Operator News
Australia – Star Entertainment reports ‘record EBITDA’ despite revenues falling
By Phil - 20 February 2020
A mixed bag of results for Star Entertainment saw ‘record group normalised EBITDA’ on ‘strong domestic earnings growth’ with an 8.4 per cent fall in net revenue to AU$1.0bn caused by bad luck in the VIP sector.
Gross revenue came for the half year came in at $1,175.6m, down 11.9 per cent on the prior comparable period with solid domestic growth adversely impacted by an unusually low win rate in the International VIP Rebate business. In Sydney, The Star generated GGR of $768m, down 4.3 per cent. Revenues in Queensland for the Brisbane casino and Star Gold Coast were down 23.3 per cent to $407.6m.
Chairman John O’Neill AO said: “The Group continues to execute its growth strategy over the half, with all major projects proceeding to plan. We delivered record Group normalised and domestic earnings, reflecting revenue growth from investments and the cost benefits from the organisational restructure, offsetting declines in our International VIP Rebate business.
“We continue negotiations with the Queensland Government for regulatory certainty at the Gold Coast. We have offered the Government a commitment for further investment in return for operational certainty, as I outlined at the Annual General Meeting on 24 October 2019. The offer includes a contractual arrangement to deliver the $2bn-plus Masterplan for The Star Gold Coast, and to invest up to $100m for the expansion and upgrade of the Gold Coast Convention and Exhibition Centre, a project that could commence immediately once an agreement is reached.
“The Board has declared a fully franked interim dividend of 10.5 cents per share (payout ratio of 76 per cent of normalised 1H FY2020 NPAT, reflecting the strength of our balance sheet and the confidence we have in our business.”
Managing Director and Chief Executive Officer, Matt Bekier said: “Management’s priorities remain focused on returns. The organisational restructure has delivered $20m in cost out benefits in the half, with an approximately $45m annualised run rate. Initiatives which leverage improved competitive capabilities are underway, focused on Sydney PGR and Group MGF performance. The upgraded and expanded Sovereign in Sydney is expected to open in May 2020, with the new Oasis following in June 2020, enabling all premium domestic customers to receive an upgraded offer. The Queen’s Wharf Brisbane project continues to be de-risked – in mid CY2020, around 75 per cent of total project costs is expected to be contracted under lump sum terms, together with financial close of the $1.6bn project level debt funding on attractive terms.
“The temporary disruption from coronavirus on the Tourism industry does not require a change to our long-standing strategy of investing to drive visitation and earnings to our network of properties located in sought-after destinations.”
The company confirmed that its AU$2.2bn Sydney hotel and casino tower would reach full height in the first week of March.
“The hotel fit-out is progressing from floors 6 to 22 with rooms on the lower floors substantially complete,” Crown stated. “The façade glazing on the hotel tower is currently being installed on level 45 with residential fit out activities advancing closely behind. The podium structure and façade is substantially complete with interior fit out activities progressing well across all areas of the podium.”
Crown wants the venue to open in December with a grand opening pitched for early next year. It will include e a six-star hotel with 349 guest rooms and suites, luxury apartments, signature restaurants, bars, luxury retail outlets, pool and spa facilities, conference rooms and VIP gaming facilities.
