Merlin to open new Legoland park in South Korea

Merlin Entertainments has announced plans to open its first Legoland themepark in South Korea, a large market for Lego toy sales.

The park is due to open in 2017 and is expected to make a full-year contribution in 2018.

The project will be financed under an 'operated and leased' model, with the total estimated cost expected to be around £172m, of which Merlin will invest about £57m, predominantly into the branded assets.

The remainder of the assets, primarily the park infrastructure, will be funded by a property company owned by a consortium of local public and private investors.

Merlin's investment is expected to deliver returns consistent with the group's stated earnings before interest, tax, depreciation and amorisation (EBITDA) return on invested capital target of 20%.

The project will incur pre-opening costs of around £6.5m and the ongoing EBITDA margin is expected to be in the range of 20-25%, reflecting a turnover-based rental charge to the property company.

Chief executive officer Nick Varney said: "South Korea offers both a developed theme park market and strong Lego brand recognition.

"The project is being supported at both the national and local levels, with significant contributions from both Gangwon Province and the City of Chuncheon, as well as a group of Korean investors."

The group reiterated its target of opening, on average, a new park every two to three years.