination of fixed rate debt and interest rate derivatives.

At the end of the reporting period the Group had $810 million of fixed interest
rate notes and $1,342 million of drawn floating rate facilities. During Q3, the
Group entered into USD 600 million of interest rate swaps, hedging USD
LIBOR floating rate debt to 2026, at an average fixed rate of c.3.15%.

At the end of the reporting period the Group had €870 million of fixed interest
rate notes and €1,460 million of drawn floating rate facilities. During Q3, the
Group entered into EUR 700 million of interest rate caps maturing in 2026 at
an average cap strike rate of c.1.61% at a running cost of c.0.9% per annum
to 2026.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

FINANCIAL AND OPERATING REVIEW

REVENUE GROWTH AND
FOCUS ON COSTS

Lenders
The Group maintains ongoing relationships with the institutions that provide
financing facilities. This includes the provision of quarterly financial information,
and presentations by the Chief Financial Officer and the Group Treasurer and
Director of Tax.

The Group keeps the debt markets under review in order to ensure that
funding can be obtained at the right time and at the right price to ensure the
availability of funds to meet strategic growth plans and our other financing
requirements. Merlin actively assesses financing opportunities, which may
include new financings, refinancings and transactions by us or our affiliates in
our existing debt from time to time, whether in the open market, in privately
negotiated transactions, through tender offers or through redemptions, and
such transactions may be material.

Covenants
A financial covenant has existed from 30 September 2020 but is only required
when the revolving credit facility is drawn by 40% or more (net of cash and
cash equivalents). The covenant requires the Group to maintain adjusted
consolidated senior secured leverage below 10x.

Effective June 2021, the Group agreed with its revolving credit facility lenders
to waive the leverage covenant until Q3 2023. As part of this agreement the
Group is required to maintain a minimum liquidity of £75 million (to include
amounts undrawn from the revolving credit facility, and cash and cash
equivalents), over the period of the waiver.

Financial risk management
Note 5.3 to the financial statements provides information in the following areas:


Liquidity risk – how the Group monitors cash requirements and
actively manages surplus cash, together with details of the Group’s
contractual maturities.
Interest rate risk – how the Group manages interest rate exposure.
Foreign currency risk – how the Group manages foreign exchange
transaction and translation exposures, together with details on the
carrying value of financial assets and liabilities in foreign currencies.
Credit risk – how the Group manages risks of customers or
counterparties to financial instruments failing to meet their obligations.






The Group’s risk assessments have identified liquidity/cash flow risk and foreign
exchange translation risk as two of the Group’s principal risks. Details of these
and whether we believe they are increasing, decreasing, or stable, are set out on
page 23.

Going concern and liquidity
We continue to prepare the financial statements on a going concern basis. Our
projections are based on what we believe is a balanced approach. We will
continue to monitor our liquidity regularly, following the approach as set out
elsewhere in this Annual Report.

Further details on our going concern assessment are set out in note 1.1 to the
financial statements.

The Group complied with the financial covenants in the year. The Group is
also required to comply with certain non-financial covenants in these bank
facilities and notes, and these requirements were satisfied throughout
the year.

Alistair Windybank
Chief Financial Officer
17 March 2023

How we report our results
Financial KPIs and Alternative Performance Measures (APMs) – we adopt certain APMs that in our view help present our trading performance in the most helpful and
meaningful way, and that we use consistently each year. These can be summarised as follows:
 We refer to EBITDA as it is a profit measure we use internally to measure the performance of our attractions. It is the KPI that we feel most appropriately captures the ongoing
ability of our attractions to generate operating cash flows. Reflecting IFRS 16, this measure does not include the cost of meeting the obligations under our leases, with the
exception of performance-based rentals which continue to be reported within EBITDA.

 We refer to operating free cash flow, which is underlying EBITDA less existing estate capital expenditure, and which is then available to contribute to capital reinvestment to
support further growth, meet the obligations under our leases, service the Group’s debt facilities, settle our tax obligations and provide a return to our shareholders.

 We refer to ‘underlying’ results, which remove the impact of any exceptional items and provide a more direct comparison of trading performance. Details of exceptional items



are provided in note 2.2 to the financial statements.
To provide a more direct comparison of trading performance in the existing estate, we refer to ‘like for like’ performance. This represents growth between two years at constant
currency and accounting standards, including all businesses owned and operated before the start of the earlier year.

Period under review – this year’s consolidated Group financial statements are prepared on a ‘53 week’ basis for the period ending 31 December 2022. In most years we report
on a ‘52 week’ period. In certain years an additional week is included to ensure that the statutory financial year end date stays in line with the end of December. Within this report
we also present unaudited ‘52 week’ information for 2022 where we think it will provide a more direct comparison of performance. The difference between the 52 and 53 week
periods is the week ending 31 December 2022, which includes revenue, cost of sales, and variable operating costs directly attributable to that week. Annual fixed costs and central
overheads are not allocated to the 53rd week as they are not incrementally incurred costs. All balance sheet, and therefore cash flow information, is reported as at the statutory year
end date and therefore represents a ’53 week’ period in 2022 (2021: 52 weeks).

Reference to financial statements – further information regarding the Group’s segmental analysis; geographical revenues and assets; and certain operating costs are provided in
note 2.1 to the financial statements on pages 49 to 52. Those areas requiring significant judgement in the preparation of the financial statements are summarised on page 48.

MOTION JVCO LIMITED

PRINCIPAL RISKS

RISKS AND
UNCERTAINTIES

Internal control and risk management
In accordance with the delegated matters set out in the Shareholder
Investment Agreement, Merlin maintains effective internal control and risk
management systems, with Board Committees and executive management
keeping them under regular review. These activities are supported by ‘The
Merlin Way’, our corporate values, which we believe should drive good
behaviours and actions by all employees.

After two years of turbulence in Merlin’s trading activities, the Company
continues to be rigorous in its approach to the operational and financial control
environment, with a strong focus on protecting corporate resources.

The Audit Committee and the Health, Safety and Security Committee continue
to receive regular updates about changes in organisational risk to ensure that
the effectiveness of the control frameworks is kept under review.

Internal control framework
The creation of an effective internal control framework helps ensure:




proper financial records are maintained;
the Group’s assets are safeguarded;
compliance with laws, regulations, policies and procedures including those
relating to health and safety matters; and
effective and efficient operation of business processes.



Merlin’s internal control framework is designed to manage, rather than
eliminate, the risk of failure to achieve the Group’s objectives and can only
provide reasonable, but not absolute, assurance against material misstatement
or loss.

The key elements of the internal control framework are described below:
 Management structure – clearly defined reporting lines, accountabilities,



and authority levels.
Strategic planning, risk management and business performance
monitoring – reviewed by the Merlin Board annually, with our pipeline for
the delivery of new attractions reviewed regularly to:
(i)

assess whether new compelling experiences and attractions in
development are progressing according to schedule;
identify new ideas and assess fit with our brand portfolio; and

(ii)
(iii) assess the expected commercial returns.
Business objectives and performance measures are set annually together
with budgets and forecasts. Regular business performance reviews are
conducted at Operating Group and individual attraction level.
Policies and procedures – a portfolio of policies and procedures is in place
for all areas of the business. The appropriateness and application of these
is continuously monitored to ensure they are proportionate to the risk
and are complied with. Assurance comes from several sources that include
health, safety and security (HSS), financial and operational audit activities
and self-certification.

ANNUAL REPORT AND ACCOUNTS 2022



Our key control activities include:
 Operational – there are a range of control measures and performance
indicators in place to ensure the effective and efficient operation of our
attractions and to give our guests safe and memorable visits.
Health, safety and security (HSS) – all our sites operate using a well-
established Safety Management System designed to ensure that they
operate in compliance with relevant regulatory and legislative requirements.
Regular HSS internal audits are undertaken to confirm this is the case,
ensuring that any safety and security matters are understood and dealt
with promptly.
Information technology – the Group has a wide range of IT technical,
security, and disaster recovery controls to ensure that it has a stable
infrastructure platform from which to operate.
Financial – our controls are designed to prevent and detect financial
misstatement or fraud and operate at three levels. Oversight controls are
typically performed by senior managers at Group and business unit level.
Month end and year end procedures are performed as part of our regular
financial reporting. Transactional level controls operate on a day-to-day
basis. To specifically address potential fraud risks at a transactional level, a
group of profit protection professionals are employed to support
management in addressing these risks at an attraction level.
Business continuity planning – disaster recovery plans and crisis
management protocols are in place to allow attractions to reinstate
performance should adverse events occur.



Risk management framework
The risk management framework sets out responsibilities together with the
oversight, monitoring, reporting and management processes that support their
fulfilment. The framework looks at both ‘top down’ and ‘bottom up’ approaches
to risk management whereby the Merlin Board retains overall responsibility for
risk management, while sites are responsible for identifying, assessing and
mitigating operational risks.

Risk oversight and monitoring is the responsibility of the following Committees:

Health, Safety and Security Committee – oversight and guidance on
management of HSS risks. Responsible for ensuring compliance with
legislation or industry standards in safeguarding guests, employees, visitors,
and contractors.
Audit Committee – oversight and guidance on financial process risk.
Responsible for assessing the effectiveness of the Group’s overall approach
to risk management and internal control.
Commercial and Strategic Risk Management Committee – oversight and
guidance on management of commercial and strategic risk.



Each Committee reviews the principal risks on a regular basis and considers
whether material changes in the external landscape or recent trading trends
require alternative approaches to monitoring and managing risk. Committee
members regularly receive deep dive updates on topics related to significant
risks as well as regular reporting from internal and external assurance providers.

MOTION JVCO LIMITED

PRINCIPAL RISKS

RISKS AND
UNCERTAINTIES

ANNUAL REPORT AND ACCOUNTS 2022

Risk appetite
The Group’s risk appetite falls into two distinct categories:




Compliance risk – the requirement to comply with legislative or
regulatory requirements in all territories where the Group operates. It
includes, but is not limited to, ride safety, accounting practices, fraud and
bribery, as well as ensuring compliance with the Group’s values and ethical
principles. In these areas we are risk averse and do not countenance any
breaches in compliance obligations.
Commercial risk – commercial risks are taken to maximise profitable
growth and sustainable returns, without compromising the health, safety
and security of guests, employees, contractors, other visitors or animals.
They must be aligned with the Group’s policies on sustainability and the
environment. The Group manages these commercial risks through an
appropriate analysis of threats and opportunities together with structured
review processes, independent expert opinions and decision-making
authority levels. Factors such as the scale of possible commercial upside,
the potential market size, the quantum of downside risk and timescales
involved may all be relevant to commercial risk decisions.

Quantitative and qualitative measures ensure effective governance of the
Group’s risk appetite. Quantitative measures include defined financial and non-
financial targets such as EBITDA, operating profit, and guest satisfaction scores.
Qualitative measures consider items such as reputational impact and compliance
with laws and regulations.

Effectiveness of risk management and internal control systems
Based on its review of risk management systems, both throughout the year and
annually, the Board is satisfied that the risk management and internal control
systems that were in place during 2022 were effective.

Plans for 2023
During 2023 we will continue to evolve our risk management approach to:
 monitoring and measuring the impact of climate change and associated

environmental issues affecting the territories in which our
businesses operate;
employee engagement and retention, so that we continue to be an
employer of choice; and
IT technical, security, and disaster recovery activities to deliver stable
infrastructure platforms from which to operate.



At the same time, we will continue our journey to standardise and automate
transactional processing activities, to deliver consistency of business process and
strengthen the internal financial control framework.

MOTION JVCO LIMITED

PRINCIPAL RISKS

RISKS AND
UNCERTAINTIES

ANNUAL REPORT AND ACCOUNTS 2022

Principal risks
The Merlin Board has considered the feedback from the Board Committees and executive management on the range of risks that could impact the Group, and
has concluded that the principal risks are those set out in the table below. The gross risk trend indicator included in the table reflects the exposure before
mitigation and is used to compare to the previous year as to whether significant risks are stable, increasing or decreasing. The Merlin Board sees no significant
movements in the outlook for most of the principal risks, with the exceptions of the competition for talent, inflationary increases for labour and other
operating costs, as well as threats emanating from cyber and fraud related activity. Comments in the table provide extra detail to help illustrate the direction of
specific risks.

Increasing risk

Decreasing risk

Stable

Risk

1. Safety

Description

How risks are managed

Serious incidents leading to guests, staff members or
contractors being harmed or becoming ill because of:

a failure to follow health and safety management
systems.
fire, flood, storm or utility failure, potentially driven by
extreme weather events.
substandard build quality or asset degradation;
inadequate maintenance and management of buildings,
infrastructure and vegetation.



2. Security

Reduction in guest confidence to visit the Group’s
attractions because of sabotage or a terrorist attack on a
ride or attraction leading to a guest or staff member or
animal in our care being harmed.

3. Commercial impact of
external threats to
location based
entertainment
operations

Personal health and security concerns that flow from
geopolitical actions, terrorist activity, public health
pandemics or climate change events, resulting in falling
visitation to a location in which the Group operates, with
displacement of both international and domestic tourists.

In extremis, such events may lead to governmental or other
regulatory instructions to close our attractions, including
over multiple geographies.

Exchange rate volatility can have a positive or adverse
impact on inbound tourism.

Acute periods of inflation can impact consumers’ appetite
for discretionary purchases.

Innovation, brand
development and
customer satisfaction

Our growth potential could be impacted if guests:


consider our offerings are outdated, no longer relevant
or enjoyable; or
provide negative social media comments that adversely
influence the likelihood of a customer to visit an
attraction.



Regular performance reviews by Board Committee with a
specific mandate for this area.

 Ownership of health, safety and security (HSS) risks by line








management.
Competent operational and engineering staff monitor and
inspect facilities in accordance with a planned programme,
backed up by professional HSS teams.
Annual risk register review and action planning processes.
Regular internal and independent external auditing and review
regimes.
Contractor selection, approval and monitoring by in-house
qualified project managers.

 Detailed security protocols before individuals access an














attraction (e.g. bag searches).
Regular infrastructure reviews to reduce the opportunity for
physical threats to guests, staff or animals.
Extensive use of CCTV.
Regularly tested major incident management plans.
Current events vigilantly monitored to identify emerging
risks.
Co-operation with local and national security forces.
Appropriate insurance cover.
Board Committee established with specific mandate for this
risk area.

Increased geographical hedging as a result of further global
diversification.
Ability to reduce variable expenditure, for example in staffing,
property and marketing costs.
Ability to defer non-essential capital expenditure.
Crisis management procedures for each attraction that set
out the appropriate response.
Ability to direct marketing and promotional activity towards
domestic or international audiences depending on tourism
trends.
Ability to promote access to a wide portfolio of attractions
using annual pass or cluster ticketing.

Customer feedback collected at every location and analysed
against challenging satisfaction targets. Actions then taken
accordingly.

 Ongoing investment in our attractions to continually refresh



the guest experience.
Engagement with the public and on social media to take any
requisite action.

MOTION JVCO LIMITED

PRINCIPAL RISKS

RISKS AND
UNCERTAINTIES

ANNUAL REPORT AND ACCOUNTS 2022

Risk

Description

How risks are managed

5. People availability and

expertise

As noted elsewhere in this report, we continue to face the
challenge of attracting and retaining appropriately
experienced and well-motivated customer service
orientated staff, especially in locations with significant
upwards wage pressures. This could impact:



guest satisfaction; or
the successful delivery of planned future expansion.

6. Competition and

Intellectual Property (IP)

Competition – for leisure time; from new or existing
providers of location based entertainment; and for IP around
which compelling propositions are created.

The commercial benefits from using third party IP may be
lost from waning interest or withdrawal of permission to use
third party IP content, where contractual obligations are not
met, or partner relationships are not managed effectively.

7. Availability and delivery
of new sites and
attractions

The ability of the Group to grow in line with strategic
objectives could be inhibited by the lack of:


economically viable sites to locate Midway attractions
and LEGOLAND parks; and
timely approval of planning consent required for
building new rides, attractions and accommodation.



8. Animal welfare

Incidents or staff behaviours leading to animals in our care
being harmed as a result of:



a failure to follow prescribed welfare protocols; or
inadequate maintenance and management of buildings,
infrastructure and vegetation.

IT robustness,
technological
developments and cyber
security

The Group operates various IT systems and applications, the
obsolescence or failure of which could impede trading or
the ability to operate an attraction. Without the technical
developments necessary to meet consumer or business
expectations, the Group may fail to deliver the growth
required by the business strategy.

Failure to put in place suitable technical and organisational
measures to ensure compliant data processing in line with
global legislative requirements could lead to data loss or
inability to use IT systems for a prolonged period, a data
breach, or a security incident resulting in data protection
sanctions, investigations and enforcement actions by local
regulators and individuals themselves.

We currently see a greater incidence and impact of cyber-
attacks on organisations across the globe. The Merlin Board
continues to consider cyber security risks, together with the
Group’s ongoing investment in that area.

 Driving greater productivity to ensure more motivated,






better rewarded employees.
Reviews of employment markets and salary benchmarking.
Personal development plans across the business to encourage
long term employment stability.
Proactively managed succession planning processes
embedded across the Group.
Annual employee survey to monitor employee engagement
and identify opportunities to develop HR policies and
processes.

 Diversification of the portfolio.
 Ongoing investment to ensure continued appeal to visitors.

 Dedicated in-house creative team to deliver new and

Competitor research and monitoring.



innovative compelling propositions and IP.
Proactive management of IP partnerships.

Experienced site search and business development teams,
working several years in advance to maintain a strong pipeline
of opportunities.
Sites regularly update development masterplans and work
closely on fostering links with local communities and planning
authorities.

 Dedicated resources used to support the Group’s roll out

strategy.














External zoo licence audits.
An internal ethics committee and the SEA LIFE Conservation,
Welfare and Engagement team monitor the treatment of
animals.
A comprehensive range of policies, standards, procedures
and guidelines.
Training programmes for all staff who interact with animals.
Planned preventative maintenance programmes to ensure
buildings, infrastructure and vegetation remain suitable for
displaying the animals in our care.

Strategic focus to ensure the long term stability of operating
systems and data security, whilst keeping pace with changing
consumer IT expectations.
Increasing resilience and stability of IT infrastructure and
security through an expanded use of secured hosting partners
and penetration testing regimes.
Implementation of additional security measures to mitigate
the increasing threat of cyber security risk.
A number of data protection policies are in place to protect
the privacy rights of individuals in accordance with relevant
data protection legislation.
Continuous review of our data protection approach in light
of evolving legislation in all operating territories.
Independent assessment of compliance arrangements.
Regular updates provided to the Merlin Board by the Chief
Technology Officer on any cyber incidents and the wider
cyber security landscape.

MOTION JVCO LIMITED

PRINCIPAL RISKS

RISKS AND
UNCERTAINTIES

ANNUAL REPORT AND ACCOUNTS 2022

Risk

Description

How risks are managed

10.

Impact of increasing
costs on operating
margins and returns on
capital

11. Anti-bribery and
corruption

As noted elsewhere in this report, we currently see
significant inflationary pressures in a number of economies.
This includes areas such as wages, fuel and energy costs.

Such inflationary pressures on cost of sales, operating costs
and capital expenditure programmes may not be fully
compensated by increases in selling prices or the ability to
redesign capital projects to keep expenditure down.

Merlin’s business model for sales is low risk, the majority of
transactions being with individual customers at low values.
From a procurement or service delivery perspective, Merlin
currently operates in or is establishing operations in a
number of territories which have a propensity for incidents
of bribery and corruption.

Any such incident could lead to criminal or civil prosecution,
fines and cause reputational damage to the Group.

12. Liquidity/cash flow risk

A lack of liquidity could inhibit the ability of the Group to
grow in line with strategic objectives if:


insufficient cash is generated during peak trading
periods to cover fixed costs, interest and tax payments
and capital investments (including strategic acquisitions,
the roll out of Midway attractions, the development of
new LEGOLAND parks and new accommodation
offerings).
changes in the global credit market impact the Group’s
long term ability to meet current growth targets.
there is an increase in short term interest rates in
primary borrowing currencies.



In extremis, adverse events may lead to a requirement to
seek extra sources of liquidity.

13. Foreign exchange

translation risk

Merlin generates its main profits in Sterling, Euros and US
Dollars and has debt in Euros and US Dollars.

Merlin reports its results in Sterling and is therefore subject
to translation risk from exchange rate fluctuations when
reporting its consolidated results.



Strategic focus on pricing associated with changing consumer
expectations.
Increasing the proportion of the cost base that is variable in
nature or can be flexed to meet demand.
Effective financial and contractual controls regarding
procurement activities.
Redesign capital schemes to a lower cost outcome.

A well-embedded corporate culture in which fraud and
bribery at any level are not tolerated.
Global fraud and bribery training programmes and a fraud
policy sign-off for all staff.
Financial and contractual controls with regard to
procurement activities.
Internal audit monitors purchasing processes on a rotational
basis.
A separate profit protection team monitors for theft or other
criminal activity across the Group and ensures best practice
for protection is shared between sites.
A whistleblowing policy is in place together with an
independently operated employee hotline.

A committed £400 million multi-currency revolving credit
facility assists with liquidity and seasonal cash flow
requirements.
Review of weekly cash flow forecasts covering a period of
12 weeks assists planning for short term liquidity.
Strategic plans cover at least four future years and are
reviewed regularly to ensure sufficient financial headroom
exists or whether it needs to be created in the future. We
also monitor the impact of the plans on the covenant tests
set out in the Group’s banking facilities.
Interest rate risk is managed through a combination of fixed
rate borrowings and hedges taken out on floating rate debt.

 Merlin maintains strong relationships with a number of

lenders and keeps the debt markets under review in order to
ensure that funding can be obtained at the right time and at
the right price to ensure the availability of funds to meet
strategic growth plans.



The Group presents constant currency figures where
appropriate to show underlying results excluding the impact
of translation differences.
Treasury policies in place and reviewed annually with regular
reviews of currency exposures.
Broad match of borrowings in the currencies of underlying
profits.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

CORPORATE SOCIAL RESPONSIBILITY

A RESPONSIBLE
BUSINESS

Our approach
Merlin’s commitment and strong social conscience drives our approach to
business responsibility and ‘being a force for good’. This is reflected in how we
treat, and care about, our visitors, our people, our suppliers, our planet, the
animals we look after and the communities in which we operate. We have
robust governance standards and practices that extend throughout the business.

‘The Merlin Way’ is the set of values which embody everything we do, and
which provide the basis for our goals and objectives. We advocate ‘The Merlin
Way’ through many of our global engagement activities and our staff wellbeing
programmes. More details can be found on our website
(www.merlinentertainments.biz).

We set out more details below, which include the five specific areas required
under the non-financial reporting requirements in the Companies Act 2006.
Further information can also be found on Merlin’s website and the websites of
our partner charities.

Employees
Employee engagement
In 2022 more than 18,000 people completed our ‘The Wizard Wants to Know’
employee engagement survey, a response rate of 84%. Our overall engagement
score was 68%, an encouraging increase of 5% on the previous year.

We have introduced long term incentive plans that are aligned to the strategic
objectives of our shareholders, provide incentive structures for our
management teams and include outstanding contribution and long service
awards that are available to all employees.

Employee communication
Throughout the year, lines of communication with our employees were
maintained, ensuring that all employees were kept fully updated on business
operations on a regular basis. Tools such as the ‘MyMerlin’ intranet and ‘The
Wizard’s News’, our monthly company digital newsletter, continued to
celebrate successes and effectively communicate across all our sites.

Gender reporting
Through 2022, one of the Company’s seven Directors and one of the Group’s
seven Executive Committee members were female. At December 2022, of the
Group’s senior management positions (being attraction General Managers up
to and including the Executive Committee) 135 (36%) were female and 243
(64%) were male. This is consistent with 2021. The percentage of female
permanent employees is 49% (2021: 49%) totalling 4,268 (2021: 4,165). The split
of male versus female employees has therefore broadly remained consistent.

Merlin continues to report on UK employees under the UK gender pay gap
reporting rules, which identify differences in pay between men and women. For
the latest available reporting period to 5 April 2022, Merlin’s mean gender pay
gap (calculated as the difference between the average hourly pay of men and
women as a percentage of the average hourly pay of men) was 18.2% (2021:
14.2%, 2020: 4.7%). The median gender pay gap (the difference between the
hourly pay of an employee in the middle of the range of male wages and an
employee in the middle of the range of female wages), was 4.0% (2021: 3.2%,
2020: 3.5%).

The increase in both figures reflects shifts in the range of employees captured
within the reporting parameters during furlough periods, and the positive
employee bonus result which paid out in the 2022 reporting period. The impact
of a positive bonus is seen more readily in senior, higher compensated roles,
which are currently held by a greater proportion of male employees. Merlin
strives to improve its gender balance in senior roles by actively encouraging and
promoting more females, as well as opening more opportunities in traditionally
male-dominated roles like engineering. We also host a number of initiatives to
educate and inspire career progression within Merlin among female staff.

Recruitment, training and development
Merlin runs a variety of training and development activities across all parts of the
business. These range from induction training and role specific learning (for
example in health and safety, and animal welfare), through management and
leadership programmes, and on to executive leadership development. Our Merlin
Careers website shows available roles across the business globally as well as
providing information on the apprenticeships we offer in areas such as hospitality,
engineering, management, and marketing.

During the COVID-19 pandemic we created more online content and self-led
learning modules so teams could continue to access learning opportunities
remotely. Through 2022, we shifted to a blended mix of online learning and
development. and ‘in person’ programmes for leadership development and critical
skills such as marketing, engineering and commercial training.

Risk management
For details of how we manage the risks of people availability and their expertise,
see page 22.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

CORPORATE SOCIAL RESPONSIBILITY

A RESPONSIBLE
BUSINESS

Health, safety and security
In accordance with the Shareholder Investment Agreement, the Board has
created a Health, Safety and Security Committee which, together with the
Merlin Board and management, ensures that Merlin is dedicated to delivering
best in class health, safety and security (HSS) standards that are clearly
understood and implemented across the Group. These standards ensure the
safety and wellbeing of our guests, employees and contractors. To support this
mission, Merlin sets out its core HSS strategic initiatives and how these must
direct and focus all efforts in a manner that is both systematic and progressive.

To help communicate these initiatives to our key internal and external
stakeholders, Merlin publishes an informative brochure called ‘Protecting the
Magic – a Guide to Health, Safety and Security at Merlin Entertainments’. This
document is available via our corporate website and our dedicated HSS
‘ProtectingTheMagic.com’ website. Additional HSS news items and features are
also published throughout the year on Merlin’s ‘Backstage’ website.

Emerging from COVID-19
Much of the world experienced renewed business and consumer activity in 2022
following numerous lockdowns and government imposed restrictions to help
combat the worst public health effects of COVID-19. Merlin’s COVID-19
countermeasures remained dynamic and able to adapt to differing states of
government restrictions, dependent on the specific country or territory.
Attention remained focused on ensuring that Merlin’s core HSS programmes
and standards continued to be suitable and applied at those attractions that
were emerging from multiple years of COVID-19 related lockdowns
and restrictions.

Attractions applied a robust approach to their HSS activities, ensuring that the
correct and necessary arrangements were in place to proactively and effectively
support the many new employees that were joining the business in 2022. A
resolute and unwavering focus on the application of Merlin’s HSS programmes
was required through the year as tight labour markets evolved and attractions
sought to enhance their resourcing levels. Supported by Merlin’s central
functions, attraction teams were able to ensure that high safety standards and
HSS performance and outcomes were achieved.

The overall strength of our HSS performance is evidenced by the continued low
level of Merlin’s Medical Treatment Case rates (relating to guests and
employees), as seen in the KPI table on the following page.

With global travel freeing up in 2022, Merlin’s HSS audit programme resumed.
Specialist auditors in the fields of safety, engineering and food safety undertook
deep-dive audits across a range of attractions. Such audits remained
complemented by independent ride safety inspections undertaken each year by
specialist third party ride examiners, as commissioned by Merlin.

Merlin’s Safety Week also resumed in 2022, focusing on the important topic of
attraction security. With notable enthusiasm and participation across all of
Merlin’s attractions, many engagement, learning and best practice sharing
activities took place, all serving to ensure that security protocols and
arrangements remain front and centre of employee understanding and conduct.

(ii)

Strategic HSS initiatives
The following strategic initiatives form the cornerstones to Merlin’s ‘Protecting
the Magic’ programme:


Leadership and engagement – requiring our leaders to exhibit visible,
proactive and unwavering leadership towards HSS, supported by our
people who are fully engaged with this shared responsibility. An example
is ‘safety leadership walks’ which are on-site walks, both in visitor areas
and ‘back of house’, by senior leaders in the business where dedicated
time is spent talking with staff about HSS matters and understanding what
more can be done.
Competency and culture – fostering a positive and proactive safety
culture, with competent and talented people focused on the effective
management of HSS risks. Rigorous training and instruction are
fundamental to Merlin’s approach to HSS across the business, with
mandatory new starter training for all employees and safety leadership
training for managers.
Assessment and control of risk – identifying, understanding and controlling
HSS risks effectively. For example, in the area of fire safety, fire engineering
surveys of our hotels have helped ensure that we continue to uphold the
highest of physical and procedural controls at all of our hotels. With regard
to food safety we adopt the best practice system of Hazard Analysis and
Critical Control Points (HACCP). We ensure traceability and assurance
over food produce sources and support our guests in their choice of
products based on their specific dietary and allergy requirements.
Standards and procedures – developing and rigorously implementing clear
and suitable standards and procedures for safe design, construction,
maintenance and operation of assets and equipment.
Assets and equipment – managing our assets and equipment to ensure they
are fit for purpose throughout their life cycle and that no unacceptable or
uncontrolled HSS risk is created. Maintenance systems and procedures
comprise daily, weekly, monthly and annual maintenance programmes
across Merlin’s rides, buildings, facilities and estates.



 Monitoring and assurance – assessing and critically reviewing our

performance in a balanced and objective manner, in order to understand,
improve and sustain our HSS performance. HSS performance, including
near-miss and incident reporting, is regularly reviewed by each attraction,
each Operating Group’s senior leadership team and the HSS Committee,
with best practice learning shared throughout the HSS management
community. All attractions undergo three types of routine health and safety
reviews (annual self-audits, independent internal audits and periodic
independent external audits), in addition to pre-opening assessments and
tactical ad-hoc audits. A comprehensive food safety audit programme is also
undertaken by third party specialists.

This process includes the use of two types of performance metric, being;
(i)

Leading indicators – which monitor the activities we undertake as part
of our HSS governance and monitoring processes. Our approach
includes arrangements by attractions for near-miss/unsafe condition
reporting, trend analysis and corrective action management.
Lagging indicators – which capture incident rates for both guests
and employees.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

CORPORATE SOCIAL RESPONSIBILITY

A RESPONSIBLE
BUSINESS

The results of our monitoring and assurance activities are set out below.

Leading indicators

Safety Inspection Certificates – Rides(1)

Safe Operating Procedures – Rides(2)

Food Safety Audits(3)

Safety Culture Survey Results(4)

HSS Committee Meetings(5)

Lagging indicators

Medical Treatment Case Rate (Guests)(6)

Medical Treatment Case Rate (Employees)(6)

2022

2021

100%

88%

74%

N/A

75%

90%

100%

0.01

0.04

0.02

0.06

(1) Safety Inspection Certificates are issued annually by independent ride examiners following the thorough
inspection and testing of every theme park ride in Merlin. This % score indicates the percentage of rides
that have valid annual Safety Inspection Certificates issued, or a formal extension granted to such annual
Inspection Certificates due to the impact of cross-border travel restrictions brought on by the COVID-19
pandemic (mainly for China).

(2) Each theme park ride in operation in Merlin must have Safe Operating Procedures in place covering the
ongoing use of the ride. These procedures must state what the necessary risk controls are for each ride.
This % score indicates the percentage of rides that have Safe Operating Procedures in place.

(3) Merlin commissions an independent specialist to audit attractions for compliance with its Food Safety

Manual. This % score represents the average compliance score, and includes those additional compliance
audits completed in-house by Merlin’s Group Head of Food Safety and Public Health. Where opportunities
for improvement to local practices are identified, these are discussed with local management and plans
implemented to address them. Due to the impact of cross-border travel restrictions brought on by the
COVID-19 pandemic, as well as extensive attraction temporary closures, such on-site audits were not able
to take place in 2021.

(4) Merlin’s annual ‘The Wizard Wants to Know’ employee survey features a series of questions relating to

health and safety and this % score represents the overall safety engagement score.

(5) Through the HSS Committee the Merlin Board provides strategic direction and performance scrutiny of

HSS matters within the business. Additionally, each Operating Group has its own HSS Steering Committee.
These forums are intended to meet quarterly and this % score indicates compliance with this expectation.
Due to some organisational changes, one LEGOLAND Parks HSS Committee meeting and one Midway
Attractions HSS Committee meeting were rescheduled to outside of this reporting period.

(6) A Medical Treatment Case (MTC) is defined as an injury which requires external medical treatment

(i.e. ambulance attendance to the site or hospital visit directly from the site). The rates referenced are the
number of MTCs relative to either 10,000 guest visitations or 10,000 employee hours worked. Through
focused and sustained efforts by attraction teams, both Case Rates have seen a positive reduction in
2022, versus 2021.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

CORPORATE SOCIAL RESPONSIBILITY

A RESPONSIBLE
BUSINESS

Environmental matters
Governance
We recognise that our operations impact upon the environment and that
effective management of this, in line with our strategic business goals, is essential
for sustainable business success. We are committed to minimising the
potentially harmful effects of such activity.

The Executive Committee is responsible for setting strategy, policy, principles,
and guidance, with ultimate responsibility for our sustainability strategy resting
with the Chief Executive Officer, ensuring that strategic policy is implemented
and that our sites’ sustainability objectives align to our corporate sustainability
objectives. We participate in the UK Energy Savings Opportunity Scheme and
other applicable environmental regulations globally. Specific budgets are made
available each year to test and implement environmentally focused initiatives.

The Group Sustainability Director is responsible for the development and
implementation of the strategy, policy and principles across the business in
order to ensure effective management of our climate impacts.

Our global attractions can draw from the Group’s green capex fund to carry
out low-carbon and efficient technology projects, and each attraction has a
sustainability champion or manager who is responsible for the delivery of our
sustainability objectives at a local level. More details can be found on the ‘Policies
& Reports’ section of our website where our environmental policy is published.

2022 activities
We continued to drive awareness in our staff and guests around environmental
issues, launching our sustainability good practice guide and video for our general
managers and technical staff. Our green capex fund supported projects within
the estate on LED lighting optimisation, variable frequency drives and the
optimisation of building management and life support systems.

Merlin is committed to increasing on-site solar photovoltaic energy generation,
and we are actively exploring the opportunity to have a combined solar
photovoltaic of over 9MW across four of our resorts at LEGOLAND
California, LEGOLAND Windsor, Gardaland and THORPE PARK.

We know that electric vehicles have a crucial role to play in decarbonising our
planet and ownership of electric vehicles is on the rise. We are therefore
working with a partner to install electric vehicle chargers across our UK resorts.

In November 2022 we were delighted to partner with Kensa Group to turn the
lastminute.com London Eye green.

Plastic pollution
Merlin has been a long term advocate for reducing plastic pollution as well as
progressing the positive impact our businesses and teams can make on their
local environments and communities. We continue to review all our retail
stores to remove unnecessary packaging and plastic across all of
our merchandise.

These initiatives will continue in 2023 and beyond. This includes working with
our global supply chain to remove unnecessary plastic packaging from our shops;
providing opportunities for all our staff and guests to become involved at our
attractions, as well as helping them consider behavioural change in their
everyday lives; and supporting the SEA LIFE TRUST in campaigning across the
globe for greater protection for our marine environment and its creatures,
including their annual beach clean which takes place on World Oceans Day.

Climate change
The Group has identified the following issues related to climate change, which are
set out below, together with Merlin’s approach in the relevant area:



Energy use – how using fossil fuel energy contributes to climate change.
Merlin is working on increasing its on-site renewable technologies such as
solar photovoltaic.
Energy price – the risk of fluctuation in global energy prices.
Merlin is exploring the opportunity of a Power Purchase Agreement (PPA)
for solar photovoltaic farms. Merlin is also investing in energy efficient
systems like variable speed drives and LED lighting to reduce the amount of
energy we use.

 Weather – the risk of distortion in weather patterns.

Merlin operates a balance of outdoor theme park resorts and Midway
attractions which are generally indoors.

 Waste, recycling, and the use of landfill.

Merlin is diverting waste from landfill where possible through recycling and
generating energy from waste. For example, our four largest UK theme
parks recycle and recover all their waste for energy generation.

Task Force on Climate-Related Financial Disclosures (TCFD)
In accordance with mandatory TCFD reporting in the UK, Merlin will comply
with TCFD from 2023.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

CORPORATE SOCIAL RESPONSIBILITY

A RESPONSIBLE
BUSINESS

Streamlined energy and carbon reporting
The Company is required to report each year on its carbon dioxide emissions, which are set out in the table below. We have followed the 2019 HM Government
Environmental Reporting Guidelines. We have used the Greenhouse Gas Protocol – Corporate Standard and have used emissions factors from IEA Emissions
Factors 2022 for electricity by country and UK Government GHG Conversion Factors for Company Reporting 2022 for all other carbon activities. We have chosen
the financial control boundary method as this allows us to report on all sources of environmental impact over which we have financial control.

In the period covered by this report, Merlin launched a series of energy efficiency initiatives such as a life support system filtration optimisation, LED lighting
optimisation, variable frequency drives and building management systems across our estate. Together these projects are expected to save 448,722 kWh annually. In
this period, we purchased 62,433 MWh of renewable energy attributes through our energy procurement contracts. The attributes are backed by Renewable Energy
Guarantees of Origin (REGOs).

Our carbon reporting period for 2022 is from September 2021 to August 2022. The KPI for measuring our carbon emissions trend is carbon emissions per
£1 million of revenue. Our reported carbon intensity ratio, that measures the usage of CO2 equivalent (CO2e) as compared to revenue, decreased significantly from
68 to 49 gross tCO2e per £1 million of revenue. We have therefore achieved a 28% carbon intensity reduction (market-based) on our 2021 figure. This reduction is
due to the increase in 2022 revenue compared to 2021, and reflects the fact that a significant element of our energy usage does not flex with trading volumes,
combined with the results of energy efficiency measures, green energy procurement and employee awareness.

We have previously set ourselves a target of a 2% year on year reduction in our carbon emissions intensity.

Energy consumption used to calculate emissions (MWh)

Emissions from combustion of natural gas, oil and LPG in tCO2e (Scope 1)

Emissions from combustion of fuel for transport purposes in tCO2e (Scope 1)

Emissions from use of CO2 for food and beverage purposes in tCO2e (Scope 1)

Refrigerant emissions from refrigeration systems in tCO2e (Scope 1)

Emissions from purchased electricity and district heating (Scope 2, location-based)

Emissions after applying purchased green emissions in tCO2e (Scope 2, market-based)

Emissions from business travel in rental cars or employee-owned vehicles where company
is responsible for purchasing the fuel in tCO2e (Scope 3)

Total gross in tCO2e

Group total in tCO2e

Group revenue (£m)

Intensity ratio: Group gross tCO2e / £1 million revenue

2022

2021

Global
(excluding UK)

117,972

7,527

686

14,337

2,144

265,005

11,103

356

3,615

72,182

102,993

6,659

439

679

13,297

2,063

212,657

8,450

911

2,584

63,717

Not reported

10,448

87,304

9,854

75,701

97,752

2,006

85,555

1,261

Scope 2 refers to indirect emissions (purchased electricity, purchased heat).

Scope 1 refers to direct emissions (natural gas, LPG, heating oil, refrigerants, diesel, petrol).

Table notes:





 We are not able to exclude some emissions from outsourced operations in our food and beverage, games and photography areas, due to the complexity of determining their share of emissions. We

Under Scope 3 emissions we report UK business travel mileage claims (a subset of scope 3 category 6 business travel).

Our annual carbon reduction target is measured based on market-based emissions.

Scope 2 market-based include REGOs for our UK operations.

plan to determine these emissions in the future and re-base our carbon emissions if necessary, in line with our carbon recalculation policy.

Defra carbon reporting factors 2022 were used for all conversions to MWh based on Gross Calorific Value (CV) (except for business mileage where Net CV was applied; this is less than 0.05% of our
overall calculated energy).

1MWh is equivalent to 1,000kWh.



MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

CORPORATE SOCIAL RESPONSIBILITY

A RESPONSIBLE
BUSINESS

Social matters
Our strong social conscience informs how the Group operates and we care
about both the people and creatures connected with our business. This is
exemplified by areas such as how we approach visitor accessibility, our ethical
animal welfare activities, and our work together with our partner charity, Merlin's
Magic Wand, to support children faced with the challenges of serious illness,
disability and adversity.

Accessibility
In 2022 we continued our commitment to disability inclusion to ensure guests
with disabilities can access the magic of Merlin. We understand our obligations
and we care about continuously improving accessibility. The Accessibility Steering
Group continued to drive improvements across the business.

We have three guiding principles:
 We will make it fun for everyone;
 We will listen, learn and adapt; and
 We will support our people, so they can support our guests.

Some of the key highlights in 2022 were:
 We launched an Internal Intel group – bringing together employees with lived
experiences of disability to inform and guide changes we are making to
disability inclusion.

 We increased the number of Changing Places toilets across the Group.
 We achieved Autism Centre accreditation for LEGOLAND Florida Resort

and will be extending this to other sites in 2023.

 We commissioned mystery visits with disabled guests to further understand



the guest experience and where improvements can be made.
To mark our ongoing commitment, we were once again proud to ‘light up
purple’ on 3 December at our attractions across the world, to
celebrate International Day of Persons with Disabilities.

Animal conservation and welfare
We operate to world class welfare standards through our animal care network
and support the work of our pioneering marine conservation charity partner, the
SEA LIFE TRUST, in its mission to protect marine life and habitats across the
world. Our global SEA LIFE teams continue to develop new and exciting guest
experiences which will inspire future generations to care for our oceans and
marine life within it.

2022 was another strong year for Merlin’s teams who continued their welfare
and conservation work to rescue, rehabilitate and release sick or injured animals
across the globe. Over 70 grey and harbour seals were rescued across the SEA
LIFE and SEA LIFE TRUST seal rescue facilities in northern Europe and the UK.
Over 135 turtles were rescued in the UK, the US, Europe and Australia. Beluga
whales Little White and Little Grey continued to do well in the SEA LIFE
TRUST’s world’s first beluga whale sanctuary in Iceland, whose team also rescued
and released over 40 puffins as part of continued support to the local community.

2022 also saw SEA LIFE and the SEA LIFE TRUST launch a conservation
programme focused on funding local projects in countries around the world,
which included the world's first rewilding of endangered zebra sharks by the SEA
LIFE Sydney Aquarium team.

SEA LIFE and the SEA LIFE TRUST continued to campaign against plastic
pollution with their global beach clean. Held on World Oceans Day, the event
ran over 24 hours at over 50 different SEA LIFE locations.

Beyond this, we also continue to support additional animal welfare initiatives at
Chessington World of Adventures Resort in the UK, and WILD LIFE Sydney
Zoo in Australia, who both maintained their long-standing commitment to
animal breeding or managed species programmes.

For details of how we manage the risks regarding animal welfare, see page 22.

Merlin’s Magic Wand
Our dedicated children’s charity partner, Merlin’s Magic Wand (MMW), will be
celebrating its 15th year of operation in 2023. Although the impact of the
COVID-19 pandemic remained evident in 2022, the charity was still able to
deliver 56,555 Magical Days Out tickets to children and their families, who are
facing challenges of serious illness, disability and adversity. The charity also
completed the 52nd Merlin’s Magic Spaces project based at Ronald McDonald
House Philadelphia, in partnership with the LEGOLAND Discovery Center
Philadelphia team, and worked with our attraction teams to reach almost
670 children through the Magic on Tour programme.

In 2023, the charity aims to provide more Magical Days Out tickets; deliver on
Magic Spaces project commitments; pursue virtual Magic on Tour offerings; and
continue to raise awareness of the charity’s aims in its 15th birthday year, so that
more beneficiaries and charity partners can look forward to a year full of magic.

Other areas
Anti-corruption and anti-bribery matters
Merlin’s approach regarding the management of anti-bribery and corruption risks
is set out on page 23. Merlin has a zero tolerance approach in this area, with
regular reports on whistleblowing being provided to the Audit Committee.

Ethical sourcing
We have a responsibility to the workers in our supply chain and seek to ensure
our products are made in an appropriate environment and the products we
source are produced in accordance with international laws and legislation. More
details on this area are available on our website
(www.merlinentertainments.biz).

Human rights
Merlin respects and supports human rights and is committed to the highest level
of ethical standards and sound governance arrangements. We aim to act ethically
and with integrity in all our business dealings. As part of this commitment and in
accordance with global Modern Slavery legislation, Merlin has implemented a
Human Rights Policy, guided by the International Labour Organisation
Declaration on Fundamental Principles and Rights at Work together with the
OECD Guidelines for Multinational Enterprises.

Further details and Merlin’s Modern Slavery and Human Trafficking Statement can
be found on Merlin’s website.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

SECTION 172
STATEMENT

The Board of Directors of the Company (the Board) recognises its responsibility to maintain high standards of business conduct and consider the impact on all
stakeholders when making decisions, including the likely consequences of any decision in the long term. The Company is managed by the Board, which
comprises representatives of its principal shareholders and an independent Chairman. The same shareholder representative Directors and independent
Chairman, together with the Group’s Chief Executive Officer and Chief Financial Officer, also meet regularly as the Board of Merlin Entertainments Limited (the
Merlin Board), For more information on the Boards’ responsibilities, see page 31.

The Board has considered the analysis undertaken by the Merlin Board on how it has exercised its duty to promote the success of the Group during the year
with regard to the matters set out in section 172 of the Companies Act 2006. After careful consideration, bearing in mind the division of responsibilities for the
business of the Group between the Company and the Merlin Board, and while acknowledging the need for the Board to exercise overall management and
supervision of the Group and to exercise independent judgement, the Board has adopted a section 172 statement in relation to the Company itself which is
consistent with that produced by the Merlin Board. Further information in the Annual Report on how the Merlin Board has exercised its duty to promote the
success of Merlin during the year with regard to the matters set out in section 172, including examples of how these duties have been applied, can be found
throughout the Annual Report as set out below.

The Board takes its responsibility to understand the views of stakeholders seriously and will continue to consider stakeholder interests in its decision-making
processes in 2023. See page 33 for more information.

Section 172 duties

Key examples

Page Key examples

Consequences of decisions in the long term
The Board and the Merlin Board approve the Group’s strategy
which includes long term growth ambitions. Accordingly, the
long term consequences for the Company and its stakeholders
are always factored into strategic decisions.

Employee interests
The Board and the Merlin Board recognise that employee
engagement, diversity, inclusion and a strong culture is important
to achieve the Company’s vision and objectives.

Chief Executive’s introduction

Principal risks

Business model

Growth drivers

6 Corporate social responsibility

9 to 10 Corporate governance

Financial and operating review

KPIs

Principal risks

Chief Executive’s introduction

5 Corporate social responsibility

Business model

Fostering business relationships with suppliers, customers
and others
The Board and the Merlin Board identify guests as key
stakeholders and Merlin constantly monitors guest feedback to
measure the quality of their experience and drive improvements.
The Board and the Merlin Board believe a collaborative
approach with suppliers and business partners provides mutually
beneficial relationships, enabling engagement on matters that are
in both parties’ interests.

Operational impact on community and environment
The Board and the Merlin Board promote an ethical operating
culture and high animal welfare standards, and are committed to
managing environmental impacts through our sustainability
strategy. The Board and the Merlin Board support Merlin’s
partnership with two charities.

Maintaining a reputation for high standards of business conduct
The Board and the Merlin Board ensure that policies and
procedures are in place to support the highest standards of
business conduct and receives regular reports to monitor
compliance. The Merlin Board is involved in the management of
issues which may have a material impact on the
Company’s reputation.

KPIs

At a glance

1 Growth drivers

Principal risks

Chief Executive’s introduction

5 Corporate social responsibility

Business model

6 to 7 Corporate governance

Business model

Principal risks

Corporate social responsibility

27 to 29

KPIs

Principal risks

20 to 23

Chief Executive’s introduction

5 Corporate social responsibility

25, 26, 29

Business model

7 Corporate governance

Act fairly between owners of the Company
The Board and the Merlin Board act in accordance with the
terms of the Shareholder Investment Agreement.

Business model

Corporate governance

On pages 31 to 34 we set out our corporate governance framework including Board and Committee responsibilities.

Page

21 to 23

31, 33

21 to 22

27, 29

MOTION JVCO LIMITED

GOVERNANCE

CORPORATE
GOVERNANCE

Overview
The Board is committed to maintaining the highest standards of governance
across the Group and recognises that a strong governance framework is
fundamental to achieving Merlin’s strategic objectives.

Merlin’s overriding purpose is to work with stakeholders to create truly
memorable experiences for visitors and long term value for our investors.
Our corporate governance framework has been developed to safeguard
these objectives.

Board and Committee responsibilities
The Board and the Merlin Board
The Company is managed by its Board of Directors (the Board) which
comprises representatives of its principal shareholders and an independent
Chairman. The Board meets as required by the Shareholder Investment
Agreement (see page 8), to provide governance over the Group and to
consider those matters requiring specific approval by the Company.

The same shareholder representative Directors and independent Chairman,
together with the Group’s Chief Executive Officer and Chief Financial
Officer, meet regularly as the Merlin Board to provide leadership and set the
strategy for the Group.

The responsibilities of the Merlin Board are detailed below:

approving strategy and major company policies;

determining the capital structure;
 maintaining the system of internal controls and risk management;


approving the strategic plan, the annual capital expenditure budget, major
capital projects and strategic transactions;
approving the appointment of key members of executive management
and overseeing management performance;
overseeing financial performance and reviewing financial reports;
reviewing Environmental, Social and Governance (ESG) performance
metrics;
establishing and maintaining an effective corporate governance framework,
in conjunction with the Board;
effective engagement with shareholders and other stakeholders; and
reviewing recommendations from Committees.











Board Committees
The following Committees have been in operation during the year and unless
otherwise stated, remain.

Health, Safety and Security Committee
This Committee ensures that health, safety and security (HSS) matters are
managed effectively and proactively throughout the Group, by overseeing our
policies and procedures for HSS, monitoring our processes for identifying and
managing risks, and monitoring the skills, effectiveness and levels of resource
within our HSS teams.

The Committee membership comprises an independent chair and
representatives from each of the investor consortium, two of whom are Board
members. Meetings are also attended by the Group Chief Executive Officer and
Group Chief Financial Officer, together with the Group Safety, Engineering and
Security Director and the Chief Operating Officer of the Midway Attractions &
Resort Theme Parks Operating Groups.



ANNUAL REPORT AND ACCOUNTS 2022

Audit Committee
This Committee assists the Board in discharging its responsibilities regarding
financial reporting by monitoring the integrity of our financial statements
including considering whether the financial statements are ‘fair, balanced
and understandable’.

It assists the Board and the Merlin Board in relation to external and internal
audits, including monitoring and reviewing the effectiveness of the internal audit
function and overseeing the performance and independence of external auditors.
It also assists the Merlin Board in matters of risk management and internal
controls, including monitoring and reviewing the effectiveness of our
whistleblowing and fraud policies and our internal control and risk management.

The Committee membership comprises representatives from two members of
the investor consortium, one of whom is a Board member.

Remuneration Committee
The Remuneration Committee assists the Merlin Board in determining its
responsibilities in relation to remuneration, including making recommendations
on the executive remuneration policy determining the individual remuneration
and benefits package of each of the members of the Merlin Executive Committee
and recommending and monitoring the remuneration of senior management
below the Merlin Executive Committee.

The Committee considers all material elements of Merlin’s remuneration policy,
remuneration and incentives of Executive Directors and senior management with
reference to independent remuneration research and professional advice and
makes recommendations on the framework for executive remuneration. The
Committee is also responsible for making recommendations for the grants of
awards under share incentive plans.

Following the retirement announcements from the outgoing Chief Executive
Officer and the Chief Development Officer, the Committee approved their
retirement packages for remuneration and benefits.

The Remuneration Committee’s membership comprises the independent
Chairman and representatives of each of the investor consortium, all of whom
are Board members.

Other Committees
In addition to the Board Committees, there are four non-Board Committees:

Executive Committee – chaired by the Chief Executive Officer, this
Committee is responsible for managing the Group’s day-to-day
operations and the development of strategic plans for consideration by
the Merlin Board. It implements the Group’s strategy and ensures that
the business complies with all applicable statutory, regulatory and
governance requirements.

Three operational Committees make recommendations to the Executive
Committee and have specific areas of responsibility as follows:


Commercial and Strategic Risk Management Committee – provides oversight
and guidance on management of commercial and strategic risk.
Development Board – reviews initial proposals for significant capital
expenditure and development projects.
Investment Board – appraises major capital expenditure and
development projects.

MOTION JVCO LIMITED

GOVERNANCE

CORPORATE
GOVERNANCE

ANNUAL REPORT AND ACCOUNTS 2022

2022 priorities
During 2022 the main areas of focus for the Merlin Board were as follows;





Consolidating the improved business performance and strategic acquisitions.
Approving the acquisitions of Cadbury World and the COEX Aquarium.
Approving major capital projects.
The recruitment of a new Chief Executive Officer following the
announcement of Nick Varney’s retirement.
Approving the appointment of a new Chief Development Officer
following the retirement of his predecessor.
Agreeing an amendment to the Licence and Co-operation Agreement
with KIRKBI.



 Monitoring the progress of LEGOLAND park projects in China.



Reviewing ‘next generation’ LEGO Discovery Centres.
Approving the Group’s five year strategic plan towards the end of
the year.

Corporate governance framework
During 2022 the Board and the Merlin Board maintained a strong corporate
governance framework and they continue to apply the Wates Corporate
Governance Principles for Large Private Companies. Details of how the
Group approaches these principles are set out below.

Principle One – Purpose and Leadership
An effective board develops and promotes the purpose of a company, and ensures that
its values, strategy and culture align with that purpose.

Merlin’s strategy has been to create a high growth, high return family
entertainment company. The business is based on strong brands and a global
portfolio which is naturally balanced against the impact of external factors. This
strategy is aligned with our purpose of delivering memorable experiences to
our millions of visitors and our vision of being the global leader in location
based entertainment.

The Merlin Board continues to review and challenge Merlin’s strategy,
performance, responsibility, and accountability so that every decision made is of
the highest quality, and in line with the Company’s culture. This is set out in ‘The
Merlin Way’ values which are embedded throughout the business, from day-to-
day management to Merlin Board reviews.

The Group receives feedback from guests and employees via guest satisfaction
surveys and employee engagement surveys; where relevant this feedback is
incorporated in Board papers. The business model and the growth drivers of
the Group are outlined in pages 6 to 10.

Whilst the Board holds overall responsibility for developing and promoting the
purpose of the Group, the Merlin Board and the Executive Committee ensure
that the values, strategy and culture are embedded globally on their behalf.

The Board Committees and Executive Committee review the effectiveness of
key internal policies. For example, the Audit Committee reviews the
effectiveness of the Group’s whistleblowing and fraud policies across
the organisation.

Principle Two – Board Composition
Effective board composition requires an effective chair and a balance of skills,
backgrounds, experience and knowledge, with individual directors having enough
capacity to make a valuable contribution. The size of a board should be guided by the
scale and complexity of the company.

The Board is appointed in accordance with the Shareholder Investment
Agreement. Each investor has nominated suitably qualified representatives to sit
on the Board and the Merlin Board. The Directors possess a wide range of skills,
backgrounds, experience, and knowledge across a broad range of businesses. The
composition of the Board is considered appropriate for the size and complexity
of the Company. Details of the Board members can be found on pages 33 to 34.

An Audit Committee, Remuneration Committee and Health, Safety and Security
Committee have been established. They have been in operation throughout the
year. The Chairman of the Board and of each Committee is responsible for
leading and facilitating constructive meetings. The Chairman of the Board
regularly elicits feedback from other Board members on meeting effectiveness
and governance.

Careful consideration has been given to the appointment of the Chair of each
Committee. The Audit Committee is chaired by an individual with recent and
relevant financial experience. The Remuneration Committee is chaired by the
independent Chairman. The Health, Safety and Security Committee is chaired by
an independent health and safety expert. The responsibilities of the Board and
these Committees are outlined on page 31.

Throughout 2022, the Board, Merlin Board and Executive Committee together
was comprised of 12 men and two women. Details of the gender mix of the
Group and its senior management are set out on page 24, together with details
of our actions in the area of diversity and inclusivity.

Principle Three – Directors Responsibilities
The board and individual directors should have a clear understanding of their
accountability and responsibilities. The board’s policies and procedures should support
effective decision-making and independent challenge.

The Board understands its responsibility for promoting the success of the
Company for the benefit of shareholders and with consideration of its
stakeholders. This is done in a way which is consistent with its ethical, legal,
and regulatory responsibilities and the Company’s constitution. The Board,
the Merlin Board and Committees are bound by a Shareholder Investment
Agreement and respective terms of reference which give clear guidance on
the matters and key strategic decisions which require Board or
Committee approval.

The Merlin Board met six times during 2022, of which three meetings were
conducted in person. The Merlin Board are provided with appropriate board
packs in advance of the meetings, including project approval papers and updates
on trading, financial performance, employee engagement and welfare, legal
matters and management of key business risks. When making decisions, only the
shareholder representatives have voting rights.

Key financial information is collated from the Company’s accounting systems. The
Group’s financial information is externally audited, and its controls are reviewed
regularly by the Group's internal audit function. The Board delegates the scrutiny
of financial information and controls to the Audit Committee. The Merlin Board
delegates authority for the day-to-day management of the Company to the
Executive Committee which meets at least eight times each year.

MOTION JVCO LIMITED

GOVERNANCE

CORPORATE
GOVERNANCE

ANNUAL REPORT AND ACCOUNTS 2022

Principle Four – Opportunity and Risk
A board should promote the long term sustainable success of the company by identifying
opportunities to create and preserve value and establishing oversight for the identification
and mitigation of risks.

Oversight of risk management is performed on an ongoing basis through interaction
with management and by risk being a regular item on Merlin Board agendas. Two
Committees have specific responsibilities for risk management. The Health, Safety
and Security Committee oversees the key areas of health, safety and security while
wider risk management and internal controls activities and commercial risks are
considered by a sub-committee of the Executive Committee, chaired by executive
management, which reports back to the Executive Committee regularly.

The Board retains overall responsibility for risk management and the Merlin Board
approves the risk management framework which sets out the responsibilities,
oversight, monitoring, reporting and management processes. Further details
regarding the approach to risk management are set out on pages 19 to 23. Long
term strategic opportunities are highlighted through the Group’s strategic planning
processes that the Board oversees. Other opportunities are brought to the
attention of the Board when they arise.

Principle Five – Remuneration
A board should promote executive remuneration structures aligned to the long term
sustainable success of a company, considering pay and conditions elsewhere in
the company.

Remuneration matters during the year were considered by the Remuneration
Committee. All matters relating to remuneration are considered by that body and
recommended to the Merlin Board for approval, in line with the Committee’s
terms of reference. Our remuneration policies and principles are aligned with
the Group's performance to support our overall values, purpose and strategy.
A series of key principles underpin the Merlin remuneration structure - pay
should be based on results and performance; consistent with best practice;
and aligned to the long term success of the Company.

During the year the Remuneration Committee ensured awards under the
management long term incentive plans for new employees and leavers were
managed appropriately. More details are set out in note 5.6 to the
financial statements.

Principle Six – Stakeholder Relationships and Engagement
Directors should foster effective stakeholder relationships aligned to the company’s
purpose. The board is responsible for overseeing meaningful engagement with
stakeholders, including the workforce, and having regard to their views when
taking decisions.

The Board are aware of the importance of fostering effective stakeholder
relationships to enable the long term success of the Group. Details of how Merlin
engages with stakeholders, including employees, is provided in the section 172
statement on page 30. The Group’s business model also focuses on our
interactions with customers, employees and investors; more information can be
found on pages 7 to 8.

During 2022, new Board paper guidance was issued within the business which
requires all new proposals for capital projects to include a section on
stakeholder engagement, including customers and employees, and how their
views have been factored into project plans. Furthermore, Board papers also
address the sustainability, accessibility and health and safety aspects of
projects. This has improved the quality of Board papers and strengthened
stakeholder voices in the Group’s development pipeline.

Board membership
The Directors currently serving are the independent Chairman and the members
of the investor consortium, who also have the right to appoint observers to the
Board, the Merlin Board and Committees. Each Director from the investor
consortium has one vote at the Board and the Merlin Board. The Group Chief
Executive Officer and the Group Chief Financial Officer are executive roles and
these positions do not have voting rights at Merlin Board meetings. The members
of the Board during the year and at the date of this report are set out below.

Roland Hernandez, Independent Chairman
Roland was appointed as a Director and independent Chairman on 7 April 2020.
He is the Founding Principal and Chief Executive Officer of Hernandez Media
Ventures, a privately held company engaged in the acquisition and management of
media assets. He has served in this capacity since January 2001.

Before founding Hernandez Media Ventures, Roland served as Chairman of
Telemundo Group, Inc., a Spanish-language television and entertainment company,
from 1998 to 2000 and as President and Chief Executive Officer from 1995 to
2000. He serves as a member of the Boards of US Bancorp, Fox Corporation, and
Take-Two Interactive Software, Inc. He serves on the advisory board of Harvard
Law School and previously served on the Board of Directors of Belmond Ltd,
MGM Resorts International, Sony Corporation, Walmart Inc, and Vail Resorts, Inc.

Roland received an A.B. in economics from Harvard College and a J.D. from
Harvard Law School.

Søren Thorup Sørensen, KIRKBI Shareholder Representative
Søren was appointed as a Director on 26 June 2019, having also been a Non-
executive Director of Merlin since 2013, prior to Merlin’s initial public offering
(IPO), representing KIRKBI. Søren has over 25 years’ experience in finance and is
currently the Chief Executive Officer of KIRKBI A/S and Director of various entities
in the KIRKBI Group.

Søren is currently Deputy Chairman of LEGO A/S and a Non-executive Director of
ISS A/S, Landis+Gyr AG, Ole Kirk’s Foundation, ATTA Foundation, Koldingvej 2,
Billund A/S and K2 Fonden af 2023 and six fully owned subsidiaries of KIRKBI A/S.
Søren was formerly a Partner, Chief Financial Officer of A.P. Moller – Maersk
Group and Managing Partner of KPMG Denmark.

Jørgen Vig Knudstorp, KIRKBI Shareholder Representative
Jørgen was appointed as a Director on 26 June 2019, having previously been a
Board observer while Merlin was listed. Jørgen is a Member of the Board of LEGO
A/S and Executive Chairman of the LEGO Brand Group. Jørgen also holds positions
as a Member of the Board of Starbucks, a Member of IMD Supervisory Board and
as Chairman of BrainPOP. Jørgen joined the LEGO Group in 2001 and in 2004 he
was appointed President and CEO of LEGO Group. He began his career at
McKinsey & Company in 1998 and holds an M.Sc. and Ph.D. in Economics
Management from Aarhus University in Denmark.

Sidsel Marie Kristensen, KIRKBI Shareholder Representative
Sidsel was appointed as a Director on 4 November 2019. Sidsel has more than
20 years’ experience as a lawyer. Sidsel joined KIRKBI A/S in 2016 and was an
Executive Vice President and General Counsel until 31 January 2023. Sidsel is
Chairman of LEGO Juris A/S and a board member of Euro Cater Holding A/S,
BrainPOP, Imagination Lab Foundation, seven fully owned subsidiaries of KIRKBI
A/S, four fully owned subsidiaries of the Merlin Group and Shanghai LEGOLAND
Management Co., Ltd. Sidsel was formerly a Partner of the Danish law firm Bech-
Bruun. Following her appointment as CEO of the LEGO Foundation, Koldingvej 2
Billund A/S, Sidsel resigned from the Board and other Merlin companies on
1 February 2023.

MOTION JVCO LIMITED

GOVERNANCE

CORPORATE
GOVERNANCE

ANNUAL REPORT AND ACCOUNTS 2022

Damir Hamzic, KIRKBI Shareholder Representative (appointed 1 February 2023)
Damir was appointed as a Director on 1 February 2023, having previously been
a Board observer. Damir joined KIRKBI A/S in 2018 and is currently Head of
Circular Plastics Investments and furthermore supports the LEGO Brand
Group. Damir is a board member of Shanghai LEGOLAND Co., Ltd. Prior to
joining KIRKBI Damir was a Group Vice President at Falck and a Director at
Carnegie Investment Bank.

Joseph Baratta, Blackstone Shareholder Representative
Joseph was appointed as a Director on 4 November 2019. Joseph Baratta is
Blackstone’s Global Head of Private Equity and a member of Blackstone’s Board
of Directors and Management Committee. He also serves on many of
Blackstone’s investment committees.

Mr. Baratta joined Blackstone in 1998 and in 2001 he moved to London to help
establish Blackstone’s corporate private equity business in Europe. Since 2012,
Mr. Baratta has served as the firm’s Global Head of Private Equity and is located
in New York.

Mr. Baratta has served on the boards of many past Blackstone portfolio
companies and currently serves as a member or observer on the boards of
Ancestry, Candle Media, First Eagle Investment Management and Medline. He is
also a member of the Board of Trustees of Georgetown University, is a trustee
of the Tate Foundation, and serves on the board of Year Up, an organization
focused on youth employment.

Before joining Blackstone, Mr. Baratta was with Tinicum Incorporated and
McCown De Leeuw & Company. Mr. Baratta also worked at Morgan Stanley in
its mergers and acquisitions department. Mr. Baratta graduated magna cum
laude from Georgetown University.

Peter Wallace, Blackstone Shareholder Representative
Peter was appointed as a Director on 26 June 2019. Mr Wallace is a Senior
Managing Director and serves as Global Head of Core Private Equity for
Blackstone. Mr. Wallace leads Blackstone’s private equity investments in the
services, leisure, and consumer/retail sectors. He also serves on several of the
firm’s investment committees.

Since joining Blackstone in 1997, Mr. Wallace has led or been involved in
Blackstone’s investments in Alight Solutions, AlliedBarton Security Services,
Allied Waste, American Axle & Manufacturing, Centennial Communications,
Centerplate (formerly Volume Services America), CommNet Celluar, GCA
Services, LocusPoint Networks, Michaels Stores, New Skies Satellites,
Outerstuff, Ltd., Pinnacle Foods/Birds Eye Foods, PSAV, PSSI, SeaWorld Parks &
Entertainment (formerly Busch Entertainment Corporation), Servpro, Sirius
Satellite Radio, Tradesmen International, Universal Orlando, Vivint, Vivint Solar
and the Weather Channel. He currently serves on the Board of Directors of
Alight Solutions, Chamberlain Group, CoreTrust, Merlin Entertainments, PSAV,
PSSI, Servpro, Tradesmen International, and Vivint. He is a trustee of Children’s
Aid Society, one of America’s oldest and largest children’s nonprofits.

Prior to joining CPP Investments in 2020, Ricardo was a Partner at Palamon
Capital Partners, where he spent more than ten years focusing on investments
in fast-growing European companies. While at Palamon, Ricardo led a number
of investments in both consumer and retail as well as business services
companies, including Retail Decisions, a B2B payments company, Thomas
International, a talent assessment tools provider to small and medium sized
businesses, Feelunique, an European online retailer of branded beauty products,
and The Rug Company, an international brand of contemporary designer home
furnishings. He led the successful sale of Retail Decisions to ACI Worldwide,
and Feelunique was eventually exited by Palamon to international beauty
retailer Sephora after his departure.

Previously, he worked for The Boston Consulting Group in New York and
London from 1999 to 2008, leading strategic advisory projects for Fortune
500 corporates.

Ricardo holds a BA in Business Administration from Universidade Católica
Portuguesa and an MBA from Harvard Business School.

Key members of the Merlin Executive Committee
The key members of the Executive Committee together with the Directors
of the Board form the Merlin Board. Details of Merlin’s key executives are set
out below.

Scott M O’Neil, Group Chief Executive Officer
Scott was appointed on 15 November 2022.

Scott has more than 25 years of experience in leading and managing global
sports and entertainment brands. With a reputation for innovation, an eye for
strategic and global brand development and partnerships, and a passion for
culture and talent development, Scott has stewarded some of the sports and
entertainment industry’s most renowned and iconic brands and properties,
including the NBA’s New York Knicks and Philadelphia 76ers; the NFL’s
Philadelphia Eagles, the NHL’s New York Rangers and New Jersey Devils; and
the internationally ranked sports and entertainment arenas, Madison Square
Garden and Prudential Center.

Scott’s mission to build innovative, inspiring, diverse, socially impactful and
high performing businesses and brands earned the organisations under his
management acclaim in innovation and culture. He recently published a life
leadership book entitled ‘Be Where Your Feet Are’ published by
St. Martins Press.

Scott earned his Bachelor’s degree in Marketing from Villanova University and
his Masters in Business Administration from Harvard Business School.

Alistair Windybank, Group Chief Financial Officer
Alistair was appointed Group Chief Financial Officer in November 2020,
including responsibility for Merlin Group IT and Procurement.

Mr. Wallace received a BA from Harvard College, where he graduated magna
cum laude.

Alistair joined Merlin in 2008 and has held various senior finance roles, including
Head of Corporate Finance, Group Investor Relations Director, Senior Finance
Director – Capital Projects and most recently, Deputy Chief Financial Officer.

Ricardo Caupers, CPPIB Shareholder Representative (appointed 25 January 2022)
Ricardo was appointed as a Director on 25 January 2022. Ricardo is
responsible for CPPIB’s direct private equity investments in business services
companies in Europe. He also has geographic coverage responsibility for
Southern Europe.

Prior to Merlin, Alistair worked for Deloitte in Audit & Assurance.

Nick Varney, Group Chief Executive Officer
After being with Merlin for 23 years, Nick retired on 14 November 2022.

MOTION JVCO LIMITED

GOVERNANCE

DIRECTORS’
REPORT

ANNUAL REPORT AND ACCOUNTS 2022

The Directors have pleasure in submitting their report and the audited financial
statements for the 53 week period ended 31 December 2022. Comparative
figures relate to the 52 week period ended 25 December 2021.

Directors’ Report
The Directors’ Report itself contains the sections detailed below.

In order to make our Annual Report and Accounts more accessible, we have set
out below where certain required disclosures can be found in other areas of this
Annual Report.

Strategic Report
Non-financial reporting
Information regarding Merlin’s approach to the five topics required by the
Companies Act is set out in the Responsible Business section on pages 24 to 29.

Other information
Other information is set out as follows:



Business review and future developments – see pages 1 to 29.
Research and development – details about Merlin Magic Making are
located on page 6.

 Directors – details are on pages 33 to 34.


Employees – details on how we communicate with employees are on
page 24.

 Directors’ responsibilities statement – see page 37.

Governance
Wates Principles
The Company has adopted the Wates Corporate Governance Principles for
Large Private Companies. Details of the Wates Principles framework can be
viewed on the website of the Financial Reporting Council (www.frc.org.uk).
Details of how the Group approaches these principles are set out on pages
32 to 33.

Guidelines for Disclosure and Transparency in Private Equity
Each of the consortium members is a private equity or ‘private equity-like’
investor. Accordingly, this Annual Report and Accounts complies with the
Guidelines for Disclosure and Transparency in Private Equity for UK companies
in private equity ownership.

Other information
Other information is set out as follows:



Section 172 statement – see page 30.
Corporate governance – see pages 31 to 34.

Financial statements
The financial statements contain information in the following areas:







Capitalised interest – see note 2.3.
Financial instruments – see note 5.3.
Financial risk management – see note 5.3.
Share-based payment transactions – see note 5.6.
Related parties – see note 6.3.
Subsidiaries and joint ventures – see note 6.6.

Share capital and related matters
The Articles of Association do not contain any restrictions on the transfer of
shares in the Company other than customary restrictions applicable where any
amount is unpaid on a share (all the issued share capital of the Company as of the
date of this Annual Report and Accounts is fully paid). Each ordinary share in the
capital of the Company ranks equally in all respects. No shareholder holds shares
carrying special rights relating to the control of the Company.

Amendment to the Company’s Articles of Association
The Company’s Articles of Association may only be amended by a special
resolution of its shareholders passed at a general meeting of its shareholders.

Appointment and removal of Directors
The Company is governed by its Articles of Association, the Shareholder
Investment Agreement and the Companies Act 2006 and related legislation, with
regard to the appointment and replacement of Directors.

Power of Directors in respect of share capital
The Directors may exercise all the powers of the Company (including, subject
to obtaining the required authority from the shareholders in general meeting,
the power to authorise the issue of new shares and the purchase of the
Company’s shares).

Directors’ indemnities and insurance
The Articles of Association of the Company permit it to indemnify the Directors
of the Company or any Group company against liabilities arising from or in
connection with the execution of their duties or powers to the extent permitted
by law.

The Company has not given any specific indemnity in favour of the Directors
during the year, but the Company has purchased Directors’ and Officers’ Liability
Insurance, which provides cover for liabilities incurred by Directors in the
performance of their duties or powers. No amount was paid under any
Director’s indemnity or the Directors’ and Officers’ Liability Insurance during
the year.

Significant contracts
There were no contracts of significance during the year to which the Company,
or any of its subsidiary undertakings, is a party and in which a Director is or was
materially interested.

Branches outside the UK
Motion JVco Limited has no branches outside the UK.

Dividend
No dividends were paid or recommended during the current or prior
financial year.

MOTION JVCO LIMITED

GOVERNANCE

DIRECTORS’
REPORT

ANNUAL REPORT AND ACCOUNTS 2022

Going concern
The Directors consider that it is appropriate to adopt the going concern basis in
preparing the financial statements.

Approval of Annual Report
The Strategic Report, Corporate Governance Report and the Directors’ Report
were approved by the Board on 17 March 2023.

For and on behalf of the Board

Søren Thorup Sørensen
Director
17 March 2023

Motion JVco Limited
Registered number 12057312

In making this statement the Directors have satisfied themselves that based on
its current base case, the Group has access to sufficient cash funds and
borrowing facilities and can reasonably expect those facilities to be available to
meet the Group’s foreseeable cash requirements.

For further details see note 1.1 to the financial statements.

Political donations
No entity in the Group made any political donations, or incurred any political
expenditure (each as defined by the Companies Act 2006) in the 53 weeks
ended 31 December 2022.

Auditors
As recommended by the Audit Committee, a resolution for the re-appointment
of Ernst & Young LLP as auditors to the Company will be proposed. So far as
the Directors are aware, there is no relevant audit information of which the
auditors are unaware. The Directors have taken all reasonable steps to
ascertain any relevant audit information and ensure the auditors are aware
of such information.

MOTION JVCO LIMITED

GOVERNANCE

ANNUAL REPORT AND ACCOUNTS 2022

DIRECTORS’
RESPONSIBILITIES STATEMENT

The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent Company’s transactions and disclose
with reasonable accuracy at any time the financial position of the parent
Company and enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect fraud and
other irregularities.

Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report and a Directors’ Report that complies with that
law and those regulations.

The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company’s website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.

The Directors are responsible for preparing the Annual Report and the Group
and parent Company financial statements in accordance with applicable law
and regulations.

Company law requires the Directors to prepare Group and parent Company
financial statements for each financial year. Under that law the Directors have
elected to prepare the Group financial statements in accordance with UK
adopted international accounting standards in conformity with the requirements
of the Companies Act 2006 and applicable law and they have elected to
prepare the parent Company financial statements in accordance with
UK adopted international accounting standards and applicable law, including FRS
101 ‘Reduced Disclosure Framework’.

Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of affairs
of the Group and parent Company and of the Group’s profit or loss for that
period. In preparing each of the Group and parent Company financial
statements, the Directors are required to:

 make judgements and estimates that are reasonable, relevant, reliable

select suitable accounting policies and then apply them consistently;



and prudent;
provide additional disclosures when compliance with the specific
requirements in IFRSs and in respect of the parent Company financial
statements, FRS 101, is insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the
Group and Company financial position and financial performance;
for the Group financial statements, state whether they have been prepared
in accordance with UK adopted international accounting standards;
for the parent Company financial statements, state whether applicable UK
adopted international accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
assess the Group and parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern; and
use the going concern basis of accounting unless they either intend to
liquidate the Group or the parent Company or to cease operations, or
have no realistic alternative but to do so.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

INDEPENDENT
AUDITOR’S REPORT

To the Members of Motion JVco Limited

Opinion
We have audited the financial statements of Motion JVco Limited (the
Company) and its subsidiaries (the Group) for the 53 weeks ended
31 December 2022 (the period) which comprise of the consolidated income
statement, the consolidated and Company statement of financial position,
consolidated statement of cash flows, the consolidated statement of
comprehensive income, the consolidated and Company statement of changes
in equity and the related notes, including a summary of significant accounting
policies. The financial reporting framework that has been applied in their
preparation is applicable law and UK adopted International Accounting
Standards and as regards the parent company financial statements, as applied
in accordance with section 408 of the Companies Act 2006. The financial
reporting framework that has been applied in the preparation of the
Company financial statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 ‘Reduced Disclosure Framework’
(United Kingdom Generally Accepted Accounting Practice).

In our opinion:


the financial statements give a true and fair view of the Group’s and of
the Company’s affairs as at 31 December 2022 and of the Group’s
profit for the 53 weeks then ended;
the Group financial statements have been properly prepared in
accordance with UK adopted International Accounting Standards;
the Company financial statements have been properly prepared in
accordance with UK adopted International Accounting Standards as
applied in accordance with section 408 of the Companies Act 2006;
and
the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.



Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent
of the Group in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.



Other information
The other information comprises the information included in the Annual
Report, other than the financial statements and our auditor’s report thereon.
The Directors are responsible for the other information contained within the
Annual Report.

Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in this report, we do not
express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether
this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there
is a material misstatement of the other information, we are required to report
that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:


the information given in the Strategic Report and the Directors’
Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
the Strategic Report and Directors’ Report have been prepared in
accordance with applicable legal requirements.



Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the
Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the Strategic Report or
Directors’ Report.

We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept by the Company, or
returns adequate for our audit have not been received from branches
not visited by us; or
the Company financial statements are not in agreement with the
accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are
not made; or
we have not received all the information and explanations we require
for our audit.

Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the Group and Company’s ability to continue
as a going concern for a period of 18 months from when the financial
statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect
to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the Group and Company’s ability to
continue as a going concern.

Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement set out
on page 37, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for
such internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement,
whether due to fraud or error.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

INDEPENDENT
AUDITOR’S REPORT

To the Members of Motion JVco Limited

In preparing the financial statements, the Directors are responsible for
assessing the Group’s and the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.



Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.

Explanation as to what extent the audit was considered capable of
detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery or intentional misrepresentations, or through collusion.
The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below. However, the primary responsibility for the
prevention and detection of fraud rests with both those charged with
governance of the entity and management.

Our approach was as follows:
 We obtained an understanding of the legal and regulatory frameworks

that are applicable to the Group and Company and determined that
the most significant which are directly relevant to specific assertions
in the financial statements, are those that relate to the reporting
framework (International Accounting Standards in conformity with
the requirements of the Companies Act 2006, and FRS 101 and the
Companies Act 2006), Health and Safety regulations and the relevant
tax compliance regulations in the jurisdictions in which the
Group operates.

 We assessed the susceptibility of the Group and Company’s financial

statements to material misstatement, including how fraud might occur,
by meeting with management and those charged with governance to
understand where there was susceptibility to fraud. We also
considered performance targets and their influence on efforts made
by management to manage earnings or influence the perceptions of
the users of the financial statements.
Based on this understanding we designed our audit procedures to
identify irregularities including fraud. With support from relevant
specialists, we performed audit procedures, including testing journal
entries and other adjustments for appropriateness, which were
designed to provide reasonable assurance the financial statements
were free from material fraud or error. Our procedures involved
reading of Board minutes and relevant reporting from the Company’s
legal counsel to identify non-compliance with such laws and
regulations, reading reporting to the Audit Committee on compliance
with regulations, enquiries of legal counsel, Group management,
the Audit Committee, internal audit and subsidiary management at
all full-scope components and review of any relevant
investigations undertaken.

A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.

Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or for the opinions we
have formed.

Rachel Savage (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London

 We understood how Motion JVco Limited is complying with those

17 March 2023

frameworks by making enquiries of management, those responsible for
legal and compliance procedures and the Company Secretary. We
corroborated our enquiries through our reading of Board and other
relevant Committee minutes, discussions with the Audit Committee,
review of whistleblowing reports and any correspondence received
from regulatory bodies.

MOTION JVCO LIMITED

PRIMARY STATEMENTS

CONSOLIDATED INCOME
STATEMENT

For the 53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

Revenue

Cost of sales

Gross profit

Staff expenses

Marketing

Other operating expenses

EBITDA(1)

Depreciation, amortisation and impairment

Operating profit

Finance income

Finance costs

Profit/(loss) before tax

Taxation

Profit/(loss) for the year(2)

Underlying
trading
£m

Note

2022

Exceptional

items (3)
£m

2.1

2.3

2.4

2,006

(359)

1,647

(536)

(74)

(366)

671

(256)

415

(279)

165

(51)

114

(29)

(25)

Total
£m

2,006

(359)

1,647

(536)

(74)

(366)

671

(285)

386

(279)

136

(47)

Underlying
trading
£m

2021

Exceptional

items (3)
£m

1,261

(226)

1,035

(373)

(30)

(253)

379

(247)

132

(226)

(92)

(46)

(138)

(1)

(2)

(3)

(2)

Total
£m

1,261

(226)

1,035

(374)

(30)

(255)

376

(246)

130

(226)

(94)

(46)

(140)

(1)

(2)

(3)

EBITDA – this is defined as profit before finance income and costs, taxation, depreciation, amortisation and impairment and is after taking account of attributable profit after tax of joint
controlled entities (see note 6.1).
Profit for the year for 2022 and loss for the year for 2021 are wholly attributable to the owners of the Company.
Details of exceptional items are provided in note 2.2.

MOTION JVCO LIMITED

PRIMARY STATEMENTS

CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME

For the 53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

Profit/(loss) for the year

Other comprehensive income

Items that cannot be reclassified to the consolidated income statement

Equity investments at FVOCI - net change in fair value

Defined benefit plan remeasurement gains

Income tax on items relating to components of other comprehensive income

Items that may be reclassified to the consolidated income statement

Exchange differences on the retranslation of net assets of foreign operations

Exchange differences relating to the net investment in foreign operations

Cash flow hedges - effective portion of changes in fair value

Cash flow hedges - reclassified to profit and loss

Income tax on items relating to components of other comprehensive income

Other comprehensive income for the year net of income tax

Total comprehensive income for the year(1)

(1)

Total comprehensive income for the year for 2022 and 2021 is wholly attributable to the owners of the Company.

Note

6.1

6.2

2.4

2022
£m

(2)

(17)

(9)

112

2021
£m

(140)

(1)

(92)

MOTION JVCO LIMITED

PRIMARY STATEMENTS

CONSOLIDATED STATEMENT
OF FINANCIAL POSITION

at 31 December 2022 (2021: 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

Property, plant and equipment

Right-of-use assets

Goodwill and intangible assets

Investments

Employee benefits

Derivative financial assets

Other receivables

Tax receivable

Deferred tax assets

Non-current assets

Inventories

Trade and other receivables

Derivative financial assets

Tax receivable

Cash and cash equivalents

Current assets

Total assets

Interest-bearing loans and borrowings

Lease liabilities

Derivative financial liabilities

Trade and other payables

Tax payable

Provisions

Current liabilities

Interest-bearing loans and borrowings

Lease liabilities

Other payables

Provisions

Employee benefits

Deferred tax liabilities

Non-current liabilities

Total liabilities

Net assets

Issued capital and reserves attributable to owners of the Company

Non-controlling interest

Total equity

The financial statements were approved by the Board of Directors on 17 March 2023 and were signed on its behalf by:

Søren Thorup Sørensen
Director

Note

4.1

5.4

4.2

6.1

6.2

4.4

2.4

4.4

5.1

5.2

5.4

4.4

4.5

5.2

5.4

4.4

4.5

6.2

2.4

5.5

2022
£m

2,664

1,633

3,685

2021
£m

2,507

1,512

3,511

8,083

7,602

165

266

529

113

185

365

8,612

7,967

491

627

3,785

1,570

128

440

5,985

6,612

2,000

1,996

2,000

484

594

3,517

1,424

116

403

5,487

6,081

1,886

1,882

1,886

MOTION JVCO LIMITED

PRIMARY STATEMENTS

CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY

For the 53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

At 26 December 2020

Loss for the year

Other comprehensive income for

the year net of income tax

Total comprehensive income

for the year

Transfer to retained earnings

5.5

At 25 December 2021

Profit for the year

Other comprehensive income for

the year net of income tax

Total comprehensive income

for the year

Equity-settled share-based payments

At 31 December 2022

5.6

5.5

Share
capital
£m

Note

Share
premium
£m

2,956

Capital Translation
reserve
reserve
£m
£m

Cost of Cash flow
hedging
reserve
£m

hedge Retained
earnings
reserve
£m
£m

Total

Non-
parent controlling
interest
equity
£m
£m

(6)

(63)

(17)

(13)

(10)

(13)

(30)

(10)

(954)

(140)

1,974

(140)

(138)

(92)

(1,086)

1,882

112

(987)

1,996

Total
equity
£m

1,978

(140)

(92)

1,886

112

2,000

MOTION JVCO LIMITED

PRIMARY STATEMENTS

CONSOLIDATED STATEMENT
OF CASH FLOWS

For the 53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

Cash flows from operating activities

Profit/(loss) for the year

Adjustments for:

Depreciation, amortisation and impairment

Finance income

Finance costs

Taxation

Loss on sale of property, plant and equipment

Movements in working capital

Changes in provisions and other non-current liabilities

Tax (paid)/received

Net cash inflow from operating activities

Cash flows from investing activities

Interest received

Acquisition of subsidiaries, net of cash acquired

Acquisition of investments

Purchase of property, plant and equipment

Disposal of property, plant and equipment

Net cash outflow from investing activities

Cash flows from financing activities

Repayment of borrowings

Repayment of shareholder loans

Net capital repayment of lease liabilities(1)

Interest paid

Financing costs

Net cash outflow from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Effect of movements in foreign exchange

Cash and cash equivalents at end of year

Note

2022
£m

2021
£m

(140)

2.1

2.3

2.4

3.1

5.2

5.1

285

(29)

279

671

(69)

642

(20)

622

(31)

(195)

(222)

(16)

(33)

(277)

(326)

185

266

246

(2)

226

376

454

459

(7)

(291)

(297)

(13)

(15)

(34)

(232)

(1)

(295)

(133)

306

185

(1)

Capital repayments of leases are stated net of £6 million received from the landlord as part of the lease modification at Heide Park Resort. In 2021 they are stated net of £25 million received
from the landlord relating to the three UK Resort Theme Park locations (see note 5.4).

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

NOTES TO THE ACCOUNTS

SECTION 1
BASIS OF PREPARATION

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

1.1

BASIS OF PREPARATION

Motion JVco Limited (the Company) is a private company limited by shares which is incorporated in the United Kingdom. Its registered office is Link House, 25 West
Street, Poole, Dorset, BH15 1LD.

The consolidated financial statements have been prepared and approved by the Directors in accordance with UK adopted international accounting standards. The
Company prepares its parent Company financial statements in accordance with UK adopted international accounting standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (FRS 101).

This section sets out the Group’s accounting policies that relate to the financial statements as a whole. Where an accounting policy is specific to one note, the policy
is described in the note to which it relates. The accounting policies have, unless otherwise stated, been applied consistently to all periods presented in these
consolidated financial statements and have been applied consistently by all subsidiaries and joint ventures.

The Group prepares its annual consolidated financial statements on a 52 or 53 week basis. These consolidated financial statements have been prepared for the
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021).

The consolidated financial statements are prepared on the historical cost basis except for derivative financial instruments and certain investments which are measured
at their fair value. The consolidated financial statements are presented in Sterling. All values are stated in £ million (£m) except where otherwise indicated.

Going concern
The Group reported a profit for the year of £89 million (2021: loss of £140 million) and generated operating cash inflows of £622 million (2021: £459 million). The
Board has assessed the Group and Company’s ability to continue as a going concern to the end of Q3 2024 (being the ‘going concern assessment period’). The
financial statements have been prepared on a going concern basis, which the Directors consider to be appropriate for the reasons set out below.

Funding
The going concern assessment considers the Group’s projected liquidity position and headroom over covenant thresholds from existing committed financing facilities
throughout the going concern assessment period. As at 31 December 2022, the Group had a cash balance of £266 million and available undrawn facilities of
£370 million relating to the Group’s revolving credit facility (RCF), with no unexpected post balance sheet changes in liquidity. In line with our forecasts, we have
seen cash outflows between the reporting date and the date of approval of the financial statements that reflect the normal seasonality of trading, combined with
ongoing capital investment. The Group’s sources of financing and its net debt at the reporting date are detailed in notes 5.1 and 5.2.

A financial covenant exists in relation to the Group’s £400 million RCF, which applies when the RCF is drawn by 40% or more (net of cash and cash equivalents). It
requires the Group to maintain adjusted consolidated senior secured leverage below 10x. With effect from June 2021, the Group agreed with its RCF lenders to
waive the leverage covenant until Q3 2023. The terms of the waiver agreement require the Group to maintain a minimum liquidity of £75 million (to include amounts
undrawn from the RCF, and cash and cash equivalents), over the period of the waiver. The Group has complied with all covenants and the terms of the waiver
agreement throughout the year.

Base case
The projections and forecasts prepared for the going concern assessment period to the end of Q3 2024 are derived from the Group’s 2023 budget, completed in Q4
2022, and its longer term strategic plan, both approved by the Merlin Board in December 2022. This period has been selected as the going concern assessment
period to ensure that it includes the likely liquidity low point in the next trading cycle.

Our ‘base case’ forecast over the going concern assessment period is based on what we believe is a balanced approach. In this base case, we have made certain key
assumptions:
•

The base case includes the expected positive impact of continued revenue initiatives and management actions to mitigate inflationary cost pressures, while
maintaining the customer experience. Utility costs modelled are based on contracted or forward rates where appropriate. Where contracted rates are not
available, utility costs have been modelled using market rates, taking into account the significant inflation seen in this area.
The impact of the rising cost of living on our guests has been considered, utilising data derived from trading periods overlapping with historic global recessions
and considering any impact to current trading. We do not expect any significant impact to visitation numbers. Marketing strategies to stimulate visitation can be
implemented as required.
It is expected that the recovery of international tourism will continue. At the time of approving these financial statements the only elements of our portfolio
that are significantly affected by restrictions on international travel are parts of the Asia Pacific region, primarily China.
Expansionary capital expenditure on planned attractions will continue throughout the assessment period, alongside ongoing capital expenditure at existing
attractions to ensure the health and safety of our guests and staff.
The base case specifically excludes any potential acquisitions over the period, or any strategic initiatives yet to be approved by the Merlin Board.

•
• We assume that the covenant waiver remains in place until Q3 2023, after which the financial covenant applies should the RCF be drawn by 40% or more.

•

Under the base case, the RCF is not forecast to be drawn to this extent during the assessment period.
Interest rates modelled during the assessment period are based on forward market rates, and reflect the hedging arrangements in place (see note 5.3).

•

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

NOTES TO THE ACCOUNTS

SECTION 1
BASIS OF PREPARATION CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

1.1

BASIS OF PREPARATION (CONTINUED)

• We have assessed that the likelihood of any future COVID-19 related lockdowns and restrictions that would affect a significant part of our attractions portfolio
is remote. Hence, no further closures or government related capacity constraints have been modelled within the going concern assessment period. During
2021 and 2022 the business demonstrated its ability to trade even while restrictions were in place.

The Directors have prepared cash flow forecasts for an 18-month period from the date of approval of these financial statements up to the end of Q3 2024 which
indicate that, under the base case, the Group will have sufficient funds to meet its liabilities as they fall due.

In this base case, there would be no breach of lending facilities taking into account the terms of the covenant calculations. Adequate liquidity is maintained through
the entire assessment period to Q3 2024. There are no significant restrictions on intra group liquidity transfers as required, and no material capital repayments
of debt falling due within the going concern assessment period, with the next maturity of facilities being in respect of €500 million of 7.0% senior secured notes
due 2025.

Downside scenarios
The Directors believe the base case scenario above is reasonable and appropriate. The potential impact of increasing inflationary costs and interest rates are inbuilt
and the base case also considers slower recovery in the Asia Pacific portfolio from international tourism.

In addition to the wide range of factors already considered in the base case, the Directors have prepared a downside scenario considering other severe but plausible
events. Examples include events leading to extended attraction closures occurring due to:
•
•
•

Ride safety incidents;
Severe weather incidents; and
Security related incidents including acts of terrorism and/or the impact of the threat of terrorism on consumer behaviours.

The continuing war in Ukraine has been considered but not modelled in the downside scenario. Our trading operations are not directly affected by the war and to
date the Group has not seen any significant impact on performance as a direct consequence of the ongoing conflict.

The diversification of the Group’s attractions helps minimise the risk of serious business interruption potentially caused by the risks considered in the downside
scenario. While not modelled in the downside scenario, there are numerous mitigating actions the Group could take to address both modelled and unmodelled
adverse impacts. These mitigating measures are considered to be realistically available to the Group based on historical experience, enabling us to meet our liabilities
as they fall due should this situation arise. Within the Group’s control, significant cost cutting measures could be implemented across operations and the Group
could delay uncommitted capital expenditure. This ability to manage the cost base and rephase or defer capital investment provides reasonable protection to the
Group in the face of macro events or uncertainty not in the Group’s control. While not in the direct control of the Group, we could also seek to further extend the
waiver to financial covenants on its borrowing facilities, renew/replace existing facilities and/or raise further finance through cash injections from the consortium of
investors in the Company. Given the Group’s history of cash generation and the successful issue of debt securities including during the COVID-19 pandemic, we
would expect to be able to raise such funds as required. However, there is no guarantee that such funds will be available.

In the modelled downside scenario, and not taking into account the impact of any mitigation measures, the Group’s currently available liquidity would remain positive,
albeit reduced, throughout the going concern assessment period. Consistent with the base case, under this scenario there would be no breach of lending facilities
considering the terms of the covenant calculations, with leverage remaining within the required limits throughout.

Stress testing has been performed to model scenarios which would cause a liquidity shortfall or covenant breach within the going concern assessment period. These
scenarios have been assessed and have been deemed remote. Our assessment indicates that the Group would still have sufficient funds to enable it to operate within
its available facilities and settle its liabilities as they fall due through the going concern assessment period.

Conclusion
Considering the Group and Company’s statement of financial position, available facilities, cash flow forecasts and the above modelled base case and downside
scenarios, financial projections indicate that the Group will have sufficient funds and resources to continue in operational existence, operate within its available
facilities and settle its liabilities as they fall due over the going concern assessment period. Accordingly, the Group continues to adopt the going concern basis in
preparing its consolidated Group and Company financial statements.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

NOTES TO THE ACCOUNTS

SECTION 1
BASIS OF PREPARATION CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

1.1

BASIS OF PREPARATION (CONTINUED)

Basis of consolidation
The consolidated financial statements comprise the financial statements of Motion JVco Limited and its subsidiaries at the end of each reporting period (see note 6.6)
and include its share of its joint ventures’ results using the equity method.

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns through its involvement with
the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases.

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated.

Whilst the Group operates in the hyperinflationary jurisdiction of Turkey, the operations are immaterial and as a result the application of IAS 29 ‘Financial Reporting
in Hyperinflationary Economies’ has not had a material impact to the Group’s consolidated results.

Foreign currency
Foreign currency transactions are translated using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the income statement, except when deferred in equity as qualifying net investment hedges.

The results and financial position of those Group companies that do not have a Sterling functional currency are translated into Sterling as follows:
• Assets and liabilities are translated at the closing rate at the end of the reporting period.
•
Income and expenses are translated at average exchange rates during the period.
• All resulting exchange differences are recognised in equity in the translation reserve.

The reporting date foreign exchange rates by major currency are provided in note 5.3.

Classification of financial instruments issued by the Group
Financial instruments are recognised on the statement of financial position when the Group becomes party to the contractual provisions of the instrument. The
accounting policy for each type of financial instrument is included within the relevant notes.

Financial assets are initially measured at fair value, unless otherwise noted, and are subsequently measured at amortised cost, fair value through other comprehensive
income or fair value through profit or loss. A financial asset is derecognised when the contractual rights to the cash flows from the asset expire or the Group
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

Financial liabilities are initially measured at fair value, plus, in the case of other financial liabilities, directly attributable transaction costs. Other financial liabilities,
primarily the Group’s interest-bearing loans and borrowings are measured at amortised cost. Financial liabilities are measured at fair value through profit or loss and
are held on the statement of financial position at fair value. A financial liability is derecognised when the Group’s obligations are discharged, expire or are cancelled.
Finance payments associated with financial liabilities are accounted for as part of finance costs.

An equity instrument is any contract that has a residual interest in the assets of the Group after deducting all of its liabilities. Finance payments associated with
financial instruments that are classified in equity are dividends and are recorded directly in equity. The preference shares issued by the Company carry a fixed,
cumulative, preferential dividend which accrues (but is not payable) on each preference share on a daily basis from the date of issue of the relevant preference share.
Payment of these dividends is at the discretion of the Company and accordingly they have been classified as equity.

Where financial instruments consist of a combination of debt and equity, the Group will assess the substance of the arrangement in place and decide how to attribute
values to each taking into consideration the policy definitions above.

Further information on equity instruments issued by the Group is set out in note 5.5.

New standards and interpretations
A full list of new accounting standards and interpretations that have been implemented in the year, including those which have had no significant impact, can be found
in note 6.4.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

NOTES TO THE ACCOUNTS

SECTION 1
BASIS OF PREPARATION CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

1.1

BASIS OF PREPARATION (CONTINUED)

Judgements and estimates
The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses.
Management considers the following areas to be the areas that have the most significant effect on the amounts recognised in the financial statements. They are
explained in more detail in the related notes.

Judgements
Management considers the following areas to be the judgements that have the most significant effect on the amounts recognised in the financial statements.
• Useful life of brands (note 4.2) - where significant brands have been recognised as part of an acquisition, they have been assessed as having indefinite useful lives

and management have considered that this judgement remains appropriate.

• Goodwill impairment reviews (note 4.3) - the level at which goodwill is initially allocated and thereafter monitored.
•

Lease obligations (note 5.4) - IFRS 16 ‘Leases’ defines the lease term as the non-cancellable period of a lease together with the options to extend or terminate a
lease, if the lessee were reasonably certain to exercise that option. Where a lease includes the option for the Group to extend the lease term, the Group makes
a judgement at the reporting date as to whether it is reasonably certain that the option will be taken.

Estimates
The preparation of the Group’s consolidated financial statements also includes the use of estimates and assumptions. Management considers the following to be the
area which includes the use of estimates and assumptions and which could have a significant risk of a material change to the carrying value of assets and liabilities
within the next year:
• Valuation of LEGOLAND Parks (LLP) and Resort Theme Parks (RTP) Operating Groups’ assets and impairment (note 4.3) - the estimation of future cash flows together

with the discount rates adopted when calculating the value in use of assets.

The consolidated financial statements also include other areas of judgement and accounting estimates. Management considers the following to be areas where the
recognition and measurement of certain assets and liabilities are based on assumptions and/or are subject to longer term uncertainties, but that do not meet the
definition under IAS 1 of significant accounting estimates or critical accounting judgements:
• Taxation (note 2.4) - recognition of deferred tax balances and accounting for tax risks.
• Valuation of Midway Attractions Operating Group assets and impairment (note 4.3) - the estimation of future cash flows together with the discount rates adopted

•
•
•

•

when calculating the value in use of assets.
Provisions (note 4.5) - estimated outflow to settle the obligations and, where relevant, the appropriate discount and inflation rates to apply.
Interest-bearing loans and borrowings (note 5.2) - expected period of borrowings when calculating the effective interest rate on those borrowings.
Share-based payments (note 5.6) - the implied enterprise value of Motion Topco Limited was calculated as at the reporting date in order to calculate share-based
payment valuations for the three schemes. The valuation was performed using the Monte Carlo option pricing model, the inputs to which involve estimation
uncertainty; these inputs are set out in note 5.6. Future valuation fluctuations could materially impact share-based payment expenses recognised in
subsequent periods.
Share-based payments (note 5.6) - using the Group’s approved five year business plan and considering ongoing future strategies of both the Group and the Group’s
shareholders, the most likely vesting period for each scheme has been estimated, with the maximum length of award expected to be nine years.

• Employee benefits (note 6.2) - assumed discount rate, inflation rate and mortality when valuing defined benefit liabilities.

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

NOTES TO THE ACCOUNTS

SECTION 2
RESULTS FOR THE YEAR

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

2.1

PROFIT BEFORE TAX

Segmental information
An operating segment, as defined by IFRS 8 ‘Operating segments’, is a component of the Group that engages in business activities from which it may earn revenues
and incur expenses. The Group is managed through its three Operating Groups, which form the operating segments on which the information shown below is
prepared. The Group determines and presents operating segments based on the information that is provided internally to the Chief Executive Officer (CEO), who is
the Group’s chief operating decision maker, and the Board. An operating segment’s operating results are reviewed regularly by the CEO to make decisions about
resources to be allocated to the segment and assess its performance.

Midway
Attractions
£m

LEGOLAND
Parks
£m

Resort
Theme
Parks
£m

Segment
results
£m

Other
items (3)
£m

Exceptional

items (4)
£m

Total
£m

2022

Visitor revenue

Accommodation revenue

Other revenue

Revenue(1)

EBITDA(2)

Depreciation and amortisation (note 4.1, 4.2, 5.4)

Impairment (note 4.1, 5.4, 6.1)

Operating profit(2)

2021

Visitor revenue

Accommodation revenue

Other revenue

Revenue(1)

EBITDA(2)

Depreciation and amortisation (note 4.1, 4.2, 5.4)

Impairment (note 5.4)

Operating profit(2)

604

631

249

(119)

130

331

344

102

(112)

(10)

665

217

924

330

(83)

247

380

124

537

172

(66)

106

361

450

157

(48)

109

298

374

148

(61)

1,630

300

2,005

736

(250)

486

1,009

194

1,255

422

(239)

183

(65)

(6)

(71)

(43)

(8)

(51)

(29)

(3)

(2)

1,630

300

2,006

671

(256)

(29)

386

1,009

194

1,261

376

(247)

130

(1)

(2)

(3)

(4)

Revenue is disaggregated into the three categories described below.
Performance is measured based on segment EBITDA, as included in internal management reports. Segment operating profit is included for information purposes.
Other items include Merlin Magic Making, head office costs and various other costs, which cannot be directly attributed to the reportable segments.
Details of exceptional items are provided in note 2.2.

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 2
RESULTS FOR THE YEAR CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

2.1

PROFIT BEFORE TAX (CONTINUED)

Geographical areas
While each Operating Group is managed on a worldwide basis, part of our strategy is to diversify geographically across the four regions shown below. The
information presented is based on the geographical locations of the visitor attractions concerned.

Geographical information

United Kingdom

Continental Europe

North America

Asia Pacific

Investments (note 6.1)

Employee benefits (note 6.2)

Derivative financial assets

Tax receivable

Deferred tax (note 2.4)

Revenues
2022
£m

Non-current
assets
2022
£m

Revenues
2021
£m

Non-current
assets
2021
£m

593

468

710

235

2,006

2,963

1,694

2,379

959

7,995

461

256

425

119

1,261

2,935

1,526

2,179

895

7,535

8,083

7,602

Revenue
Revenue represents the amounts received (excluding VAT and similar taxes) in the areas set out below and which have been disaggregated in the segmental
information presented above. When accounting for revenue, an assessment is made, considering the control principles of IFRS 15 ‘Revenue from Contracts with
Customers’, as to whether parties involved in providing goods or services to a customer are acting as a principal (if they control delivery to the customer) or, if they
are arranging for those goods or services to be provided by the other party, as an agent. Where Merlin has outsourced the delivery of the service, for example such
as in food and beverage operations, the Group accounts for these as an agent.

• Visitor revenue - represents admissions tickets, retail, food and beverage sales and other commercial offerings such as photos and games experiences inside an

attraction. Tickets and other services can be bought in advance, generally online, in which case they are held in deferred revenue and recognised when the visitor
uses those tickets or services, or the validity period expires. Revenue from annual passes and other tickets that entitle a customer to continued visits over a
period of time is deferred and then recognised over the period that the pass is valid. Retail and food and beverage revenue, along with other similar commercial
offerings, is recognised at point of sale.

• Accommodation revenue - represents overnight stay and conference room revenue along with food and beverage revenue earned within our hotels and other

accommodation offerings. Accommodation revenue is recognised at the time when a customer stays at the accommodation.

• Other revenue - represents sponsorship, function, management and development contract revenue along with other sundry items. Sponsorship revenue is

recognised over the relevant contract term. Function revenue is recognised at the time of the event. Management contract revenue is recognised as it is earned.
Where the Group enters into contracts for attraction development, revenue is recognised over time as performance obligations under the contracts are met.

Cost of sales
Cost of sales of £359 million (2021: £226 million) represents variable expenses (excluding VAT and similar taxes) incurred from revenue generating activities. Retail
inventory, food and beverage consumables and costs associated with the delivery of accommodation are the principal expenses included within this category.

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 2
RESULTS FOR THE YEAR CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

2.1

PROFIT BEFORE TAX (CONTINUED)

Operating expenses
Staff numbers and costs
The average number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:

Operations

Attraction management and central administration

The aggregate payroll costs of these persons were as follows:

Wages and salaries

Share-based payments

Social security costs

Other pension costs

Government support

2022

18,074

2,487

20,561

2021

15,423

2,187

17,610

2022

£m

455

(2)

536

2021

£m

342

(19)

374

The total charge for the year for share-based payments for 2021 was less than £1 million. Further details are provided in note 5.6.

The Group has accessed government support measures in the geographies in which it operates, including employee furlough schemes. This funding meets the
definition of a government grant and the income recognised in the year in relation to these furlough schemes was £2 million (2021: £19 million).

Government grants are recognised when there is reasonable assurance that the Group has complied with the relevant conditions within the agreement and that the
grant will be received. For each grant, the Group assesses whether it relates to either capital or operational expenditure incurred. A grant relating to expenses
already incurred is recognised in the period in which it becomes receivable, offsetting the expenses the grants are intended to compensate. The funding received is
included within the cash flows from operating activities in the consolidated statement of cash flows.

Directors’ remuneration
Directors’ remuneration for the year was £0.3 million, being the remuneration of the highest paid Director (2021: £0.3 million). There were no Company pension
contributions payable.

Related party transactions with key management personnel
The remuneration of key management, comprising the members of the Executive Committee, was as follows:

Key management emoluments including social security costs

2022
£m

7.9

2021
£m

7.3

In addition to the above, charges relating to share-based payments and other related payments totalled £12.6 million (2021: £0.2 million) in relation to the schemes
described in note 5.6.

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 2
RESULTS FOR THE YEAR CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

2.1

PROFIT BEFORE TAX (CONTINUED)

Auditor’s remuneration

Audit of these financial statements

Audit of financial statements of subsidiaries

2022
£m

2.4

0.5

2.9

2021
£m

1.9

0.5

2.4

In 2022 additional costs of £0.3 million were incurred in respect of the audit of the financial statements for 2021.

Other operating expenses
In addition to the employee furlough schemes noted above, the Group has accessed a number of other support measures. These totalled £33 million (2021:
£19 million) and were offset against other operating expenses in the income statement. They related to arrangements whereby the government funding provided
support for operating costs. The funding received is included within the cash flows from operating activities in the consolidated statement of cash flows.

2.2

EXCEPTIONAL ITEMS

Accounting policy
Due to their nature, certain one-off and non-trading items can be classified separately as exceptional items in order to draw them to the attention of the reader. In
the judgement of the Directors this presentation shows the underlying performance of the Group more accurately.

Exceptional items
The following items are exceptional and have been shown separately on the face of the consolidated income statement.

Within staff expenses:

Productivity and efficiency activities(1)

Within other operating expenses:

Productivity and efficiency activities(2)

Transaction costs(3)

Exceptional items included within EBITDA

Within depreciation, amortisation and impairment:

Impairment of property, plant and equipment and right-of-use assets(4)

Impairment of investment in joint venture undertaking(5)

Exceptional items before income tax

Income tax credit on exceptional items above

Exceptional items for the year

2022
£m

2021
£m

(4)

(1)

(2)

(3)

(4)

(5)

Certain one-off operational costs were incurred in 2021 as the Group’s productivity and efficiency related activities that commenced in 2020 were completed. They were separately presented as
they were not part of the Group’s underlying operating expenses.
In 2021 the Group changed its accounting policy related to the capitalisation of certain software assets following the IFRS Interpretations Committee’s agenda decision published in April 2021.
This change in accounting policy led to an increase in exceptional operating expenses relating to productivity and efficiency activities of £3 million in 2021. They were separately presented as
they were not part of the Group’s underlying operating expenses.
In 2021 certain costs in respect of previous transactions were finalised leading to the release of amounts previously provided for of £1 million. They were separately presented as they were not
part of the Group’s underlying operating expenses.
Impairment charges have been made in the year of £19 million in property, plant and equipment and £3 million in right-of-use assets, in respect of two of the Group’s Midway attractions. These
reflect latest estimates at the end of the reporting period of the future performance of these attractions, taking into account reviews of the market and economic conditions at those locations. In
2021 an impairment credit was recorded in the year of £1 million in respect of one Midway location that was subject to impairment in 2020. They are separately presented as they are not part
of the Group’s underlying depreciation charge.
Impairment charges have been made in the year of £7 million in respect of the Group’s investment in the company operating the LEGOLAND Dubai Hotel, which is part of the LEGOLAND Parks
Operating Group. This reflects an assessment of market and economic conditions in that location.

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 2
RESULTS FOR THE YEAR CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

2.3

FINANCE INCOME AND COSTS

Accounting policies
Income and costs
Finance income comprises interest income from financial assets and investments, applicable foreign exchange gains and gains on hedging instruments that are
recognised in the income statement. Finance costs comprise interest expense, finance charges on finance leases, applicable foreign exchange losses and losses
on hedging instruments that are recognised in the income statement. Interest income and interest expense are recognised as they accrue, using the effective
interest method.

Capitalisation of borrowing costs
Where assets take a substantial time to complete, the Group capitalises borrowing costs directly attributable to the acquisition, construction or production of
those assets.

Finance income

Interest income

Other

Net foreign exchange gain

Finance costs

Interest expense on lease liabilities

Interest expense on financial liabilities measured at amortised cost

Other interest expense

Other

Net foreign exchange loss

2022
£m

203

2021
£m

165

279

226

Capitalised borrowing costs amounted to £3 million in 2022 (2021: £8 million), with a capitalisation rate of 4.9% (2021: 4.3%). Tax relief on capitalised borrowing
costs amounted to £1 million in 2022 (2021: £2 million).

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 2
RESULTS FOR THE YEAR CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

2.4

TAXATION

Accounting policies
The tax charge for the year is recognised in the income statement and the statement of comprehensive income, according to the accounting treatment of the related
transaction. The tax charge comprises both current and deferred tax.

Current tax is the expected tax payable on taxable income, using tax rates substantively enacted at the end of the reporting period, and any adjustment to tax
payable in respect of previous periods.

Deferred tax is provided on certain temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and taxation purposes
respectively. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither
accounting nor taxable profit other than in a business combination; and differences relating to investments in subsidiaries and joint ventures to the extent that they will
probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period.

Subject to the exceptions noted above, deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused
tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and
the carry forward of unused tax credits and unused tax losses can be utilised. This assessment is made after considering a number of factors, including the Group’s
future trading expectations.

Provisions for uncertain tax positions are recognised when the Group has a present obligation as a result of a past event and management judge that it is probable that
there will be a future outflow of economic benefits to settle that obligation. Uncertain tax positions are assessed and measured on an issue by issue basis within the
jurisdictions that we operate using management’s estimate of the most likely outcome. A combination of in-house tax experts, previous experience and professional firms
is used when assessing uncertain tax positions.

Recognised in the income statement

Current tax

Current year

Adjustment for prior periods

Total current income tax

Deferred tax

Origination and reversal of temporary differences

Changes in tax rate

Adjustment for prior periods

Total deferred tax

Total tax expense in income statement

2022
£m

2021
£m

(5)

(7)

(2)

(9)

(1)

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 2
RESULTS FOR THE YEAR CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

2.4

TAXATION (CONTINUED)

Reconciliation of effective tax rate

Profit/(loss) before tax

Income tax using the UK domestic corporation tax rate

Effect of tax rates in foreign jurisdictions

Non-deductible expenses

Movement in uncertain tax provisions

Income not subject to tax

Effect of changes in tax rate

Effect of recognising deferred tax assets previously unrecognised

Unrecognised temporary differences

Adjustment for prior periods

Total tax expense in income statement

2022
%

19.0%

34.6%

2022
£m

136

(12)

(1)

(5)

2021
%

19.0%

(48.9%)

2021
£m

(94)

(18)

(5)

(1)

(8)

The reported effective tax rate (ETR) is 34.6%. The difference between the underlying ETR (excluding exceptionals) of 30.8% and the UK standard tax rate of 19.0% is
primarily attributable to the effect of tax rates in foreign jurisdictions and certain non-deductible expenditure offset by movements in uncertain tax provisions. During the
course of the year, the conclusion of tax authority enquiries has enabled certain provisions to be released or reassessed.

In 2021, the difference between the reported ETR of (48.9)% and the UK standard tax rate was primarily attributable to the revaluation of deferred tax liabilities due to
the change in the UK tax rate from 19% to 25% from 1 April 2023, and the non-recognition of tax losses.

Significant factors impacting the Group’s future ETR include the Group’s geographic mix of profits, the timing of recognition of tax losses and changes to local or
international tax laws. Unrecognised deferred tax assets include tax losses in various jurisdictions which may be recognised in future periods as the relevant business
becomes profitable. In the 3 March 2021 Budget it was announced that the UK tax rate will increase to 25% from 1 April 2023. This will have a consequential effect on the
Group’s future tax charge.

In April 2019 the European Commission (EC) announced its final decision that certain elements of the UK’s Controlled Foreign Company rules partially represent State
Aid and in February 2021, the Group received charging notices from HMRC for £28 million, which have been paid. The UK Government made an annulment application
against the EC decision, however in June 2022 the EU General Court dismissed the UK’s application. The UK has subsequently lodged an appeal to the Court of Justice of
the European Union. The Group expects the appeal will ultimately be successful and accordingly the payments are held as a receivable in non-current assets. If the appeal
is ultimately unsuccessful then this could result in an increase in the Group’s future effective tax rate.

Recognised through the statement of other comprehensive income

Effective portion of changes in fair value of cash flow hedges

Remeasurement gains on defined benefit plans

Total tax expense in statement of other comprehensive income

2022
£m

2021
£m

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 2
RESULTS FOR THE YEAR CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

2.4

TAXATION (CONTINUED)

Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:

Property, plant and equipment

Right-of-use assets / lease liabilities

Other short term temporary differences

Corporate interest restriction

Intangible assets

Tax value of loss carry-forwards

Tax assets/(liabilities)

Set-off tax

Net tax assets/(liabilities)

Assets

2022
£m

271

(266)

2021
£m

259

(245)

Liabilities

Net

2022
£m

(244)

(87)

(24)

(351)

(706)

266

(440)

2021
£m

(205)

(78)

(3)

(362)

(648)

245

(403)

2022
£m

(220)

(32)

(344)

(435)

2021
£m

(183)

(37)

(340)

(389)

Other short term temporary differences primarily relate to financial assets and liabilities and various accruals and prepayments.

Set-off tax is separately presented to show deferred tax assets and liabilities by category before the effect of offsetting these amounts in the statement of financial
position where the Group has the right and intention to offset these amounts.

Movement in deferred tax during the current year

Property, plant and equipment

Right-of-use assets / lease liabilities

Other short term temporary differences

Corporate interest restriction

Intangible assets

Tax value of loss carry-forwards

Net tax assets/(liabilities)

26
December
2021
£m

(183)

(37)

(340)

(389)

Acquisitions
through
business
combinations

£m

(1)

Recognised
in other
comprehensive
income
£m

Effect of
movements
in foreign
exchange
£m

Recognised
in income
£m

31
December
2022
£m

(22)

(8)

(1)

(14)

(21)

(11)

(14)

(3)

(13)

(220)

(32)

(344)

(435)

In 2022 movements recognised in income were principally due to tax allowances in the UK and US exceeding depreciation and the use of brought forward losses.
This is partially offset by interest disallowances in the UK.

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 2
RESULTS FOR THE YEAR CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

2.4

TAXATION (CONTINUED)

Movement in deferred tax during the previous year

Property, plant and equipment

Right-of-use assets / lease liabilities

Other short term temporary differences

Corporate interest restriction

Intangible assets

Tax value of loss carry-forwards

Net tax assets/(liabilities)

27
December
2020
£m

Recognised
in income
£m

Recognised
in other
comprehensive
income
£m

Effect of
movements
in foreign
exchange
£m

25
December
2021
£m

(151)

(42)

(277)

(346)

(35)

(66)

(1)

(48)

(1)

(183)

(37)

(340)

(389)

In 2021 movements recognised in income were principally due to the revaluation of deferred tax liabilities due to the change in the UK tax rate offset by interest
disallowances in the UK and USA.

Unrecognised deferred tax assets

Property, plant and equipment

Right-of-use assets / lease liabilities

Other short term temporary differences

Tax value of loss carry-forwards

Net unrecognised tax assets

2022
£m

129

2021
£m

132

The unrecognised deferred tax assets relating to loss carry-forwards include £15 million (2021: £6 million) expiring in 0-5 years and £23 million (2021: £28 million)
expiring in 6-10 years. The remaining losses and other timing differences do not expire under current tax legislation.

The nature and location of the tax losses carried forward are such that there is currently no expectation that the majority of the losses will be utilised.

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 3
BUSINESS COMBINATIONS

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

3.1

BUSINESS COMBINATIONS

Accounting policies
When a business combination takes place, the Directors consider the rights and intentions of the directors of both entities and the overall controlling parties before
and after acquisition to determine who the acquiring party is, and then account for business combinations by applying the purchase method. Having determined the
acquiring party, any individually identifiable assets, liabilities and contingent liabilities acquired are valued. These include the property, plant and equipment and any
intangible assets which can be sold separately or which arise from legal rights regardless of whether those rights are separable, with any remaining balance being
assigned to goodwill.

2022
The COEX Aquarium
In April the Group completed the acquisition of the COEX Aquarium in Seoul, South Korea. The Group acquired 100% of the issued share capital of Seoul Ocean
Aquarium Co., Ltd. for £31 million, net of cash acquired. This acquisition added a further significant attraction to the SEA LIFE portfolio.

Cadbury World
In January 2022 the Group entered into an agreement to take over the operations of the Cadbury World attraction in the UK. The transaction completed in
December 2022. No consideration was paid in the year. Consideration of £8 million has been recognised which, subject to the performance of the attraction, is
expected to be payable in 2024.

These acquisitions had the following effect on the Group’s assets and liabilities:

Acquiree's net assets at the acquisition date:

Property, plant and equipment

Right-of-use assets

Inventories

Cash and cash equivalents

Lease liabilities

Trade and other payables

Provisions

Current tax liabilities

Deferred tax assets and liabilities

Net identifiable assets and liabilities

Goodwill

Consideration

Analysis of net cash outflow

Cash acquired

Cash paid at acquisition

Net cash outflow

The COEX
Aquarium

Cadbury
World

Fair values at
acquisition

£m

(9)

(1)

(2)

(1)

£m

(1)

The COEX
Aquarium

Cadbury
World

£m

(1)

£m

(10)

(1)

(2)

(1)

Total

£m

(1)

Goodwill of £27 million has been allocated to the Midway Attractions Operating Group. The goodwill arose on these transactions as they support the Group’s wider
strategy to build clusters of Midway indoor attractions in key gateway cities. The goodwill is not deductible for tax purposes.

In the year to 31 December 2022 these acquisitions contributed £8 million to consolidated revenue and a profit of £2 million to the consolidated underlying
operating profit of the Group.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 4
OPERATING ASSETS
AND LIABILITIES
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

4.1

PROPERTY, PLANT AND EQUIPMENT

Accounting policies
Property, plant and equipment (PPE) are stated at cost less accumulated depreciation and impairment losses.

Where components of an item of PPE have different useful lives, they are accounted for separately.

The initial cost of PPE includes all costs incurred in bringing the asset into use and includes external costs for the acquisition, construction and commissioning of the
asset, internal project costs (primarily staff expenses) and capitalised borrowing costs.

Assets acquired through business combinations
At the time of a business combination PPE is separately recognised and valued. Given the specialised nature of the PPE acquired, fair values are calculated on a
depreciated replacement cost basis. The key estimates are the replacement cost, where industry specific indices are used to restate original historic cost; and
depreciation, where the total and remaining economic useful lives are considered, together with the residual value of each asset. The total estimated lives applied
are consistent with those set out below. Residual values are based on industry specific indices. Freehold land is valued using a market approach.

New sites
Capital expenditure on new attractions includes all the costs of bringing the items of PPE within that attraction into use ready for the opening of the attraction.
Pre-opening costs are only capitalised to the extent they are required to bring PPE into its working condition. Other pre-opening costs are expensed as incurred.

Existing sites
Subsequent expenditure on items of PPE in our existing estate can be broadly split into two categories:
• Capital expenditure which adds new items of PPE to an attraction, or which extends the operational life, or enhances existing items of PPE is accounted for as
an addition to PPE. Examples of such expenditure include new rides or displays and enhancements to rides or displays, which increase the appeal of our
attractions to visitors.

• Expenditure which is incurred to maintain the items of PPE in a safe and useable state and to maintain the useful life of items of PPE is charged to the income
statement as incurred. Examples of such expenditure include regular servicing and maintenance of buildings, rides and displays and ongoing repairs to items
of PPE.

Government grants
Government grants are recognised when there is reasonable assurance that the Group has complied with the relevant conditions within the agreement and that the
grant will be received. For each grant, the Group assesses whether it relates to either capital or operational expenditure incurred. The Group has elected to
deduct grants related to capital expenditure from the total project costs within property, plant and equipment and amortise them systematically over the useful life
of the assets.

Depreciation
Land is not depreciated. Assets under construction are not depreciated until they come into use, when they are transferred to buildings or plant and equipment as
appropriate. Depreciation is then charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of PPE. Asset lives
for plant and equipment vary depending on the nature of the asset, from short life assets such as IT assets, up to long term infrastructure assets. No residual values
are typically considered.

The estimated useful lives are as follows:

Asset class

Freehold/long leasehold buildings

Leasehold buildings

Plant and equipment

Depreciation policy

50 years

20 – 50 years (dependent on life of lease)

5 – 30 years

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 4
OPERATING ASSETS
AND LIABILITIES CONTINUED
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

4.1

PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Property, plant and equipment

Cost

At 27 December 2020

Additions

Disposals

Transfers

Effect of movements in foreign exchange

Balance at 25 December 2021

Acquisitions through business combinations (note 3.1)

Additions

Disposals

Transfers

Effect of movements in foreign exchange

Balance at 31 December 2022

Depreciation

At 27 December 2020

Depreciation for the year

Disposals

Transfers

Effect of movements in foreign exchange

Balance at 25 December 2021

Depreciation for the year

Impairment

Disposals

Effect of movements in foreign exchange

Balance at 31 December 2022

Carrying amounts

At 26 December 2020

At 25 December 2021

At 31 December 2022

ANNUAL REPORT AND ACCOUNTS 2022

Land and
buildings
£m

Plant and
equipment
£m

Under
construction
£m

1,269

293

(19)

1,544

(1)

263

114

895

(2)

284

(19)

1,176

(3)

1,930

1,281

(1)

184

279

1,192

1,360

1,651

154

110

(2)

(3)

261

113

(1)

392

741

915

889

627

201

(1)

(577)

(18)

232

184

(296)

124

(55)

572

232

124

Total
£m

2,791

220

(3)

(56)

2,952

202

(4)

175

3,335

286

165

(2)

(4)

445

180

(1)

671

2,505

2,507

2,664

Depreciation is calculated in line with the policy stated previously.

During the year the Group reviews useful economic lives and tests PPE for impairment in accordance with the Group’s accounting policy, as referred to in note 4.3.
Impairment charges have been made in the year of £19 million (2021: £nil), in respect of two of the Group’s Midway attractions, arising from a review of market and
economic conditions at those locations where the carrying value exceeded the recoverable amount. No reasonable change in the assumptions would materially
change the impairments recognised.

One attraction within the Group’s LEGOLAND Parks Operating Group is sensitive to changes in assumptions, where an increase of 45 basis points in the pre-tax
discount rate would absorb the headroom of £25 million.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 4
OPERATING ASSETS
AND LIABILITIES CONTINUED
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

4.1

PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Capital commitments
At the year end the Group had a number of outstanding capital commitments in respect of capital expenditure at its existing attractions (including accommodation),
as well as for Midway attractions that are under construction. These commitments are expected to be settled within two financial years of the reporting date. These
amount to £62 million (2021: £70 million) for which no provision has been made.

4.2 GOODWILL AND INTANGIBLE ASSETS

Accounting policies
Goodwill represents the difference between the cost of an acquisition and the fair value of the identifiable net assets acquired less any contingent liabilities
assumed. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to groups of cash-generating units and is not amortised but is
tested annually for impairment. In respect of joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment in the joint venture.

Where they arise on acquisition, brands are valued using the excess earnings method. All the significant brands acquired are assessed as having indefinite useful
economic lives. This assessment is based upon the strong historical performance of the brands over a number of economic cycles, the ability to roll out the brands,
and the Directors’ intentions regarding the future use of brands. The Directors feel this is a suitable policy for a brands business which invests in and maintains the
brands, and foresee no technological developments or competitor actions which would put a finite life on the brands. The brands are tested annually for impairment.
Other brands are amortised over a period of fifteen years.

Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred.

Other intangible assets comprise software licences deemed to be controlled by the Group, sponsorship rights and other contract or relationship based intangible
assets. They are amortised on a straight-line basis from the date they are available for use. They are stated at cost less accumulated amortisation and
impairment losses.

The estimated useful lives of other intangible assets are as follows:

Asset class

Licences

Estimated useful life

Life of licence (up to 15 years)

Other intangible assets

Relevant contractual period (up to 30 years)

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 4
OPERATING ASSETS
AND LIABILITIES CONTINUED
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

4.2 GOODWILL AND INTANGIBLE ASSETS (CONTINUED)

Goodwill and intangible assets

Cost

At 27 December 2020

Additions

Effect of movements in foreign exchange

Balance at 25 December 2021

Acquisitions through business combinations (note 3.1)

Additions

Transfer to right-of-use assets (note 5.4)

Effect of movements in foreign exchange

Balance at 31 December 2022

Amortisation

At 27 December 2020

Amortisation for the year

Effects of movements in foreign exchange

Balance at 25 December 2021

Amortisation for the year

Transfer to right-of-use assets (note 5.4)

Effect of movements in foreign exchange

Balance at 31 December 2022

Carrying amounts

At 26 December 2020

At 25 December 2021

At 31 December 2022

ANNUAL REPORT AND ACCOUNTS 2022

Goodwill
£m

2,460

(28)

2,432

164

2,623

260

(2)

258

277

2,200

2,174

2,346

Intangible assets

Brands
£m

1,325

(13)

1,312

1,321

1,324

1,311

1,319

Other
£m

(4)

(1)

Total
£m

3,818

(41)

3,779

(4)

174

3,977

265

(2)

268

(1)

292

3,553

3,511

3,685

Intangible assets are tested for impairment in accordance with the Group’s accounting policy, as referred to in note 4.3. As a result of these tests, no impairment
charges have been made in the year (2021: £nil).

Goodwill
Goodwill is allocated to the Group’s operating segments which represent the lowest level at which it is monitored and tested for impairment. It is denominated in
the relevant local currencies and therefore the carrying value is subject to movements in foreign exchange rates.

Midway Attractions

LEGOLAND Parks

Resort Theme Parks

2022
£m

364

1,852

130

2,346

2021
£m

323

1,724

127

2,174

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 4
OPERATING ASSETS
AND LIABILITIES CONTINUED
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

4.2 GOODWILL AND INTANGIBLE ASSETS (CONTINUED)

Brands
The Group has valued the following brands at the time of those brands being acquired. Certain brands are denominated in their relevant local currencies and
therefore the carrying value is subject to movements in foreign exchange rates.

Midway Attractions

Madame Tussauds

SEA LIFE

London Eye

Dungeons

Other

Resort Theme Parks

Gardaland Resort

Alton Towers Resort

THORPE PARK Resort

Heide Park Resort

Chessington World of Adventures Resort

Warwick Castle

2022
£m

2021
£m

428

205

213

944

175

428

205

213

945

168

375

1,319

366

1,311

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 4
OPERATING ASSETS
AND LIABILITIES CONTINUED
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

4.3

IMPAIRMENT TESTING

Accounting policies
The carrying amount of the Group’s goodwill is tested for impairment on an annual basis. Intangible assets, PPE and right-of-use (ROU) assets are reviewed at the end of each
reporting period to determine whether there is any indication of impairment. If any such indication exists or if the asset has an indefinite life, the asset’s recoverable
amount is estimated.

The process of impairment testing is to estimate the recoverable amount of the assets concerned, and recognise an impairment loss whenever the carrying amount
of those assets exceeds the recoverable amount. Impairment testing is performed first at the individual cash-generating unit (CGU) level without goodwill, with any
impairment loss recognised as required. Impairment testing for goodwill is then applied to the collection of CGUs to which the goodwill relates.

The level at which the assets concerned are reviewed varies as follows:

Asset

Goodwill

Brands

PPE

ROU assets

Goodwill is reviewed at an Operating Group level, being the relevant grouping of CGUs at which the benefit of such goodwill arises. A
CGU is the smallest identifiable group of assets that generates largely independent cash inflows, being the Group’s individual attractions.

Brands are reviewed at an individual CGU level.

PPE is reviewed at an individual CGU level, being the Group's individual attractions.

ROU assets are reviewed at an individual CGU level, being the Group's individual attractions. In doing so, the associated lease liability is
considered against the value of the ROU asset as a sale of a CGU would necessitate that a buyer takes on the lease liability.

For assets that are in continuing use but do not generate largely independent cash inflows, the recoverable amount is determined for the CGU to which the
assets belong.

Impairment losses are recognised in the income statement. They are allocated first to reduce the carrying amount of goodwill, and then to reduce the carrying
amount of other intangible assets and other assets on a pro rata basis.

Calculation of recoverable amount
In accordance with accounting standards the recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. To assess value in use,
estimated future cash flows have been discounted to their present value using pre-tax discount rates, each appropriate to the Operating Group concerned. The
Group’s internally approved five year business plans, where the first year is based on latest budgets, are used as the basis for these calculations, with cash flows
beyond the five year outlook period then extrapolated using long term growth rates.

The key assumptions and estimates used when calculating the net present value of future cash flows from the Group’s businesses are as follows:

Estimate

Future cash flows

Growth in EBITDA

Timing and quantum of future
capital and maintenance
expenditure

Long term growth rate

Assumed to be equivalent to the operating cash flows of the businesses less the cash flows in respect of capital expenditure
and repayments of lease liabilities. The Group uses EBITDA less an allocation of central costs, in line with other recharges
which occur in the business, as a proxy for the operating cash flows of its attractions as they are not significantly impacted
by movements in working capital.

EBITDA is forecast by an analysis of both projected revenues and costs. Visitor numbers and revenue projections are
based on market analysis, including the total available market, historic trends, competition and site development activity,
both in terms of capital expenditure on rides and attractions as well as marketing activity.

Projections of operating costs are based on historical data, adjusted for variations in visitor numbers and planned expansion
of site activities as well as general market conditions.

Projections are based on the attractions’ long term development plans, taking into account the capital investment necessary
to maintain and sustain the performance of the attractions’ assets.

A growth rate of 2.5% (2021: 2.5%) was determined based on management’s long term expectations, taking account of
historical averages and future expected trends in both market development and market share growth.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 4
OPERATING ASSETS
AND LIABILITIES CONTINUED
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

4.3

IMPAIRMENT TESTING (CONTINUED)

Estimate

Discount rates to reflect the risks
involved

Based on the estimated weighted average cost of capital of a ‘market participant’ within the main geographical regions
where the Group operates, these are drawn from market data and businesses in similar sectors, and adjusted for asset
specific risks. The key assumptions of the ‘market participant’ include the ratio of debt to equity financing, risk free rates
and the medium term risks associated with equity investments. Average figures are used where appropriate to reduce the
impact of any short term volatility. Net present values are calculated using pre-tax discount rates derived from this post-
tax weighted average cost of capital.

Midway Attractions

LEGOLAND Parks

Resort Theme Parks

Pre-tax discount rates

Post-tax discount rates

2022

10.7%

10.9%

2021

10.3%

10.4%

2022

8.6%

8.5%

8.6%

2021

8.3%

8.4%

8.3%

Sensitivity analysis
Impairment reviews are often sensitive to changes in key assumptions. Sensitivity analysis has therefore been performed on the calculated recoverable amounts
considering incremental changes in the key assumptions.

Particular focus is given to material amounts where headroom is more limited. This relates to goodwill attributed to the LEGOLAND Parks Operating Group, where
the headroom is £550 million (2021: £87 million) and the Resort Theme Parks Operating Group where the headroom is £173 million (2021: £22 million). The Midway
Attractions Operating Group and the individual brands show considerable headroom and are not sensitive to even significant changes in any of the key assumptions.

In undertaking sensitivity analysis consideration has been given to movements in forecast EBITDA, increases in discount rates and reductions in long term
growth rates:
 At the reporting date the Directors consider that the forecasts used reflect the best estimate of future trading. It is noted, however, that the calculations are
inherently sensitive to the level of growth which can depend on a number of factors. While in the short term slower growth would be highly unlikely to affect
valuations by a substantial amount, longer term shortfalls that affect the outlook for the fifth year of the plan (which drives the terminal value) would have a
more significant impact.

 Discount rates have been derived from market data. As these rates are intended to be long term in nature they are expected to be reasonably stable in the short

term, however market discount rates could increase in future.

 The long term growth rate, which is applied to the cash flows of the final year in the business plan (2027), was determined based on management’s long term

expectations, taking account of historical averages and future expected trends in both market development and market share growth.

LEGOLAND Parks (LLP)




If EBITDA for LLP as a whole was forecast to be 14% lower than currently anticipated for 2027, headroom would be absorbed in full.
If the pre-tax discount rate used across LLP had been higher by a factor of 13% to 12.1%, headroom would have been absorbed in full.
If circumstances caused the long term growth rate to lower from 2.5% to 0.7%, headroom would be absorbed in full.

Resort Theme Parks (RTP)




If EBITDA for RTP as a whole was forecast to be 11% lower than currently anticipated for 2027, headroom would be absorbed in full.
If the pre-tax discount rate used across RTP had been higher by a factor of 15% to 12.6%, headroom would have been absorbed in full.
If circumstances caused the long term growth rate to lower from 2.5% to 0.2%, headroom would be absorbed in full.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 4
OPERATING ASSETS
AND LIABILITIES CONTINUED
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

4.4 WORKING CAPITAL

Accounting policies
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is measured using the first-in first-out principle and includes expenditure incurred in
acquiring the inventories and bringing them to their present location and condition. In a business combination the goods for resale held by the acquired Group are
‘stepped-up’ to a value that takes into account an estimation of the level of future sales proceeds to be generated by the acquiring Group, less estimated costs
necessary to sell the inventory.

Trade and other receivables
Trade and other receivables are recognised and carried at the original invoice amount less a loss allowance calculated using the simplified expected credit loss (ECL)
model approach. Trade receivables are written off when there is no reasonable expectation of recovery. Other receivables are stated at their amortised cost less any
impairment losses. Estimated ECLs are calculated using both actual credit loss experience and forward looking projections.

Inventories

Maintenance inventory

Work in progress

Goods for resale

Trade and other receivables

Trade receivables

Other receivables

Prepayments

Contract assets

2022
£m

Current assets

Non-current assets

2022
£m

165

2021
£m

113

2022
£m

2021
£m

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 4
OPERATING ASSETS
AND LIABILITIES CONTINUED
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

4.4 WORKING CAPITAL (CONTINUED)

Ageing of trade receivables
The ageing analysis of trade receivables, net of allowance for non-recoverable amounts, is as follows:

Neither past due nor impaired

Up to 30 days overdue

Between 30 and 60 days overdue

Between 60 and 90 days overdue

Over 90 days overdue

Information about the Group’s exposure to credit risk is included in note 5.3.

Trade and other payables

Trade payables

Accruals

Deferred income

Other payables

ANNUAL REPORT AND ACCOUNTS 2022

2022
£m

2021
£m

Current liabilities

Non-current liabilities

2022
£m

179

194

491

2021
£m

202

190

484

2022
£m

2021
£m

Accruals
Accruals comprise balances in relation to both operating and capital costs incurred at the reporting date but for which an invoice has not been received and payment
has not yet been made.

Deferred income
Deferred income comprises revenues received or invoiced at the reporting date which relate to future periods. The main components of deferred income relate to
advanced ticket revenues in respect of online bookings and annual pass purchases; pre-booked accommodation; and certain sponsorship and similar arrangements.

In 2022, at year end exchange rates, this also includes £52 million (2021: £50 million) received in respect of funding and infrastructure support for the development of
LEGOLAND Korea. Further details are provided in note 6.3.

£106 million of the deferred income at 25 December 2021 was recognised in revenue in 2022.

Other payables
Non-current other payables includes £20 million in respect of share-based payment transactions (2021: less than £1 million). Further details are provided in note 5.6.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 4
OPERATING ASSETS
AND LIABILITIES CONTINUED
53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

4.5

PROVISIONS

Accounting policy
Provisions are recognised when the Group has legal or constructive obligations as a result of past events and it is probable that expenditure will be required to settle
those obligations. They are measured at the Directors’ best estimates, after taking account of information available and different possible outcomes.

If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific to the liability.

Provisions

Balance at 26 December 2021

Acquisitions through business combinations (note 3.1)

Provisions made during the year

Utilised during the year

Unused amounts reversed

Unwinding of discount

Effect of movements in foreign exchange

Balance at 31 December 2022

2022

Current

Non-current

2021

Current

Non-current

Asset
retirement
provisions
£m

Other
£m

(1)

(3)

(7)

Total
£m

124

(4)

(8)

151

128

151

116

124

Asset retirement provisions
Certain attractions operate on leasehold sites and these provisions relate to the anticipated costs of removing assets and restoring the sites concerned at the end of
the lease term. These leases are typically of a duration of between 10 and 60 years.

They are established on inception and reviewed annually. The provisions are discounted back to present value with the discount then being unwound through the
income statement as part of finance costs. The cost of establishing these provisions together with the impact of any changes in the discount rate is capitalised within
the cost of the related asset.

Other
Other provisions include future regulatory payments in connection with the modification of the UK Resort Theme Parks leases and agreements that were entered
into to secure their tenure until 2077 (see note 5.4) that may become payable at the start of the additional 35 year period. Remaining balances relate to the
estimated cost arising from open insurance claims, tax matters and legal issues.

There are no anticipated future events that would be expected to cause a material change in the timing or amount of outflows associated with the provisions.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.1 NET DEBT

Analysis of net debt
Net debt is the total amount of cash and cash equivalents less interest-bearing loans and borrowings and lease liabilities. Cash and cash equivalents comprise cash
balances, call deposits and other short term liquid investments such as money market funds which are subject to an insignificant risk of a change in value.

Cash and cash equivalents

Interest-bearing loans and borrowings

Lease liabilities

Net debt

Cash and cash equivalents

Interest-bearing loans and borrowings

Lease liabilities

Net debt

26
December
2021
£m

185

(3,554)

(1,458)

(4,827)

Acquisitions
through
business
combinations
£m

(10)

(9)

27
December
2020
£m

306

(3,677)

(1,364)

(4,735)

Net
cash
flows (1) movements (2)

Non-cash

Effect of
movements
in foreign
exchange (3)

£m

228

399

£m

(209)

(223)

(432)

£m

(272)

(19)

(284)

Net
cash
flows (1) movements (2)

Non-cash

Effect of
movements
in foreign
exchange (3)

£m

(133)

189

106

162

£m

(173)

(228)

(401)

£m

107

147

31
December
2022
£m

266

(3,807)

(1,612)

(5,153)

25
December
2021
£m

185

(3,554)

(1,458)

(4,827)

(1)
(2)
(3)

Net cash flows include the drawdown and repayment of loans and borrowings, interest paid relating to loans and borrowings and interest paid and capital repayments relating to leases.
Non-cash movements include the finance costs relating to loans and borrowings and leases from the income statement, together with lease additions and disposals.
A substantial proportion of the Group’s net debt is denominated in non Sterling currencies.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.2

INTEREST-BEARING LOANS AND BORROWINGS

Accounting policy
Interest-bearing loans and borrowings are initially recognised at fair value less attributable fees. These fees are then amortised through the income statement on an
effective interest rate basis over the expected life of the loan (or over the contractual term where there is no clear indication that a shorter life is appropriate). If the
Group’s estimate of the expected life based on repayment subsequently changes, the resulting adjustment to the effective interest rate calculation is recognised as a
gain or loss on re-measurement and presented separately in the income statement, in accordance with IFRS 9 ‘Financial Instruments’.

Interest-bearing loans and borrowings

£400 million floating rate revolving credit

facility due 2026

Floating rate bank facilities due 2026

€500 million fixed rate notes due 2025

$400 million fixed rate notes due 2026

€370 million fixed rate notes due 2027

$410 million fixed rate notes due 2027

Other loans

Interest payable

Current liabilities

Non-current liabilities

2022
£m

2021
£m

2022
£m

2,352

440

340

321

332

2021
£m

2,186

418

311

304

297

Total

2022
£m

2,363

440

340

321

332

2021
£m

2,196

418

311

304

297

3,785

3,517

3,807

3,554

Interest-bearing loans and borrowings are initially recognised at fair value, net of transaction costs and are subsequently stated at amortised cost. Any difference
between the proceeds (net of transaction costs) and the redemption amount is amortised through the income statement over the period of the borrowings using the
effective interest method.

At 31 December 2022, the Group’s senior facilities are the following:

Senior secured debt
• €1,460 million and $1,342 million drawn facilities to mature in November 2026 entered into by the Company’s subsidiary Motion Finco S.à r.l. The margins on
these facilities are dependent on the Group’s adjusted leverage ratio and at 31 December 2022 were at a margin of 3.0% (2021: 3.0%) for EUR borrowings and
3.25% (2021: 3.25%) for USD borrowings over the floating interest rates when drawn. The relevant floating interest rates are USD LIBOR, which was 4.73% at
31 December 2022 (0.13% at 25 December 2021), and EURIBOR, which was 2.20% at 31 December 2022 (nil% at 25 December 2021).

• €500 million of 7.0% senior secured notes due 2025 entered into by the Company’s subsidiary Motion Finco S.à r.l. The notes are listed on The International

Stock Exchange.

• $400 million 5.75% senior notes due 2026 entered into by the Company’s subsidiary Merlin Entertainments Limited. The notes are listed on The International

Stock Exchange.

• A £400 million revolving credit facility to mature in May 2026. £30 million was utilised by way of establishing certain ancillary facilities, including letters of credit.

The relevant floating rate used for the facility was amended on 1 January 2022 from GBP LIBOR to the Sterling Overnight Index Average (SONIA).

Other senior debt
• €370 million 4.5% senior notes due 2027 and $410 million 6.625% senior notes due 2027 entered into by the Company’s subsidiary Motion Bondco DAC. The

notes are listed on The International Stock Exchange.

The terms of the floating rate debt facility require a repayment of 0.25% of the outstanding principal amount of the USD borrowings every three months.

Other loans of £1 million (2021: £3 million) have been taken out in respect of specific capital projects.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.2

INTEREST-BEARING LOANS AND BORROWINGS (CONTINUED)

Covenants
A financial covenant has existed from 30 September 2020 but is only required when the revolving credit facility is drawn by 40% or more (net of cash and cash
equivalents). The covenant requires the Group to maintain adjusted consolidated senior secured leverage below 10x.

Effective June 2021, the Group agreed with its revolving facility lenders to waive the leverage covenant until Q3 2023. As part of this agreement the Group is
required to maintain a minimum liquidity of £75 million (to include amounts undrawn from the revolving credit facility, and cash and cash equivalents), over the
period of the waiver.

The Group complied with the financial covenants in the year. The Group is also required to comply with certain non-financial covenants in these bank facilities and
notes, and these requirements were satisfied throughout the year.

5.3

FINANCIAL RISK MANAGEMENT

Liquidity risk
Liquidity risk is the risk that the Group would not have sufficient funds to meet its financial obligations as they fall due. The Group’s Treasury department produces
short term and long term cash forecasts to identify liquidity requirements and headroom, which are reviewed by the Group’s Chief Financial Officer. Surplus cash is
actively managed across Group bank accounts to cover local shortfalls or invested in bank deposits or other short term liquid investments such as money market
funds. In some countries bank cash pooling arrangements are in place to optimise the use of cash. As at 31 December 2022 the Group had £266 million of cash and
cash equivalents (2021: £185 million) and access to a £400 million revolving credit facility, of which £30 million was utilised in 2022 (2021: £28 million) by way of
establishing certain ancillary facilities, including letters of credit, in order to meet its obligations and commitments that will fall due.

The following table sets out the contractual maturities of financial liabilities, including interest payments. This analysis assumes that interest rates prevailing at the
reporting date remain constant.

0 to <1
year
£m

1 to <2
years
£m

2 to <5
years
£m

5 to <10
years
£m

10 to <20
years
£m

20 years
and over
£m

Contractual
cash flows
£m

2022

Floating rate bank facilities due 2026

(169)

(129)

(2,789)

€500 million fixed rate notes due 2025

$400 million fixed rate notes due 2026

€370 million fixed rate notes due 2027

$410 million fixed rate notes due 2027

Other loans

Lease liabilities

Derviatives

Trade payables

(31)

(19)

(15)

(23)

(1)

(110)

(73)

(435)

(32)

(19)

(15)

(23)

(111)

(458)

(360)

(372)

(408)

(311)

(3,087)

(521)

(398)

(402)

(454)

(1)

(470)

(841)

(2,682)

(4,525)

(73)

(324)

(4,681)

(470)

(841)

(2,682)

(9,433)

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.3

FINANCIAL RISK MANAGEMENT (CONTINUED)

2021

Floating rate bank facilities due 2026

€500 million fixed rate notes due 2025

$400 million fixed rate notes due 2026

€370 million fixed rate notes due 2027

$410 million fixed rate notes due 2027

Other loans

Lease liabilities

Trade payables

0 to <1
year
£m

1 to <2
years
£m

(82)

(27)

(17)

(14)

(21)

(2)

(107)

(60)

(330)

(82)

(27)

(17)

(14)

(21)

(1)

(129)

(291)

2 to <5
years
£m

(2,541)

(413)

(343)

(43)

(62)

(289)

ANNUAL REPORT AND ACCOUNTS 2022

5 to <10
years
£m

10 to <20
years
£m

20 years
and over
£m

Contractual
cash flows
£m

(327)

(326)

(453)

(799)

(1,573)

(2,705)

(467)

(377)

(398)

(430)

(3)

(3,350)

(60)

(7,790)

(3,691)

(1,106)

Interest rate risk
The Group is exposed to interest rate risk on both interest-bearing assets and liabilities. The Group has a policy of actively managing its interest rate risk exposure
using a combination of fixed rate debt, interest rate swaps, and interest rate caps.

At 31 December 2022 the Group had £1,441 million of fixed rate debt comprising:
• €500 million of 7.0% notes to mature in 2025;
• $400 million of 5.75% notes to mature in 2026;
• €370 million 4.5% notes to mature in 2027; and
• $410 million 6.625% notes to mature in 2027.

If required, to achieve the desired balance of fixed and floating interest rates across currencies, the Group may use floating to fixed interest rate swaps and caps
(which are part of cash flow hedging relationships) and fixed to floating interest rate swaps and caps (which are part of fair value hedging relationships).

In 2022, the Group entered into hedging arrangements on USD 600 million of floating rate USD debt to swap the floating interest rate to a fixed rate and on
EUR 700 million of floating rate EUR debt to cap the floating interest rate to a capped rate on the drawn floating rate facilities.

In aggregate, at the end of the reporting period, 67% (2021: 37%) of the Group’s interest-bearing loans and borrowings is at a fixed/capped rate for a weighted
average period of 4 years (2021: 5 years). At 31 December 2022 the fair value of interest rate derivative assets was £39 million (2021: £nil). These interest rate
derivatives are designated as cash flow hedges.

Interest rate swaps and caps are recognised at fair value which is determined by reference to market rates. The fair value is the estimated amount that the Group
would receive or pay to exit the instrument, taking into account current interest rates, credit risks and bid/ask spreads. Following initial recognition, changes in fair
value are recognised immediately in profit or loss, except where the Group adopts hedge accounting.

When hedge accounting, the Group formally documents the relationship between the hedging instruments and hedged items. It makes an assessment, at inception
and on an ongoing basis, as to whether the hedging instruments are expected to be ‘highly effective’ in offsetting the changes in the fair value or cash flows of the
respective hedged items during the life of the hedge.

Changes in the fair value of interest rate swaps that are designated and qualify as cash flow hedges are recognised in other comprehensive income and presented in
the cash flow hedge reserve in equity. Any ineffective portion of changes in fair value is recognised immediately in profit or loss. Cumulative gains and losses would
remain in equity until either the hedged transaction is no longer expected to occur, or until the hedged transaction occurs, at which point they will be reclassified to
profit or loss.

Fair value changes in interest rate caps attributable to changes in the intrinsic value are accumulated in the cash flow hedge reserve, and reclassified from the cash
flow hedge reserve to the income statement as a reclassification adjustment in the same period or periods during which the hedged future cash flows affect profit or
loss. Changes in the time value of interest rate caps are accumulated in the cost of hedging reserve and recycled to the income statement on a systematic basis over
the life of the instrument.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.3

FINANCIAL RISK MANAGEMENT (CONTINUED)

Sensitivity analysis
Based on the net debt position as at 31 December 2022 a 100 basis points rise in market interest rates would result in an increase in net interest paid of £10 million
(2021: £14 million) and a 100 basis points fall in market interest rates would result in a decrease in net interest paid of £14 million (2021: increase of £1 million). This
has been calculated by applying the interest rate change to the Group’s variable rate cash, borrowings and derivatives.

Foreign currency risk
As the Group operates internationally, the performance of the business is sensitive to movements in foreign exchange rates. The Group’s potential currency
exposures comprise transaction and translation exposures. The Group ensures that its net exposure to foreign currency balances is kept to a minimal level by using
foreign currency swaps to exchange balances back into Sterling or by buying and selling foreign currencies at spot rates when necessary. The fair value of foreign
exchange contracts is the present value of future cash flows and is determined by reference to market rates. At 31 December 2022 the fair value of foreign currency
swap assets was £5 million (2021: £1 million) and of foreign currency swap liabilities was £7 million (2021: £3 million), none of which are hedge accounted.

Transaction exposures
The revenue and costs of the Group’s operations are denominated primarily in the currencies of the relevant local territories. Any significant cross-border trading
exposures would be hedged by the use of forward foreign exchange contracts.

Translation exposures
The Group’s results, as presented in Sterling, are subject to fluctuations as a result of exchange rate movements. The Group does not hedge this translation
exposure to its earnings but, where material, may carry out net asset hedging by borrowing in the same currencies as the currencies of its operating units or by using
forward foreign exchange contracts. The Group’s debt facilities (excluding lease liabilities) are therefore denominated in Euros, US Dollars and Sterling and at
31 December 2022 the amounts drawn consisted of €2,330 million and $2,152 million. There are forward foreign exchange contracts in place in respect of
JPY 16,065 million (2021: JPY 14,900 million).

Gains or losses arise on the retranslation of the net assets of foreign operations at different reporting dates and are recognised within the consolidated statement of
comprehensive income. They will predominantly relate to the retranslation of opening net assets at closing foreign exchange rates, together with the retranslation of
retained foreign profits for the year (that have been accounted for in the consolidated income statement at average rates) at closing rates. Exchange rates for major
currencies are set out below.

Gains or losses also arise on the retranslation of foreign currency denominated borrowings designated as effective net investment hedges of overseas net assets.
These are offset in equity by corresponding gains or losses arising on the retranslation of the related hedged foreign currency net assets. The Group also treats
specific intercompany loan balances, which are not intended to be repaid in the foreseeable future, as part of its net investment. In the event of a foreign entity being
sold or a hedging item being extinguished, such exchange differences would be recognised in the income statement as part of the gain or loss on sale.

The following exchange rates have been used in the translation of the results of foreign operations:

US Dollar

Euro

Closing
rate for
2020

1.36

1.11

Weighted
average
rate for
2021

1.38

1.17

Closing
rate for
2021

1.34

1.18

Weighted
average
rate for
2022

1.25

1.18

Closing
rate for
2022

1.21

1.13

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.3

FINANCIAL RISK MANAGEMENT (CONTINUED)

The Sterling equivalents of financial assets and liabilities denominated in foreign currencies were:

2022

Cash and cash equivalents

Floating rate bank facilities due 2026

€500 million fixed rate notes due 2025

$400 million fixed rate notes due 2026

€370 million fixed rate notes due 2027

$410 million fixed rate notes due 2027

Other loans

Lease liabilities

2021

Cash and cash equivalents

Floating rate bank facilities due 2026

€500 million fixed rate notes due 2025

$400 million fixed rate notes due 2026

€370 million fixed rate notes due 2027

$410 million fixed rate notes due 2027

Other loans

Lease liabilities

Sterling
£m

157

(993)

(831)

133

(953)

(813)

Carrying value

Euro
£m

US Dollar
£m

(1,274)

(440)

(321)

(1)

(288)

(2,308)

(1,209)

(418)

(304)

(3)

(172)

(2,094)

(1,094)

(340)

(332)

(92)

(1,829)

(994)

(311)

(297)

(93)

(1,684)

Other
£m

(239)

(175)

(240)

(211)

Total
£m

266

(2,363)

(440)

(340)

(321)

(332)

(1)

(1,612)

(5,143)

185

(2,196)

(418)

(311)

(304)

(297)

(3)

(1,458)

(4,802)

Sensitivity analysis on foreign currency risk
A 10% strengthening of all currencies against Sterling would increase net debt by £383 million (2021: £359 million). As described above, gains or losses in the income
statement and equity are offset by the retranslation of the related foreign currency net assets or specific intercompany loan balances.

A 10% strengthening of all currencies against Sterling would reduce the fair value of foreign exchange contracts and result in a charge to the income statement of
£5 million (2021: £13 million).

Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk is
limited to the carrying value of the Group’s monetary assets. The Group has limited credit risk with its customers, the vast majority of whom pay in advance or at
the time of their visit. There are credit policies in place with regard to its trade receivables with credit evaluations performed on customers requiring credit over a
certain amount.

The Group manages credit exposures in connection with financing and treasury activities including exposures arising from bank deposits, cash held at banks and
derivative transactions, by appraisal, formal approval and ongoing monitoring of the credit position of counterparties. Counterparty exposures are measured against a
formal transaction limit appropriate to that counterparty’s credit position. The Group robustly appraises investments before they are made to ensure the associated
credit risk is acceptable. Performance of investments are closely monitored, in some cases through Board participation, to ensure returns are in line with
expectations and credit risk remains acceptable. There were no overdue amounts in respect of investments and no impairments have been recorded (2021: £nil).

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.3

FINANCIAL RISK MANAGEMENT (CONTINUED)

Fair values
Fair value hierarchy
The Group analyses financial instruments in the following ways:
•
Level 1: uses unadjusted quoted prices in active markets.
•
Level 2: uses inputs that are derived directly or indirectly from observable prices (other than quoted prices).
•
Level 3: uses inputs that are not based on observable market data.

Fair value versus carrying amounts
The fair values of financial assets and liabilities are presented in the table below, together with the carrying amounts shown in the statement of financial position.
Short term receivables, payables and cash and cash equivalents have been excluded from the following disclosures on the basis that their carrying amount is a
reasonable approximation to fair value.

Held at amortised cost

Floating rate bank facilities due 2026

€500 million fixed rate notes due 2025

$400 million fixed rate notes due 2026

€370 million fixed rate notes due 2027

$410 million fixed rate notes due 2027

Other loans

Held at fair value

Derivative financial instruments

Minority equity investments

Fair value

hierarchy

Level 2

Level 1

Level 3

Level 2

Level 3

2022

Carrying

amount

£m

Fair value

£m

2021

Carrying

amount

£m

Fair value

£m

(2,363)

(2,277)

(2,196)

(2,200)

(440)

(340)

(321)

(332)

(1)

(443)

(310)

(272)

(293)

(1)

(418)

(311)

(304)

(297)

(3)

(2)

(443)

(313)

(300)

(310)

(3)

(2)

(3,749)

(3,548)

(3,517)

(3,557)

The fair values shown above for the bank facilities and fixed rate notes have been calculated using market values. There is no difference between the carrying value
and the fair value of minority equity investments. These are accounted for as ‘fair value through other comprehensive income’ and are valued by reference to
EBITDA multiples or discounted cash flows, as appropriate to each investment.

There have been no transfers between levels in 2022 or 2021.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.4

LEASE OBLIGATIONS

Accounting policy
Where a contract provides the right to control the use of an asset for a period of time in exchange for consideration, the contract is accounted for as a lease. In
order for lease accounting to apply, an assessment is made at the inception of the contract that considers whether:
•

the Group has the use of an identified asset, which entitles it to the right to obtain substantially all of the economic benefits that arise from the use of the
asset; and
the right to direct the use of the asset, either through the right to operate the asset or by predetermining how the asset is used.

•

Measurement at lease inception
At the lease commencement date the Group, as the lessee, will recognise:
•
a lease liability representing its obligation to make lease payments, and:
•
an asset representing its right to use the underlying leased asset (ROU asset).

The lease liability is initially measured as the present value of future lease payments, discounted using the interest rate implicit in the lease, or if not available an
incremental borrowing rate. Future lease payments will include fixed payments, variable lease payments that depend on an index or rate (initially measured at the
rate at the commencement date, and subsequently modified as subsequent index or rates changes occur) and amounts expected to be payable by the lessee under
residual value guarantees. In relation to variable lease payments that depend on an index or rate, the total lease liability recognised in the statement of financial
position includes the impact of any index or rate changes that have already occurred, but does not include the impact of any future index or rate changes that have
not yet taken place.

The ROU asset is initially measured at cost, which comprises the amount initially recognised as the lease liability, lease payments made at or before the
commencement date less any lease incentives received, initial direct costs incurred, and the estimated costs to be incurred at the end of the lease to restore the site
to the required condition stipulated in the lease.

In a business combination the ROU assets and lease liabilities for those leases accounted for under IFRS 16 ‘Leases’ are aligned, except where it is assessed that the
cost of the acquired historic lease commitments taken on are greater or lower than a market participant would expect to pay were equivalent leases being entered
into at the time of the transaction. Where a current market rental is estimated to be higher than that currently paid by the acquired Group, there is an upward
adjustment to the right-of-use asset, or vice-versa if the opposite applies.

On inception of a lease for a new site, where required, the estimated cost of decommissioning any additions is included within ROU assets and depreciated over
the lease term. A corresponding provision is set up as disclosed in note 4.5.

Depreciation (and any subsequent impairment) on the ROU asset, interest on the lease liability and any variable lease payments are all recognised in the
income statement.

Ongoing measurement
After the commencement date the Group measures the ROU asset using a cost model, reducing the cost through depreciation and any impairment losses.
Adjustments will be made to the ROU asset to reflect the changes in the lease liability as a result of changes to lease payments or modifications to the lease.

The lease liability is adjusted for interest on the liability, contractual lease repayments and any reassessment of the lease as a result of a contract modification, such as
changes to the contractual rent amounts, or changes to the term of the lease.

Upon lease modification, the discount rates used in the present value calculations are adjusted to reflect the appropriate rates at the date of modification for the
remaining term of the lease, with resulting adjustments to the liability and ROU asset balances. Discount rates are then not revisited during the remaining life of
the lease.

When a lease is terminated earlier than the contractual end date within the lease agreement, the remaining balances on the lease liability after any final payments due,
the ROU asset gross cost and the ROU asset accumulated depreciation are removed. Any difference between the liability balance removed and the net ROU asset
balance removed are reflected in the income statement.

Short term and low-value leases
The Group has taken the recognition exemptions for short term leases and leases of low-value items. Leases which fall within the Group’s defined parameters for
these exemptions are excluded from the IFRS 16 lease accounting requirements and are accounted for on a straight-line basis over the lease term.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.4

LEASE OBLIGATIONS (CONTINUED)

Rent reductions and deferrals
In response to the COVID-19 pandemic, in 2020 the International Accounting Standards Board (IASB) issued amendments to IFRS 16 ‘Leases’ to allow lessees not to
account for rent concessions as lease modifications if they are a direct consequence of COVID-19 and meet certain conditions. On 31 March 2021 the IASB
extended their amendments to IFRS 16 beyond 30 June 2021. Therefore, as a lessee we have applied the practical expedient for the whole of the financial year and
are not required to assess whether eligible rent concessions are lease modifications. Accordingly, where the Group has agreed concessions in the form of a one-off
reduction in rent, they have been accounted for as a variable lease payment and have been recognised in profit or loss. The total recognised in the income statement
was £1 million (2021: £1 million).

Lease arrangements
The Group’s most significant lease arrangements are set out below.

There is a portfolio of leases that relate to the United Kingdom attractions within the Resort Theme Parks Operating Group, and Heide Park Resort in Germany.
Each of these lease agreements was initially for a period of 35 years from inception until 2042, and allowed for annual rent increases based on the inflationary index
in the United Kingdom and fixed increases in Germany. The Group had the option, but was not contractually required, to extend each agreement individually for two
further terms of 35 years, to 2077 and then to 2102, subject to an adjustment to market rates at that time. At the end of 2021 the agreements were modified and
new agreements were entered into to secure tenure for an additional 35 years from 2042 to 2077. The second extension option from 2077 to 2102 still remains
available for the Group to exercise in the future for each site.

For the United Kingdom sites the modification was completed before the end of the 2021 reporting period and the relevant balances were adjusted accordingly in
the 2021 financial statements. The transaction was treated as a lease modification. It did not meet the criteria to be treated as a separate lease. The Group did not
exercise the lease option unilaterally; instead the Group and the lessor entered into a binding agreement to extend the leases in 2042, and agreed certain lease
changes. As part of these changes the United Kingdom sites are now subject to annual rent increases from 2022 linked to CPI +0.5% (with a floor of 1%, and a
maximum increase of 4%). Under the previous agreement the sites were subject to RPI based annual upwards only increases without any maximum. The minimum
1% per annum was reflected in the modification calculation. As part of the transaction the Group received a cash payment of £25 million from the landlord in 2021.
A further £3 million was received in 2023, after the reporting date. The modification and securing of tenure of the UK sites resulted in an increase to the lease
liability of £149 million in 2021.

For the Heide Park Resort, the terms of the modification were agreed and completed at the start of the 2022 reporting period. Under the extension agreement the
park and hotel leases at this site will continue to be subject to fixed annual rent increases, and these have been reflected in the modification calculation. The
extension resulted in a modification to the associated leases, with an increase to the lease liability of £98 million recognised in 2022. As part of the transaction the
Group received a payment of £6 million from the landlord during 2022.

At the time of the acquisition of the Merlin Group by the investor consortium in November 2019, it was determined that the implicit rate of interest for the leases
noted above was not readily determinable, and accordingly an incremental borrowing rate (IBR) was used that reflected the Group’s financing arrangements at that
time. For the modifications above the IBR was calculated by reference to the mid yield on a composite index of debt at an appropriate duration and the same (or
similar) long term credit rating as the Company, adjusted where relevant for the sovereign yield for a similar duration to the index being used in the
country/geography of that index.

LEGOLAND Japan was opened during 2017. The park was developed under an ‘operated and leased’ model whereby a local operating company leases the site and
park infrastructure from a development partner. The development partners are related parties, being KIRKBI Invest A/S and LLJ Investco K.K, a subsidiary of KIRKBI
Invest A/S. KIRKBI Invest A/S holds KIRKBI’s investment as a shareholder of the Group. The lease is for a period of 50 years to 2067. The Group does not have any
right to request the renewal of the lease agreement, however it may be extended subject to agreement of terms with the lessor. For further details see note 6.3.

In addition to the above leases, the Group also enters into other leasing arrangements for sites within the Midway Attractions Operating Group and central areas.
These are typically of a duration between 10 and 60 years, with rent increases determined based on local market practice. In addition to a fixed rental element, rents
within the Midway Attractions Operating Group can also contain a performance related element, typically based on turnover at the site concerned. The key
contractual terms in relation to each lease are considered when calculating the rental charge over the lease term. The potential impact on rent charges of future
performance or increases based on inflationary indices are each excluded from these calculations. Options to renew leases will vary from site to site in line with local
market practice in the territories concerned. Not all of these leases will necessarily have extension options available to them.

On certain leases the Group is required to make variable lease payments in addition to, or instead of, any fixed or minimum rent amounts, usually in the form of rent
based on a percentage of the turnover generated by the relevant attraction. These payments are charged directly to the income statement and do not result in any
adjustment to the lease liabilities or ROU assets as they are contingent on performance. As such there is no future obligation until that performance occurs. As
noted below, the expense relating to these variable lease payments was £23 million in 2022 (2021: £12 million).

There are no significant operating restrictions placed on the Group as a result of its lease arrangements.

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.4

LEASE OBLIGATIONS (CONTINUED)

Right-of-use assets

Cost

At 27 December 2020

Additions

Movements in asset retirement provisions

Disposals

Effect of movements in foreign exchange

Balance at 25 December 2021

Acqisitions through business combinations (note 3.1)

Additions

Movements in asset retirement provisions (note 4.5)

Disposals

Transfer from other intangible assets (note 4.2)

Effect of movements in foreign exchange

Balance at 31 December 2022

Depreciation

At 27 December 2020

Depreciation for the year

Impairment

Disposals

Effect of movements in foreign exchange

Balance at 25 December 2021

Depreciation for the year

Impairment

Disposals

Transfer from other intangible assets (note 4.2)

Effect of movements in foreign exchange

Balance at 31 December 2022

Carrying amounts

At 26 December 2020

At 25 December 2021

At 31 December 2022

ANNUAL REPORT AND ACCOUNTS 2022

Land and
buildings
£m

Plant and
equipment
£m

1,405

185

(7)

(21)

1,574

146

(4)

114

(11)

(1)

(4)

114

Total
£m

1,519

201

(8)

(25)

1,688

148

(4)

1,769

117

1,886

(1)

(3)

(1)

166

(2)

240

1,306

1,408

1,529

(1)

108

104

105

(1)

(4)

(1)

176

(2)

253

1,414

1,512

1,633

During the year the Group reviews useful economic lives and tests ROU assets for impairment in accordance with the Group’s accounting policy, as referred to in
note 4.3. Impairment charges have been made in the period of £3 million, in respect of two of the Group’s Midway attractions, arising from a review of market and
economic conditions at those locations where the carrying value exceeded the recoverable amount. An impairment credit was recorded in 2021 of £1 million in
respect of one Midway location that was subject to impairment in 2020.

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.4

LEASE OBLIGATIONS (CONTINUED)

Lease liabilities

Current

Non-current

The maturity analysis of lease liabilities is disclosed within note 5.3. The cash outflow for leases is disclosed within note 5.1.

Amounts recognised in the income statement

Expense relating to variable lease payments

Depreciation expense of right-of-use assets

Interest expense on lease liabilities

5.5

EQUITY AND CAPITAL MANAGEMENT

ANNUAL REPORT AND ACCOUNTS 2022

2022
£m

1,570

1,612

2022
£m

169

2021
£m

1,424

1,458

2021
£m

141

Capital management
The capital structure of the Group consists of debt and equity. The Group’s objective when managing capital is to: maintain a strong capital base so as to ensure
shareholder and creditor confidence and to sustain future development of the business; to provide returns for shareholders; and to optimise the capital structure to
reduce the cost of capital. There are no externally imposed capital requirements on the Group.

To enable the Group to meet its objective, the Merlin Board monitor returns on capital through constant review of earnings generated from the Group’s capital
investment programme and through regular budgeting and planning processes, manage capital in a manner so as to ensure that sufficient funds for capital investment
and working capital are available, and ensure that the requirements of the Group’s debt covenants are met.

Share capital and reserves
Share capital

Ordinary shares of £0.01 each

Preference shares of £0.01 each

On issue and fully paid at end of year

2022
Number

28,759,359

2,847,137,139

2,875,896,498

2022
£m

2021
Number

28,759,359

29 2,847,137,139

29 2,875,896,498

2021
£m

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.5

EQUITY AND CAPITAL MANAGEMENT (CONTINUED)

Issue of shares
The nominal value of shares in issue is shown in share capital, with any additional consideration for those shares shown in share premium.

Ordinary shares
The holders of ordinary shares are entitled to receive dividends as declared from time to time.

Each ordinary share entitles the holder of that ordinary share to receive notice of and to attend and to speak and to vote at general meetings of the Company (on
the basis of one vote per ordinary share), or on any resolution proposed to members as a written resolution. Each ordinary share in the capital of the Company
ranks equally in all respects and no shareholder holds shares carrying special rights relating to the control of the Company.

Preference shares
The preference shares earn a fixed, cumulative, preferential dividend at the rate of 6% per annum on the issue price of the preference shares, which accrues (but is
not payable) on each preference share on a daily basis from the date of issue of the relevant preference share, and ends on the day preceding the redemption date,
compounding annually on each anniversary of the compounding date.

The preference shares rank ahead of the ordinary shares for all purposes and no dividend, distribution, return of capital and/or reduction of capital is paid on the
ordinary shares until the preference shares have been redeemed in full.

Each preference share entitles the holder of that preference share to receive notice of and to attend and to speak and to vote at general meetings of the Company
(on the basis of one vote per preference share), or on any resolution proposed to members as a written resolution.

Capital reserve
During 2019, the Group issued £156 million 0% subordinated unsecured shareholder loan notes due 31 October 2020. In accordance with the accounting policy as
set out in note 1.1, these were classed as financial liabilities. Reflecting the off-market interest rate attached to these loan notes, these were initially recognised at
fair value of £150 million with the difference of £6 million treated as a capital contribution. The capital reserve was eliminated through retained earnings in 2021.

Dividends
Dividends are recognised through equity on the earlier of their approval by the Company’s shareholders or their payment. The Directors of the Company have
declared their intention not to pay a dividend for the year ended 31 December 2022 (2021: £nil).

Translation reserve
The translation reserve of £(30) million (2021: £(17) million) comprises all foreign exchange differences arising from the translation of the financial statements of
foreign operations. The reporting date foreign exchange rates by major currency are provided in note 5.3.

Cost of hedging reserve
The cost of hedging reserve of £(10) million (2021: £nil) comprises accumulated changes in the time value of interest rate caps.

Cash flow hedge reserve
The cash flow hedge reserve of £38 million (2021: £nil) comprises accumulated changes in the intrinsic value of interest rate caps and the fair value of interest rate
swaps. They are reclassified from the cash flow hedge reserve to the income statement as a reclassification adjustment in the same period or periods during which
the hedged future cash flows affect profit or loss.

Reserve for own shares
The Group has made share grants under three employee share incentive plans relating to the Company’s subsidiary Motion TopCo Limited (see note 5.6).
Preference B shares, ordinary B shares and ordinary C shares of the subsidiary were issued to senior management and other employees in exchange for
consideration. The total employee investment is £4,545,262 (2021: £4,362,865) with the nominal value of the shares subscribed for as at the reporting date being
£117,793 (2021: £108,019). Upon the vesting date of the incentive plans, employees will hold a non-controlling interest in Motion TopCo Limited of 0.16% (2021:
0.16%). Until vesting, Motion TopCo Limited recognises these as treasury shares that result in a reduction to equity; this reduction is eliminated on consolidation.

3,929,200 (2021: 3,650,900) of the shares issued to employees as part of the share incentive plans are held in an employee benefit trust, with a nominal value of
£39,292 (2021: £36,509).

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.6

SHARE-BASED PAYMENT TRANSACTIONS

Accounting policy
The fair value of share plans is recognised as an expense over the expected vesting period with a corresponding entry to either share-based payment liabilities for
cash-settled plans and cash-settled elements relating to compound instruments, or retained earnings for equity-settled plans and equity-settled elements relating to
compound instruments. All entries are net of deferred tax. The fair value of share plans is determined at the date of grant. The fair value of awards granted is
measured based on observable market data, taking into account the terms and conditions upon which awards were granted. For all cash-settled awards and cash-
settled elements relating to compound instruments, the fair value is re-measured at each accounting date up to the vesting date by applying an option pricing model.
Non-market based performance conditions (including most likely exit events) are taken into account for all plans in estimating the number of awards likely to vest,
which is reviewed at each accounting date up to the vesting date, at which point the estimate is adjusted to reflect the actual awards issued. No adjustment is made
after the vesting date even if the awards are forfeited or are not exercised.

Share awards
The Group operates three employee share incentive plans:

Senior Management Long Term Bonus plan (LTB)

Senior Management Equity Investment (EI)
 Management Share Scheme (MSS)

The Group has issued share awards to employees, with all plans being in respect of the Company’s subsidiary entity Motion Topco Limited. Some of these share
awards issued are held in an employee benefit trust (see note 5.5).

Analysis of share-based payment charge
The total charge for the year for all plans is £21 million (2021: less than £1 million), and at the reporting date, liabilities in respect of share-based payment transactions
in the year were £20 million (2021: less than £1 million). The Group has not directly measured the fair value of services received from individuals within the plans in
the year, as it cannot be reliably estimated.

Plan

LTB

MSS

Analysis of awards

Performance condition(1)

2022
£m

2021
£m

MSS

LTB

Method of settlement accounting

Cash-settled

Compound instrument

Part compound instrument, part
equity-settled, part cash-settled

Number of allocated awards

Date of grant

Weighted average award life (years)(1)

4,970,113(2)

7,696,425(3),(4)

11 November 2021

November 2021-July 2022

3.0

4.7

A reconciliation of award movements during the year is shown below. The exercise price for all plans is £nil and hence no weighted average exercise prices are
presented.

At 26 December 2021

Granted during the year

Forfeited during the year

At 31 December 2022

EI
Number

4,770,951

199,162

MSS
Number

6,547,400

1,890,025

(741,000)

4,970,113(2)

7,696,425(3),(4)

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.6

SHARE-BASED PAYMENT TRANSACTIONS (CONTINUED)

(1) Weighted average award life / performance conditions – the Group has exercised its judgement to conclude there is sufficient parity between all MSS awards granted to both senior

management and other employees to account for all MSS awards in the same manner, and accordingly have concluded that for all awards there is a non-market based performance condition
that the awards will vest on the earlier of a defined interim trigger event or exit. Using the Group’s approved five-year business plan and considering ongoing future strategies of both the Group
and the Group’s shareholders, the most likely vesting period for each scheme has been estimated, with the maximum length of award expected to be nine years. The blend of compound, cash-
settled or equity-settled instruments within each scheme therefore impacts the calculated weighted average award life.
Comprising 4,823,468 preference B shares and 146,645 ordinary B shares (2021: 4,630,182 preference B shares and 140,769 ordinary B shares).
Ordinary C shares.
Inclusive of 1,619,225 awards entitling the employee to a cash bonus equivalent in value to a notional number of shares and 6,077,200 allocated shares (2021: 516,500 awards and
6,030,900 allocated shares).

(2)

(3)

(4)

Senior Management Long Term Bonus plan (LTB)
The LTB plan was granted on 11 November 2021 to eligible employees. The designated individuals of the plan are entitled to a gross cash bonus corresponding to a
percentage of the equity value of Motion Topco Limited upon vesting, which is expected to occur upon an interim trigger event. Executive retirements occurring in
the period ended 31 December 2022 have resulted in the reduction of this maximum percentage since the prior year to 0.55%. The cash payment is based on the
value of equity instruments of Motion Topco Limited (there are no equity settlement alternatives) and continuity of service, and hence falls in scope to be
cash-settled.

The fair value of this award is estimated at £14 million following consideration of future uncertainties and the potential volatility of business values, and it could
change in future years should the value of the Group rise over time. As the award is cash-settled, valuations calculating the expected fair value of awards are
reperformed on an annual basis.

Senior Management Equity Investment (EI)
The Senior Management Equity Investment (EI) plan was granted from Motion Topco Limited on 11 November 2021 and 22 July 2022 following eligible employee
investment, resulting in 4,823,468 preference B shares and 146,645 ordinary B shares being issued. The eligible employee investment for the EI plan varies in
comparison to the Management Share Schemes (MSS) as the awards are a different share category (B shares versus ordinary C shares awarded in MSS schemes). The
preference shares carry a right to a discretionary fixed, cumulative preferential dividend, which accrues (but is not payable) on each preference share on a daily basis
from 1 April 2021. Payment of these dividends is at the discretion of the Board of Motion Topco Limited. Accordingly, these awards have been classified as equity
and hence fall under the scope of IFRS 2 ‘Share-based Payment’.

There is a put option for cash on up to 100% of the shares at fair market value, exercisable at the expected vesting date, which is the earlier of the interim trigger
event or exit. As the interim trigger event is expected to occur prior to an exit event, this has been used to estimate the vesting period of the plan. The option is
subject to non-market based performance conditions, being exit events which create obligations on the Group, and continuity of employment. Individuals with
continued employment until exit will retain shares to the extent the put option is not exercised; hence, the potential appreciation of value of the EI plan is treated as
a compound instrument.

Management Share Scheme (MSS)
The MSS’s are accounted for as part equity-settled, part cash-settled and part compound instruments. MSS plans were granted for senior management and other
employees on several dates from 11 November 2021 to 14 November 2022. The plans can be subdivided into two tranches. The first tranche includes 5,577,200
ordinary C shares following eligible employee investment in Motion Topco Limited, and 1,619,225 awards which entitle the employee to a cash payment equivalent to
the fair value of a notional number of shares upon vesting. All such awards are classified as cash-settled. 2,803,575 awards remain unissued and unallocated. Prior to an
exit event all unallocated awards must be allocated; the Group has exercised its judgement and assumed that all awards will be allocated before an interim trigger
event. Hence, the total value of this tranche of MSS awards will always be equal to 10,000,000 shares regardless of staff attrition over the vesting period. The value of
10,000,000 share awards has therefore been considered when calculating the fair value of the MSS plans.

The second tranche relates to 500,000 ordinary C shares issued on 22 July 2022 following conversion of ordinary A shares of Motion Topco Limited. This tranche
remains separate to the 10,000,000 share awards described above, but the terms of the awards are otherwise identical. Whilst in the case of the senior management
issues, the Board has retained some flexibility on the terms of settlement, the Group has exercised its judgement to conclude there is sufficient parity between MSS
awards granted to both senior management and other employees to account for all MSS awards in the same manner.

For MSS share awards, from December 2021 onwards, 12% per annum of the total award becomes eligible for cash-settlement at the expected vesting date, with the
maximum cash-settlement crystallising at 60% in December 2025 of the total value of the MSS share awards. For the purposes of calculating the accounting entries,
the full 60% is assumed to become eligible for cash-settlement (‘the cash settlement option’). Should the vesting event occur at an earlier date than estimated, the
number of MSS share awards eligible for cash settlement decreases.

The 60% of MSS share awards which have a cash settlement option are subject to a put option; this option requires Motion JVco Limited to purchase the shares at
fair market value for cash upon exercise at an interim trigger event. If the put option is not exercised, ordinary C shares in Motion Topco Limited would be retained
by the employee and hence 60% of MSS share awards issued are treated as compound instruments. The equity component of the instrument is deemed to have an
expected value of £nil at vesting (as the expected benefit relating to this portion of the award is identical to the expected cash benefit), and hence the entire share-
based payment expense relating to 60% of MSS share awards issued relates to expected cash-settlement.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 5
CAPITAL STRUCTURE
AND FINANCING CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

5.6

SHARE-BASED PAYMENT TRANSACTIONS (CONTINUED)

For the remaining 40% of MSS share awards issued, should the put option requiring Motion JVco Limited to purchase the other 60% at fair market value for cash be
exercised, the employee’s ordinary C shares would automatically convert to EI ordinary and preference B shares in quantities equivalent to fair market value at the
point of exercise. If the put option is not exercised, ordinary C shares in Motion Topco Limited would be retained by the employee and would no longer be the
obligation of the Group to settle. The awards are therefore treated as equity-settled and employees would receive the benefit of these shares at a final exit event
following an interim trigger event, assuming continuity of service. Amounts due to tax authorities in respect of shares issued are the obligation of the employee to
settle. Taxes due on cash bonus awards, equivalent to the value of a notional number of shares, will be settled via payroll.

Should the employee leave service after an interim trigger event but prior to a final exit event, they will receive a cash-settlement equivalent to the fair market value
of their converted EI shares at the date of leaving (or the lower of cost and fair market value if the individual is a competing leaver). Historic attrition data for all
levels of management has been reviewed in approximating the proportions of the 40% MSS awards that will be either equity or cash settled.

Fair value calculation
The fair value per award granted and the assumptions used in the calculations are as follows:

Plan

LTB

Settlement
accounting

Cash-settled

Number of

awards Date of grant

n/a

11/11/2021

Compound

4,970,113(1)

MSS

Compound

3,346,320(2)

MSS

Equity-settled

1,743,704(2)

MSS

Cash-settled

487,176(2)

MSS

Cash-settled
(other)

1,619,225(2),(3)

11/11/2021
22/07/2022

11/11/2021
23/12/2021
21/02/2022
22/07/2022

11/11/2021
23/12/2021
21/02/2022

23/12/2021
21/02/2022
14/11/2022

Weighted
average
share price
at grant
date (£)

Weighted
average fair
value per award
at measurement
date (£)

n/a

13,873,021

0.824

Expected
dividend
yield
(%)

0.0%

Expected
volatility
(%)

54.9%

Risk free
rate
(%)

3.2%

0.072

9.63

0.0%

54.9%

3.2%

0.072

5.19

0.0%

37.7%

3.2%

0.072

8.37

0.0%

46.3%

3.2%

n/a

11.21

0.0%

54.9%

3.2%

Exercise
price (£)

(1)
(2)

(3)

Comprising 4,823,468 preference B shares and 146,645 ordinary B shares (2021: 4,630,182 preference B shares and 140,769 ordinary B shares).
Ordinary C shares. 2,803,575 MSS awards remain unallocated as at 31 December 2022.
These awards entitle the employee to a cash bonus equivalent in value to a notional number of shares.

The key assumptions in calculating the share-based payments were as follows:





The Monte-Carlo option pricing model was used to value all plans at the date of grant.
The expected volatility is based on broadly comparable quoted companies and takes into account the expected life of the relevant award.
The risk-free rate is equal to the prevailing UK Gilts rate at grant date, which is commensurate with the expected term.
Expected dividend yield assumes that preference shares will roll forward any accrued dividend on the basis that distributions are discretionary. Therefore,
dividend yield is assumed to be 0.0%.
The grant date has been determined for each plan following consideration of when there was mutual understanding between the Group and the employee on
the plan’s key terms; this date has been deemed to be the date of share issuance.
The Group has exercised its judgement to conclude there is sufficient parity between MSS awards granted to both senior management and other employees to
account for all awards in the same manner.



MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

6.1

INVESTMENTS

Accounting policy
The Group holds investments in two forms.

Minority equity investments are accounted for as ‘fair value through other comprehensive income’ (FVOCI), having taken the election available under IFRS 9
‘Financial instruments’. This applies to the investments in IDR Resorts Sdn. Bhd., Gangwon Jungdo Development Corporation Ltd, Shanghai LEGOLAND Co., Ltd
and Big Bus Tours Group Holdings Limited.

Associates and joint ventures are those entities over whose activities the Group has joint control or significant influence, established by contractual agreement. The
consolidated financial statements include the Group’s share of the total recognised income and expenses on an equity accounted basis, from the date that joint
control or influence commences until the date that it ceases.

Balance at 26 December 2021

Net change in fair value - included in OCI

Transfer to non-current other receivables

Share of reserves in joint ventures

Impairment

At 31 December 2022

Gangwon Jungdo
Development
Shanghai
Corporation LEGOLAND Co
£m

£m

IDR
Resorts
£m

LL Dubai
Hotel
£m

(5)

(3)

(7)

Total
£m

(5)

(3)

(7)

Minority equity investments
IDR Resorts
The Group has a minority equity investment in IDR Resorts Sdn. Bhd. (IDR). IDR and its subsidiaries are deemed to be related parties as together they own
LEGOLAND Malaysia (see note 6.3).

Gangwon Jungdo Development Corporation
The Group has a minority equity investment in Gangwon Jungdo Development Corporation Ltd, the local company that has provided funding and infrastructure
support to the development of LEGOLAND Korea (see note 6.3).

Shanghai LEGOLAND Co.
The Group has a minority equity investment in Shanghai LEGOLAND Co., Ltd., the company developing the LEGOLAND Shanghai Resort. This is being developed
under the Group’s management contract model, where we manage the resort under a management contract. During 2022 £5 million of the investment made in
2021 was reallocated to non-current other receivables.

Big Bus Tours
The Group has an investment in Big Bus Tours Group Holdings Limited (BIG BUS), held substantially all in the form of loan notes. The value of the investment was
adjusted to £nil in 2020, when the BIG BUS city tour business was severely impacted by the COVID-19 pandemic, and a capital restructuring exercise took place
whereby the priority of the Group’s investment reduced compared to other investors. The investment is valued adopting a market-based approach (based on
EBITDA multiples). Following a review of the value at the reporting date, the value has been retained at £nil (2021: £nil). Positive value adjustments could occur in
the future.

The Group also holds a minority equity investment valued at £nil (2021: £nil).

Investments in associates and joint ventures
LL Dubai Hotel
The Group holds a 40% equity interest in LL Dubai Hotel LLC. This is the company that developed the hotel at LEGOLAND Dubai, which opened in January 2022.
The negative share of reserves of £3 million reflects the Group’s share of that company’s retained losses for the period. Impairment charges have been made in the
year of £7 million, reflecting an assessment of market and economic conditions in that location.

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

6.1

INVESTMENTS (CONTINUED)

Summarised financial information in respect of LL Dubai Hotel LLC is set out below and is based on 100% of their results.

Non-current assets

Current assets

Total assets

Non-current liabilities

Current liabilities

Total liabilities

Revenue

Expenses

Loss for the year

6.2

EMPLOYEE BENEFITS

2022
£m

2021
£m

(9)

(1)

Accounting policies
Defined contribution pension schemes
In the case of defined contribution schemes, the Group pays fixed contributions into a separate fund on behalf of the employee and has no further obligations to
them. The risks and rewards associated with this type of scheme are assumed by the members rather than the employer. Obligations for contributions to defined
contribution pension schemes are recognised as an expense in the income statement as incurred.

Defined benefit pension schemes
A defined benefit scheme is a post-employment benefit scheme other than a defined contribution scheme. The Group’s net obligation is calculated for each scheme
by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to
determine its present value and offset by the fair value of any scheme assets. The calculation is performed by a qualified actuary using the projected unit credit
method. All actuarial gains and losses are recognised in the period they occur directly in equity, through other comprehensive income.

Defined contribution pension schemes
The Group operates a number of defined contribution pension schemes and the total expense relating to those schemes in the current year was £13 million
(2021: £11 million).

Defined benefit pension schemes
The principal scheme that the Group operates is a closed scheme for certain former UK employees of The Tussauds Group, which was acquired by the Merlin
Group in 2007. The scheme entitles retired employees to receive an annual payment based on a percentage of final salary for each year of service that the employee
provided. The pension schemes have not directly invested in any of the Group’s own financial instruments or in properties or other assets used by the Group.

The most recent full actuarial valuation of the scheme was carried out as at 31 December 2021 and updated to 30 September 2022 due to material changes in
market conditions. As a result, it was agreed to pay annual deficit reduction contributions of £544,000, increasing at 3% per annum, payable monthly from 1 January
2023 to 30 November 2028.

The Group expects £1 million in ongoing contributions to be paid to its defined benefit schemes in 2023. The weighted average duration of the defined benefit
obligation at 31 December 2022 was 10 years (2021: 17 years).

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

6.2

EMPLOYEE BENEFITS (CONTINUED)

The assets and liabilities of the schemes are:

Equities

Corporate bonds

Cash

Pooled investment funds (property)

Fair value of scheme assets

Present value of defined benefit obligations

Net pension surplus/(liability)

Movement in the net pension surplus/(liability)

At 27 December 2020

Contributions by employer

Benefits paid

Remeasurement gain

At 25 December 2021

Contributions by employer

Benefits paid

Remeasurement (loss)/gain

At 31 December 2022

2022
£m

(30)

Present
value of
scheme
assets
£m

Present
value of
defined
benefit
obligations
£m

(1)

(6)

(46)

(45)

(30)

2021
£m

(45)

(7)

Net
pension
surplus/
(liability)
£m

(11)

(7)

The amount recognised in the income statement was £nil (2021: £nil). The amount recognised in the statement of other comprehensive income was a profit of
£8 million (2021: £3 million).

Actuarial assumptions
Principal actuarial assumptions (expressed as weighted averages) at the year end were:

Discount rate

Rate of price inflation

2022

5.0%

3.3%

2021

1.8%

3.5%

The scheme is closed to future accrual for active members and therefore there is no link to future salary increases.

Assumptions regarding future mortality are based on published statistics and mortality tables. For the Tussauds Group scheme the actuarial table used is S3PxA. The
mortality assumption adopted predicts that a current 65 year old male would have a life expectancy to age 87 and a female would have a life expectancy to age 89.

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

6.3

RELATED PARTY TRANSACTIONS

Identity of related parties
The Group has related party relationships with its shareholders (and their connected parties), key management personnel, joint ventures, and other co-investors.

The defined benefit pension scheme for certain former UK employees of The Tussauds Group is also a related party (see note 6.2).

Transactions with shareholders (and connected parties)
Goods and services
Transactions including the purchase and sale of goods, the payment of fees and royalties, and trading balances outstanding at 31 December 2022 and 25 December
2021 were as follows:

2022

KIRKBI Invest A/S

LEGO Group

2021

KIRKBI Invest A/S

LEGO Group

Goods and services

Amount
owed by
related party
£m

Sales
£m

Purchases and
royalties
£m

Amount
owed to
related party
£m

112

Loans and borrowings
Certain shareholders (or other parties related to those shareholders), are owners of elements of the Group’s bank facilities as described in note 5.2. Balances
outstanding at 31 December 2022 are KIRKBI Invest A/S £479 million (2021: £451 million) and funds advised by parties related to Blackstone £32 million (2021:
£26 million). Interest is paid and accrued on the same terms as described in note 5.2.

Lease arrangements
As set out in note 5.4 the Group has entered into a lease with LLJ Investco K.K (a subsidiary of KIRKBI Invest A/S). The term of this lease is 50 years, with 44 years
remaining at the reporting date. The Group’s annual obligations consist of fixed rental payments, turnover rent and service charges totalling £6 million (2021:
£6 million). The total undiscounted commitment relating to fixed rental payments is £245 million over the remaining lease term (2021: £259 million).

The Group leases land, buildings and car parking areas from KIRKBI Invest A/S (a shareholder). The term of this lease is 25 years, with 17 years remaining at the
reporting date. The Group’s annual obligations consist of fixed rental payments, turnover rent and service charges totalling £1 million (2021: less than £1 million). The
total undiscounted commitment relating to fixed rental payments is £6 million over the remaining lease term (2021: £6 million).

The Group leases land and buildings from Koldingvej 2 Billund A/S (which has a 25% shareholding in the LEGO Group). The term of this lease is 29 years, with
19 years remaining at the reporting date. The Group’s annual obligations consist of fixed rental payments, turnover rent and service charges totalling less than
£1 million (2021: less than £1 million). The total undiscounted commitment relating to fixed rental payments is £8 million over the remaining lease term (2021:
£8 million).

The Group also previously entered into lease agreements with parties that are related parties of the Blackstone Investment Funds, who are shareholders in the
Company. These are as follows:
• Multi Corporation B.V. in relation to SEA LIFE and LEGOLAND Discovery Centre Istanbul;
•
• NEC Group Ltd, in relation to The Bear Grylls Adventure and LEGOLAND Discovery Centre attractions in Birmingham.

Shopcore in relation to LEGOLAND Discovery Centre Chicago; and

The Group’s annual obligations for these agreements consist of fixed rental payments, turnover rent and service charges totalling £2 million (2021: £2 million). The
total undiscounted commitment relating to fixed rental payments on these leases is £22 million over the remaining terms of each lease (2021: £27 million).

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

6.3

RELATED PARTY TRANSACTIONS (CONTINUED)

Other transactions
Included in deferred income is an amount of less than £1 million (2021: £2 million) received from a KIRKBI Group company (LEGO Juris A/S) in 2020 to support
certain development activities. A further £6 million was received in 2022 to support development activities, of which less than £1 million remains to be spent in
future periods.

During 2022 the Group contracted payroll services in North America from UKG, a related party of the Blackstone Investment Funds that are shareholders in the
Group. The total paid to this company in the year was less than £1 million.

Transactions with key management personnel
Key management of the Group, being the Directors of the Board, the members of the Merlin Executive Committee and their immediate relatives control nil%
(2021: nil%) of the Company. The remuneration of key management is disclosed in note 2.1.

As at 25 December 2021 two members of key management were provided with loans from the Group equalling £120,000 in aggregate, for use by the individuals in
investing in the Senior Management Equity Investment share-based payment plan (see note 5.6). The loans were repaid during 2022. No interest was payable
on the loans. As at 31 December 2022, the Company held funds of £38,000 on behalf of KIRKBI Invest A/S relating to the transfer and conversion of 505,876
ordinary A shares in Motion TopCo Limited. Please see note 5.6 for further details.

Transactions with other related parties
LEGOLAND Malaysia
As part of the agreement for the development and operation of LEGOLAND Malaysia, the Group subscribed for share capital in IDR Resorts Sdn. Bhd. (IDR) which
together with its subsidiaries owns the park (see note 6.1). On this basis, IDR and its subsidiaries are deemed to be related parties.

Transactions entered into, including the purchase and sale of goods, payment of fees and trading balances outstanding at 31 December 2022 and 25 December 2021,
are as follows:

Sales to related party

Amounts owed by related party

2022
£m

2021
£m

LEGOLAND Korea
The Group has a minority equity investment in and has entered into transactions with Gangwon Jungdo Development Corporation Ltd, a Korean company which
acts under the direction of the Gangwon Province and has provided funding and infrastructure support of KRW 80 billion (£52 million at year end exchange rates)
to the development of LEGOLAND Korea. As required under the terms of the funding agreement, the Group has spent this support on costs associated with the
project. The conditions of the funding require that following the completion of the park’s construction, the Group operates the park for a period of time
post-opening.

All of these funds had been received by 25 December 2021 and at the reporting date are recorded within deferred income. Once agreed with Gangwon Jungdo
Development Corporation Ltd, this amount will be accounted for as a capital grant and offset against the total project costs, within property, plant and equipment.

6.4 NEW STANDARDS AND INTERPRETATIONS

The following amendments to standards and interpretations have been implemented in the year with no significant impact to the Group:
• Amendments to IAS 37 ‘Onerous contracts – cost of fulfilling a contract’
• Annual Improvements to IFRS Standards 2018-2020
• Amendments to IAS 16 ‘Property, plant and equipment – proceeds before intended use’
• Amendments to IFRS 3 ‘Reference to Conceptual Framework’

The IASB has also issued the following amendments to standards that will be effective for the Group for the 2023 reporting period. The Group does not expect any
significant impact on its consolidated financial statements from these amendments.

• Amendments to IAS 12 ‘Income taxes – deferred tax related to assets and liabilities arising from a single transaction’
• Amendments to IAS 1 ‘Presentation of financial statements – disclosure of accounting policies’
• Amendments to IAS 8 ‘Accounting policies, changes in accounting estimates and errors – definition of accounting estimates’

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

6.5 ULTIMATE PARENT COMPANY INFORMATION

The largest group in which the results of the Company are consolidated is that headed by the Company, incorporated in the United Kingdom. No other group
financial statements include the results of the Company.

The consolidated financial statements of the Company and its subsidiaries are available to the public by visiting the Merlin corporate website at
www.merlinentertainments.biz.

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

6.6

SUBSIDIARY AND JOINT VENTURE UNDERTAKINGS

The Group has the following investments in subsidiaries and joint ventures:

Subsidiary undertaking

AAE Unit Trust

AQDEV Pty Limited

Illawarra Tree Topps Pty Ltd

LEGOLAND Discovery Centre Melbourne Pty Ltd

Living and Leisure Australia Limited

Living and Leisure Australia Management Limited

Living and Leisure Australia Trust

Living and Leisure Finance Trust

LLA Aquariums Pty Limited

Melbourne Underwater World Pty Ltd

Melbourne Underwater World Trust

ME LoanCo (Australia) Pty Limited

Merlin Entertainments (Australia) Pty Ltd

MUW Holdings Pty Ltd

Northbank Development Trust

Northbank Place (Vic) Pty Ltd

Oceanis Australia Pty Ltd

Oceanis Australia Unit Trust

Oceanis Developments Pty Ltd

Oceanis Foundation Pty Ltd

Oceanis Holdings Limited

Oceanis Korea Unit Trust

Oceanis NB Pty Ltd

Oceanis Northbank Trust

Oceanis Unit Trust

Sydney Attractions Group Pty Ltd

Sydney Tower Observatory Pty Limited

Sydney Wildlife World Pty Limited

The Otway Fly Pty Ltd

The Otway Fly Unit Trust

The Sydney Aquarium Company Pty Limited

Underwater World Sunshine Coast Pty Ltd

US Fly Trust

Madame Tussauds Austria GmbH

MT Austria Holdings GmbH

Merlin Entertainments Belgium N.V.

Christchurch Investment Company Limited

Merlin Entertainments (Canada) Inc

Madame Tussauds Exhibition (Beijing) Company Limited

Madame Tussauds Exhibition (Shanghai) Company Limited

Madame Tussauds Exhibition (Wuhan) Company Limited

Merlin Entertainments Hong Kong Limited

Country of
incorporation
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (2)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Australia (1)
Austria (3)
Austria (3)
Belgium (4)
British Virgin Islands (5)
Canada (6)
China (7)
China (8)
China (9)
China (10)

Class of
share held

Ownership
2022

Ownership
2021

Ordinary

100.0%

50.0%

100.0%

50.0%

100.0%

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

6.6

SUBSIDIARY AND JOINT VENTURE UNDERTAKINGS (CONTINUED)

Subsidiary undertaking

Merlin Entertainments (Shanghai) Company Limited

Merlin Exhibition (Chongqing) Company Limited

Merlin Exhibition (Shenyang) Company Limited

Merlin Indoor Children's Playground (Shanghai) Company Limited

Merlin (Shanghai) Management Advisory Company Limited

Shanghai Chang Feng Oceanworld Co. Ltd

Shanghai LEGOLAND Management Co., Ltd

LEGOLAND ApS

Merlin Entertainments Group Denmark Holdings ApS

SEA LIFE Helsinki Oy

SEA LIFE France SARL

Dungeon Deutschland GmbH

Heide-Park Soltau GmbH

LEGOLAND Deutschland Freizeitpark GmbH

LEGOLAND Deutschland GmbH

LEGOLAND Discovery Centre Deutschland GmbH

LEGOLAND Holidays Deutschland GmbH

LLD Share Beteiligungs GmbH

LLD Share GmbH & Co. KG

Madame Tussauds Deutschland GmbH

Merlin Entertainments Group Deutschland GmbH

SEA LIFE Deutschland GmbH

SEA LIFE Konstanz GmbH

Tussauds Deutschland GmbH

Tussauds Heide Metropole GmbH

Merlin Entertainments India Private Limited
Merlin Entertainments Ireland 1 Limited (a)
Merlin Entertainments Ireland 2 Limited (a)

Motion Bondco Designated Activity Company

SEA LIFE Centre Bray Limited

Gardaland S.r.l.

Gardaland Holidays S.r.l.

Merlin Attractions Italy S.r.l.

Merlin Entertainments Group Italy S.r.l.

Merlin Water Parks S.r.l.

Ronchi del Garda S.p.A.

Ronchi S.p.A.

LEGOLAND Japan Limited

Merlin Entertainments (Japan) Limited

Merlin Entertainments Group Luxembourg 3 S.à r.l.
Merlin Lux Finco 1 S.à r.l. (a)
Merlin Lux Finco 2 S.à r.l. (a)

Motion Finco S.à r.l.

Country of
incorporation
China (11)
China (12)
China (13)
China (14)
China (15)
China (16)
China (17)
Denmark (18)
Denmark (18)
Finland (19)
France (20)
Germany (21)
Germany (22)
Germany (23)
Germany (23)
Germany (21)
Germany (23)
Germany (23)
Germany (23)
Germany (21)
Germany (21)
Germany (21)
Germany (21)
Germany (22)
Germany (22)
India (24)

Ireland

Ireland
Ireland (25)
Ireland (26)
Italy (27)
Italy (27)
Italy (27)
Italy (27)
Italy (27)
Italy (28)
Italy (27)
Japan (29)
Japan (30)
Luxembourg (31)

Luxembourg

Luxembourg
Luxembourg (31)

Class of
share held

Ownership
2022

Ownership
2021

Ordinary

100.0%

85.0%

100.0%

99.9%

100.0%

100.0%
(b) 49.4%

90.4%

100.0%

85.0%

100.0%

99.9%

100.0%

100.0%
(b) 49.4%

90.4%

100.0%

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

6.6

SUBSIDIARY AND JOINT VENTURE UNDERTAKINGS (CONTINUED)

Subsidiary undertaking

Motion Finco 2 S.à r.l.

LEGOLAND Malaysia Hotel Sdn. Bhd

Merlin Entertainments Group (Malaysia) Sdn. Bhd

Merlin Entertainments Studios (Malaysia) Sdn. Bhd

Amsterdam Dungeon B.V.

LEGOLAND Discovery Centre Scheveningen B.V.

Madame Tussauds Amsterdam B.V.

Merlin Entertainments Den Haag B.V.

Merlin Entertainments Holdings Nederland B.V.

SEA LIFE Centre Scheveningen B.V.

Auckland Aquarium Limited

Merlin Entertainments (New Zealand) Limited

Merlin Entertainments (SEA LIFE PORTO) Unipessoal Lda

Merlin Entertainments Singapore Pte. Ltd

LEGOLAND Korea LLC

Merlin Entertainments Korea Limited

Seoul Ocean Aquarium Co., Ltd.

SLCS SEA LIFE Centre Spain S.A.

Merlin Entertainments (Thailand) Limited

Siam Ocean World Bangkok Co Ltd

Istanbul Sualti Dunyasi Turizm Ticaret A.S

Madame Tussauds Museum LLC

Merlin Holdings Limited

Alton Towers Limited

Alton Towers Resort Operations Limited

Charcoal CLG 1 Limited (company limited by guarantee)

Charcoal CLG 2 Limited (company limited by guarantee)

Charcoal Holdco Limited

Charcoal Midco 1 Limited

Charcoal Newco 1 Limited

Charcoal Newco 1a Limited

Chessington Hotel Limited

Chessington World of Adventures Limited

Chessington World of Adventures Operations Limited

Chessington Zoo Limited

CWA PropCo Limited

LEGOLAND US Holdings Limited

LEGOLAND Windsor Park Limited

London Aquarium (South Bank) Limited

London Dungeon Limited

London Eye Holdings Limited

London Eye Management Services Limited

Madame Tussaud’s Limited

Country of
incorporation
Luxembourg (31)
Malaysia (32)

Malaysia (32)

Netherlands (33)

Netherlands (34)

Netherlands (35)

Netherlands (36)

Netherlands (33)

Netherlands (37)

New Zealand (38)

Portugal (39)

Singapore (40)

South Korea (41)

South Korea (42)

South Korea (43)
Spain (44)
Thailand (45)
Thailand (46)
Turkey (47)
UAE (48)
UAE (49)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)

Class of
share held

Ownership
2022

Ownership
2021

Ordinary

100.0%

60.0%

100.0%

100.0%
(c) 48.0%
(c) 1.0%

100.0%

60.0%

100.0%

100.0%
(c) 48.0%
(c) 1.0%

100.0%

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

6.6

SUBSIDIARY AND JOINT VENTURE UNDERTAKINGS (CONTINUED)

Subsidiary undertaking

Madame Tussauds Touring Exhibition Limited

Merlin Attractions Operations Limited

Merlin Magic Making Limited

Merlin Entertainments (Asia Pacific) Limited

Merlin Entertainments (Blackpool) Limited

Merlin Entertainments (Dungeons) Limited

Merlin Entertainments (NBD) Limited

Merlin Entertainments (SEA LIFE) Limited

Merlin Entertainments Crown (UK) Limited

Merlin Entertainments Group Employee Benefit Trustees Limited

Merlin Entertainments Group Holdings Limited

Merlin Entertainments Group Limited

Merlin Entertainments Group Operations Limited

Merlin Entertainments Holidays Limited (formerly Tussauds Attractions Limited)

Merlin Entertainments Limited

Merlin’s Magic Wand Trustees Limited

Merlin UK Finance 1A Limited (a)

Merlin UK Finance 2A Limited (a)

Merlin UK Finco 1 Limited

Merlin UK Finco 2 Limited

Merlin US Holdings Limited

Motion Topco Limited (d)

Motion Midco Limited

Motion Acquisition Limited

SEA LIFE Centre (Blackpool) Limited

SEA LIFE Centres Limited

SEA LIFE Trustees Limited

The London Planetarium Company Limited

The Millennium Wheel Company Limited

The Seal Sanctuary Limited

The Tussauds Group Limited

Thorpe Park Operations Limited

Tussauds Group (UK) Pension Plan Trustee Limited

Tussauds Limited

Warwick Castle Limited

Lake George Fly LLC

LEGO Discovery Center Washington D.C. LLC

LEGOLAND California LLC

LEGOLAND Discovery Center Arizona LLC

LEGOLAND Discovery Center Boston LLC

LEGOLAND Discovery Center Columbus LLC

LEGOLAND Discovery Centre (Dallas) LLC

LEGOLAND Discovery Centre (Meadowlands) LLC

Country of
incorporation
UK (50)

UK (50)

UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
UK (50)
USA (51)
USA (52)
USA (52)
USA (52)
USA (52)
USA (52)
USA (52)
USA (52)

Class of
share held

Ownership
2022

Ownership
2021

Ordinary

100.0%

99.8%

100.0%

99.8%

100.0%

ANNUAL REPORT AND ACCOUNTS 2022

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

6.6

SUBSIDIARY AND JOINT VENTURE UNDERTAKINGS (CONTINUED)

Subsidiary undertaking

LEGOLAND Discovery Center Michigan LLC

LEGOLAND Discovery Center Philadelphia LLC

LEGOLAND Discovery Center San Antonio LLC

LEGOLAND Discovery Center San Jose LLC

LEGOLAND Discovery Centre US LLC

LEGOLAND New York LLC

Madame Tussauds Hollywood LLC

Madame Tussaud Las Vegas LLC

Madame Tussauds Nashville LLC

Madame Tussaud’s New York LLC

Madame Tussauds Orlando LLC

Madame Tussauds San Francisco LLC

Madame Tussauds Washington LLC

Merlin Entertainments Chicago LLC

Merlin Entertainments Crown (US) Inc

Merlin Entertainments Group Florida LLC

Merlin Entertainments Group US Holdings Inc

Merlin Entertainments Group US LLC

Merlin Entertainments Group Wheel LLC

Merlin Entertainments North America LLC

Merlin Entertainments Short Breaks LLC

Merlin Entertainments Theme Parks LLC

Merlin Entertainments US NewCo LLC

Motion Finco LLC

San Francisco Dungeon LLC

SEA LIFE Center San Antonio LLC

SEA LIFE Charlotte LLC

SEA LIFE Meadowlands LLC

SEA LIFE Michigan LLC

SEA LIFE Minnesota LLC

SEA LIFE Orlando LLC

SEA LIFE US LLC

The Tussauds Group LLC

Joint venture undertaking

LL Dubai Hotel LLC

Country of
incorporation
USA (52)

USA (52)

USA (53)
USA (52)

USA (52)

Class of
share held

Ownership
2022

Ownership
2021

Ordinary

100.0%

Country of
incorporation
UAE (54)

Class of
share held

Ordinary

Ownership
2022

Ownership
2021

40.0%

(a)

(b)

(c)

(d)

Companies were dissolved in 2022.
Motion JVco Limited has control over this entity via control of the immediate parent entity and the control that the immediate parent entity has over the subsidiary entity.
Motion JVco Limited has 100% of the beneficial ownership of these entities.
Motion Topco Limited is held by the Company. All other subsidiaries are held by intermediate subsidiaries. Upon the vesting date of the share incentive plans, employees will hold a non-controlling
interest in Motion TopCo Limited of 0.16% (see note 5.5).

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

6.6

SUBSIDIARY AND JOINT VENTURE UNDERTAKINGS (CONTINUED)

Registered offices

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19)

(20)

(21)

(22)

(23)

(24)

(25)

(26)

(27)

(28)

(29)

(30)

(31)

(32)

(33)

(34)

(35)

(36)

(37)

(38)

(39)

(40)

(41)

(42)

(43)

(44)

(45)

(46)

(47)

(48)

(49)

(50)

(51)

(52)

(53)

(54)

Suite 1, Level 11, 66-68 Goulburn Street, Sydney, New South Wales, 2000, Australia
Unit 501, 370 St Kilda Road, Melbourne, Victoria, Australia
Riesenradplatz 5-6, 1020 Wien, Vienna, Austria
Koning Albert 1 Laan 116, 8370, Blankenberge, Belgium
P.O. Box 3340, Road Town, Tortola, British Virgin Islands
Suite 5300 Commerce Court West, 199 Bay Street, Toronto, ON, M5L 1B9, Canada
No. 4, 6, 8, 10, 12, 14, 16, 18 Qianmen Avenue, Dongcheng District, Beijing, China
10/F New World Building, No 2-68 Nanjing Xi Road, Shanghai 200003, China
21, Han Street, Wuchang District, (Shops 40/41/42) Building 5, Lot J2, Wuhan, China
Shops B131, B132 & B133 of Level B1, K11 Musea Victoria Dockside, 12 Salisbury Road Tsim Sha Tsui, Kowloon Hong Kong
Room No.3F-01b&32&K1, L3 Floor, Zhihuixuhui Plaza, No.1-2 of 2389 Alley, Zhangyang Road, Shanghai Pilot Free Trade Zone, China
4-11, Fu 9, No. 133, Nanpin Road, Nan'an District, Chongqing, China
No. 2 Jia-1, Bolan Road, Heping District, Shenyang, China
L2-25, 2F, 3F Parkside Plaza, Putuo District, Shanghai, China
Room 10-1, 10th Floor, No 2-68 Nanjing West Rd, Huangpu District, Shanghai, China
189, Daduhe Road, Pu Tuo District, Shanghai, 200062, China
Room 5668, No. 19, Cao Li Road 38 Lane, Feng Jing Town, Jinshan District, Shanghai, China
Aastvej 10, 7190 Billund, Denmark
Tivolitie 10, Helsinki 00510, Finland
Centre Commercial Val d'Europe, Espace 502, 14 cours du Danube, Serris, 7711 Marne-La-Vallée, France
Kehrwieder 5, 20457 Hamburg, Germany
Heidenhof 1, 29614 Soltau, Germany
Legoland Allee, 89312, Gunzburg, Germany
606 Suryakiran Building, 19 Kasturba Gandhi Marg, Connaught Place, New Delhi 110001, India
2nd Floor, 1-2 Victoria Buildings, Haddington Road, Dublin 4, Ireland
6th Floor, 2 Grand Canal Square, Dublin 2, Ireland
Via Derna 4, Castelnuovo del Garda, 37014, Verona, Italy
Loc Ronchi, Castel del Garda Verona, 37014, Verona, Italy
2-2-1, Kinjoufutou Minato-ku, Nagoya-shi, Japan
Island Mall, Decks Tokyo Beach, 1-6-1 Daiba, Minato-ku, Tokyo, Japan
2-4, Rue Eugène Ruppert, L-2453, Luxembourg
Level 13A-6, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, 50490 Kuala Lumpur, Malaysia
Rokin 78, 1012 KW Amsterdam, Netherlands
Gevers Deynootweg 970, 2586 BW Den Haag, Netherlands
Dam 20 GEBOUW P&C, 1012 NP Amsterdam, Netherlands
Jasmijn 13, Leidschendam, 2262AN, Netherlands
Strandweg 13, 2586 JK Den Haag, Netherlands
Level 11, 41 Shortland Street, Auckland 1010, New Zealand
No. 1 Rua Particular do Castelo de Queijo, 4100-379, Porto, Portugal
12 Marina View, #11-01 Asia Square, Tower 2, 018961, Singapore
Yoseon-dong, 8F Moorim Building, 16 Joongang-ro, Chuncheon-si, Gangwon-do, Republic of Korea
266 Haeundaehaebyun-ro, Haenudee-Gu, Busan, Republic of Korea
513, Yeongdong-daero, Gangnam-gu, Seoul, Republic of Korea
Puerto Marina, Benalmadena-Costa, 29630 Benalmadena, Malaga, Spain
989 Siam Discovery, #401 4 Flr., #501 5 Flr., #601 6 Flr., #701 7 Flr., Rama I Road, Pathumwan, Bangkok 10330, Thailand
B1-B2 Floor Siam Paragon, 991 Rama 1 Road, Khweng Patumwan, Bangkok 10330, Thailand
Kocatepe Mah, Pasa Cad, Forum Istanbul AVM No. 5/5, Bayrampasa, Turkey
Office 1601, 48 Burj Gate, Burj Khalifa, Dubai, United Arab Emirates
Emaar Square, Building 3, Level 5, P.O. Box 37172, Dubai, United Arab Emirates
Link House, 25 West Street, Poole, Dorset, BH15 1LD, United Kingdom
80 State Street, Albany, New York 12207-2543, United States
1209 Orange Street, Wilmington, New Castle County, Delaware, 19801, United States
200 Bellvue Parkway Suite 210, Wilmington, New Castle County, Delaware, 19809, United States
Office 301, Building I, Emaar Square, Burj Khalifa, Sheikh Zayed Road, PO Box 123311, Dubai, United Arab Emirates

MOTION JVCO LIMITED

NOTES TO THE ACCOUNTS
SECTION 6
OTHER NOTES CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

6.6

SUBSIDIARY AND JOINT VENTURE UNDERTAKINGS (CONTINUED)

UK registered subsidiaries exempt from audit
The following subsidiaries are taking advantage of an exemption from audit under section 479A of the Companies Act 2006. Motion JVco Limited is providing a
statutory guarantee for any outstanding liabilities of these subsidiaries. All subsidiary undertakings have been included in the consolidated financial statements
of Motion JVco Limited as at 31 December 2022.

Subsidiary undertaking

Alton Towers Resort Operations Limited

Charcoal CLG 1 Limited

Charcoal Midco 1 Limited

Charcoal Newco 1 Limited

Charcoal Newco 1a Limited

Chessington Hotel Limited

Chessington World of Adventures Operations Limited

LEGOLAND US Holdings Limited

LEGOLAND Windsor Park Limited

London Aquarium (South Bank) Limited

London Eye Holdings Limited

London Eye Management Services Limited

Merlin Entertainments (Asia Pacific) Limited

Company
number

06127441

06128422

06125930

06128686

06130062

05686193

06128521

06273037

02721728

06553877

05686179

02896849

03767102

Subsidiary undertaking

Merlin Entertainments (Blackpool) Limited
Merlin Entertainments (Dungeons) Limited
Merlin Entertainments (NBD) Limited
Merlin Entertainments (SEA LIFE) Limited
Merlin Entertainments Crown (UK) Limited
Merlin Entertainments Group Limited
Merlin Entertainments Group Operations Limited
Merlin Magic Making Limited
Merlin UK Finco 1 Limited
Merlin UK Finco 2 Limited
Merlin US Holdings Limited
SEA LIFE Centre (Blackpool) Limited
Thorpe Park Operations Limited

Company
number

02429776

03671067

05010879

02182098

09679586

05022287

03671093

03663168

08753258

08753263

06273035

02407713

06127478

MOTION JVCO LIMITED

MOTION JVCO LIMITED
COMPANY
FINANCIAL STATEMENTS

Company statement of financial position at 31 December 2022 (2021: 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

Non-current assets

Investments

Deferred tax assets

Current assets

Amounts owed by Group undertakings

Total assets

Non-current liabilities

Other payables

Total liabilities

Net assets

Issued capital and reserves attributable to owners of the Company

Total equity

The notes on pages 99 to 102 form part of these financial statements.

Note

iii

2022
£m

3,005

3,006

2,986

2021
£m

2,985

2,986

The Company has elected to take the exemption available under s408 of the Companies Act 2006 not to present the Company statement of comprehensive income.
The Company recorded a profit for the year of £nil (2021: profit for the year of £nil).

The parent Company financial statements were approved by the Board of Directors on 17 March 2023 and were signed on its behalf by:

Søren Thorup Sørensen
Director

MOTION JVCO LIMITED

MOTION JVCO LIMITED
COMPANY
FINANCIAL STATEMENTS

Company statement of changes in equity at 31 December 2022 (2021: 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

At 27 December 2020

Profit for the year

Total comprehensive income for the year

Transfer to retained earnings

At 25 December 2021

Profit for the year

At 31 December 2022

Share
capital
£m

Share
premium
£m

2,956

Capital
reserve
£m

Retained
earnings
£m

(6)

(5)

Total
equity
£m

2,986

Note

MOTION JVCO LIMITED

NOTES TO MOTION JVCO LIMITED
COMPANY
FINANCIAL STATEMENTS

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

ACCOUNTING POLICIES

Motion JVco Limited (the Company) is a private company limited by shares which is incorporated in the United Kingdom. Its registered office is Link House, 25 West
Street, Poole, Dorset, BH15 1LD.

The principal activity of the Company is to act as a holding company.

These financial statements were prepared in accordance with UK adopted international accounting standards, including Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ (FRS 101).

In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006, but makes amendments where necessary in order to comply with Companies Act 2006
and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.

The consolidated financial statements of Motion JVco Limited are prepared in accordance UK adopted international accounting standards and are available to the
public and may be obtained by visiting the Merlin corporate website at www.merlinentertainments.biz. Company financial statements have been prepared and
approved by the Directors in accordance with UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006.

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
• Cash flow statement and related notes;
• Disclosures in respect of transactions with wholly owned subsidiaries;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs;
• Disclosures in respect of the compensation of key management personnel.

As the consolidated financial statements of Motion JVco Limited include the equivalent disclosures, the Company has also taken the exemptions under FRS 101
available in respect of certain disclosures required by IFRS 13 ‘Fair value measurement’ and the disclosures required by IFRS 7 ‘Financial instrument disclosures’.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.

These financial statements have been prepared for the 53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021).

A summary of the Company’s significant accounting policies is set out below.

Investments in subsidiaries
Investments in subsidiaries are stated at cost, less provision for impairment. The carrying amount of the Company’s investments in subsidiaries is reviewed annually to
determine whether there is any indication of impairment. If any such indication exists, the investment’s recoverable amount is estimated. If the carrying value of the
investment exceeds the recoverable amount, the investment is considered to be impaired and is written down to the recoverable amount. The impairment loss is
recognised in the income statement.

Foreign currency
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains
and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement.

Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement unless it relates to items recognised directly in
equity, when it is recognised directly in equity, or when it relates to items recognised in other comprehensive income, when it is recognised through the statement
of comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates substantively enacted at the end of the reporting period, and any
adjustment to tax payable in respect of previous periods.

After considering forecast future profits, deferred tax assets are recognised where it is probable that future taxable profits will be available against which those assets
can be utilised.

MOTION JVCO LIMITED

NOTES TO MOTION JVCO LIMITED
COMPANY
FINANCIAL STATEMENTS CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

ACCOUNTING POLICIES (CONTINUED)

Classification of financial instruments issued by the Company
Financial instruments are recognised on the statement of financial position when the Company becomes party to the contractual provisions of the instrument. The
accounting policy for each type of financial instrument is included within the relevant note.

Financial assets are initially measured at fair value, unless otherwise noted, and are subsequently measured at amortised cost, fair value through other comprehensive
income or fair value through profit or loss. A financial asset is derecognised when the contractual rights to the cash flows from the asset expire or the Company
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

Financial liabilities are initially measured at fair value, plus, in the case of other financial liabilities, directly attributable transaction costs. Other financial liabilities,
primarily the Company’s interest-bearing loans and borrowings, are measured at amortised cost. Financial liabilities are measured at fair value through profit or loss
and are held on the statement of financial position at fair value. A financial liability is derecognised when the Company’s obligations are discharged, expire or are
cancelled. Finance payments associated with financial liabilities are dealt with as part of finance costs.

An equity instrument is any contract that has a residual interest in the assets of the Company after deducting all of its liabilities. Finance payments associated with
financial instruments that are classified in equity are dividends and are recorded directly in equity. The preference shares issued by the Company carry a fixed,
cumulative, preferential dividend which accrues (but is not payable) on each preference share on a daily basis from the date of issue of the relevant preference share.
Payment of these dividends is at the discretion of the Company and accordingly they have been classified as equity.

Where financial instruments consist of a combination of debt and equity, the Company will assess the substance of the arrangement in place and decide how to
attribute values to each taking into consideration the policy definitions above.

Dividends
Dividends are recognised through equity on the earlier of their approval by the Company’s shareholders or their payment.

Judgements and estimates
The preparation of financial statements requires management to exercise judgement in applying the Company’s accounting policies. It also requires the use of
estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Management
considers the area of estimation that has the most significant effect on the amounts recognised in the financial statements to be the estimation of the value in use of
the Merlin Entertainments Group of companies, which underpins the annual review of the carrying amount of the Company’s investment in subsidiaries (see note iii).

OPERATING EXPENSES

Staff numbers and costs
The average number of persons employed by the Company during the year was seven (2021: seven), being the Directors of the Company.

The employment costs of the Directors of the Company have been borne by other Group companies for their services to the Group as a whole. The costs related
to these Directors are included within note 2.1 of the consolidated financial statements.

Auditor’s remuneration
Fees paid to Ernst & Young LLP for audit and other services to the Company are not disclosed in its individual accounts as the Group accounts are required to
disclose such fees on a consolidated basis (note 2.1 of the consolidated financial statements).

100

MOTION JVCO LIMITED

NOTES TO MOTION JVCO LIMITED
COMPANY
FINANCIAL STATEMENTS CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

iii

INVESTMENT IN SUBSIDIARY UNDERTAKING

Cost and carrying value

At 27 December 2020

Additions

At 25 December 2021

Additions

At 31 December 2022

Shares in
subsidiary
undertaking
£m

2,835

150

2,985

3,005

The subsidiary undertaking at the year end is as follows:

Company

Motion Topco Limited

Activity

Country of
incorporation

Shareholding

Description of
shares held

Holding company

99.8%

Ordinary

A full list of Group companies is included in note 6.6 of the consolidated financial statements on pages 90 to 95.

Upon the vesting date of the share incentive plans, employees of the Group will hold a non-controlling interest in Motion Topco Limited of 0.16% (see note 5.5 of
the consolidated financial statements). Cash settlements occurring upon vesting of the schemes are the obligation of the Company to settle. Additional investments
of £20 million have been recognised in the year with a corresponding liability in other payables (see note 5.6 of the consolidated financial statements).

The carrying amount of the Company’s investments in subsidiaries has been reviewed to determine whether there is any indication of impairment.

The approach to impairment testing within the consolidated accounts is set out in note 4.3 to the consolidated accounts which includes details on the key
assumptions and estimates used when calculating the net present value of future cash flows from the Group’s businesses. A consistent approach is taken for testing
the Company’s investment in its subsidiary, with this assessment also including value for new business development that is excluded from the goodwill impairment
testing until such time as new sites become operational. The approach adopted therefore applies consistent judgements and estimates as set out in the impairment
testing note 4.3, other than for new business development.

Impairment reviews are often sensitive to changes in key assumptions. Sensitivity analysis is therefore performed on the calculated recoverable amounts considering
incremental changes in the key assumptions, where the balance being tested is material and headroom is limited.

In 2022 there is sufficient headroom such that the valuation is not sensitive to even significant changes in any of the key assumptions. Headroom would remain if pre-
tax discount rates used had been higher by a factor of 10%, combined with the long term growth rate used being 2.25% instead of 2.5%.

101

MOTION JVCO LIMITED

NOTES TO MOTION JVCO LIMITED
COMPANY
FINANCIAL STATEMENTS CONTINUED

53 weeks ended 31 December 2022 (2021: 52 weeks ended 25 December 2021)

ANNUAL REPORT AND ACCOUNTS 2022

EQUITY

Share capital

Ordinary shares of £0.01 each

Preference shares of £0.01 each

On issue and fully paid at end of year

2022
Number

28,759,359

2,847,137,139

2,875,896,498

2022
£m

2021
Number

28,759,359

29 2,847,137,139

29 2,875,896,498

2021
£m

Issue of shares
The nominal value of shares in issue is shown in share capital, with any additional consideration for those shares shown in share premium.

Ordinary shares
The holders of ordinary shares are entitled to receive dividends as declared from time to time.

Capital reserve
During 2019 the Company issued £156 million 0% subordinated unsecured shareholder loan notes due 31 October 2020. In accordance with the accounting policy as
set out in note i, these were classed as financial liabilities. Reflecting the off-market interest rate attached to these loan notes, these were initially recognised at fair
value of £150 million with the difference treated as a capital contribution. During 2020 the shareholder loans were repaid and the proceeds reinvested in a further
issue of new ordinary and preference shares to the existing shareholders. The capital reserve was eliminated through retained earnings in 2021.

Retained earnings
The profit after tax for the year in the accounts of Motion JVco Limited is £nil (2021: £nil).

RELATED PARTY TRANSACTIONS

For full details of transactions and arrangements with the Company’s ultimate shareholders, see note 6.3 of the consolidated financial statements.

102

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

GLOSSARY

Board

Capex

Cluster

Board of Directors of the Company.

Capital expenditure.

A group of attractions located in a city close to one another.

Constant currency

Using 2021 exchange rates.

CWE

EBITDA

Conservation, Welfare and Engagement. The SEA LIFE team that focuses on delivering world class animal welfare
throughout our animal care network and developing new guest experiences.

Profit before finance income and costs, taxation, depreciation, amortisation and impairment and after taking account
of attributable profit after tax of joint ventures.

Exceptional items

Due to their nature, certain one-off and non-trading items can be classified as exceptional in order to draw them to
the attention of the reader and to show the underlying business performance more accurately.

Existing estate (EE)

EE comprises all attractions other than new openings.

GDPR

Group

IPO

KPI

LBC

LCA

LDC

General Data Protection Regulation.

Intellectual Property.

Motion JVco Limited group of companies.

Initial Public Offering.

Key Performance Indicator.

Little BIG City attractions. These are part of the Midway Attractions Operating Group.

Licence and Co-operation agreement. This agreement sets out the rights granted to the Group to use the LEGO
and LEGOLAND brands.

LEGOLAND Discovery Centre attractions. These are part of the Midway Attractions Operating Group.

Like for like (LFL)

2022 LFL growth refers to the growth between 2021 and 2022 on a constant currency basis using 2021 exchange
rates and includes all businesses owned and operated before the start of 2021.

Listing

LLP

Listing on the London Stock Exchange.

LEGOLAND Parks Operating Group.

Merlin Board

The Board of Directors of Merlin Entertainments Limited.

Merlin Magic Making (MMM)

Merlin’s Magic Wand (MMW)

MMM is the unique resource that sits at the heart of everything Merlin does. It is our specialist in-house site-search
and business development; creative design; production; and project management team. MMM also pursues
acquisition and investment opportunities.

MMW forms a key element of Merlin’s Corporate Social Responsibility commitment. Our partner children’s charity
delivers magical experiences around the world to children who are facing challenges of serious illness, disability
or adversity.

Midway or Midway attractions

The Midway Attractions Operating Group and/or the Midway attractions within it. Midway attractions are typically
smaller, indoor attractions located in city centres, resorts or shopping malls.

Madame Tussauds attractions. These are part of the Midway Attractions Operating Group.

‘Net Promoter’ score

How we measure the propensity of our customers to recommend our attractions.

New Business Development (NBD)

NBD relates to attractions that are newly opened or under development for future opening, together with the
addition of new accommodation at existing sites. New openings can include both Midway attractions and new theme
parks. NBD combines with the existing estate to give the full estate of attractions.

Non-core

Attractions which Merlin has ceased the operation of during the period.

103

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

GLOSSARY

Operating free cash flow

Underlying EBITDA less existing estate capex.

Peppa Pig

We have a multi-territory exclusivity arrangement to develop a range of attractions based on the Peppa Pig brand, one of
the most well-known pre-school IPs in the world.

Peppa Pig Theme Park

A standalone theme park based on the Peppa Pig brand. When located at a Merlin theme park as a second gate
attraction the results are reported within the associated Operating Group.

Rooms

RPC

RTP

SEA LIFE TRUST

Second gate

A single accommodation unit at one of our theme parks, for example a hotel room, lodge or glamping tent.

Revenue per capita, defined as visitor revenue divided by number of visitors.

Resort Theme Parks Operating Group.

The SEA LIFE TRUST forms a key element of Merlin’s Corporate Social Responsibility commitment. Our partner
marine conservation charity works to protect the marine environment.

A visitor attraction at an existing resort with a separate entrance and for which additional admission fees
are charged.

SLC

SEA LIFE Centre aquarium attractions. These are part of the Midway Attractions Operating Group.

The Merlin Way

The culture of the Group which encompasses our vision and values.

Top Box

Underlying

Visitors

The highest level of customer satisfaction that we record in our customer surveys from touchscreen data at our
attractions.

Underlying information presented excludes exceptional items that are classified separately within the
financial statements.

Represents all individual visits to Merlin owned or operated attractions.

Wizard Wants to Know (WWTK) WWTK is our annual online employee survey.

Yext

A platform we used to monitor online guest reviews and help inform how we improve our attractions.

Terms used
Unless otherwise stated, the terms ‘Merlin’, ‘Merlin Entertainments’, ‘the Group’, ‘We’ and ‘Us’ refer to the Company (Motion JVco Limited) and, as applicable, its
subsidiaries and/or interests in joint ventures.

Percentages are calculated based on figures before rounding and are then rounded to one decimal place.

104

MOTION JVCO LIMITED

ANNUAL REPORT AND ACCOUNTS 2022

OTHER FINANCIAL
INFORMATION

Foreign exchange rate sensitivity
The Group’s income statement is exposed to fluctuations in foreign currency exchange rates principally on the translation of our non Sterling earnings. The tables below
show the impact on 2022 52 week revenues and underlying EBITDA of re-translating them at 2021 foreign exchange (FX) rates. The calculation for weighted average
EBITDA rates can be affected where foreign currency earnings move between months from being positive or negative.

Currency

USD

EUR

Other

Decrease in 2022 revenues at 2021 FX rates

Currency

USD

EUR

Other

Decrease in 2022 underlying EBITDA at 2021 FX rates

2021
average
FX rates

1.38

1.17

2021
average
FX rates

1.38

1.18

2022
average
FX rates

%age
movement
in FX rates

Revenue
impact
£m

1.25

1.18

(9.8)%

0.7%

(67)

(59)

2022
average
FX rates

%age
movement
in FX rates

EBITDA
impact
£m

1.25

1.17

(9.4)%

(0.2)%

(25)

(23)

105