SUMMARY OF THE ARTHUR ANDERSEN REPORT
Annex B
In November 1986, Arthur Andersen & Co. completed an independent review of the five year financial projections prepared by the management of Ocean Park Ltd. for the period ending 30 June 1991.
2.
In order to assess the impact of any changes in the assumptions used by Ocean Park in the preparation of their Baseline Model, the consultants compiled several simulation models by varying the factors most susceptible to change. The cash flow projections prepared by the Company had been prepared on fairly conservative assumptions which illustrated that the Park should be able to develop a capital spending programme over 5 years of $213 million as approved and planned, plus a further $33 million yet to be identified. The consultants noted that the Company relied heavily on attendance assumptions, and that a 10% reduction in attendance using the Baseline Model would result in deficit cash balances in the fiscal years ending 1989 and 1990. However, should attendances fall by over 14%, the fund generated internally would be inadequate to meet planned capital developments, which would need to be deferred under such circumstances.
3.
Using the company's Baseline model, the consultants also prepared alternative simulation model projections by introducing a number of new assumptions to produce sensitivity analysis variations as follows :
"(i)
(ii)
Attendance is projected to vary according to the timing of new attractions added to Ocean Park in the five year projection period;
Admission fees are arrived at after the high proportion of adult visitors who pay full fare is taken into account and the impact of
inflation is considered;
(iii) Catering and other revenue is computed after
adjusting for higher revenue per capita;
(iv) Operating costs and cash outflow for the purchase
of display animals are shown with the impact of
inflation;
......