The Star Entertainment Group reports FY19 half-year results with increased net profit, earnings

INVESTMENT in its Gold Coast casino has paid dividends for The Star Entertainment Group which has reported record earning of $331 million for the first half of the financial year — boosted by an eye-watering spend by VIP customers.

The Star Gold Coast's original Star Grand hotel (left) and The Darling all lit up in Broadbeach as it launches it's new luxury 17-storey hotel The Darling

INVESTMENT in its Gold Coast casino has paid dividends for The Star Entertainment Group which has reported record earning of $331 million for the first half of the financial year — boosted by an eye-watering spend by VIP customers.

Net profit was $149 million, up 351.4 per cent on the previous corresponding period result of $32.9 million, when debt restructuring had hit the group’s bottom line.

However The Star’s normalised profit, which strips out the impact of volatile VIP win rates and other one-off items, dipped 2.4 per cent from the previous year to $123.8 million.

Shareholders will enjoy a 40 per cent boost to their interim dividend, up to 10.5 cents franked.

Net earnings at the group’s Queensland businesses on the Gold Coast were up 23.5 per cent on the same time last year, with visitation up 11.8 per cent.

The market responded positively to the result, sending Star shares 5.8 per cent skywards to $4.655 by midday Gold Coast time.

VIPs bet an eye-watering $6.8 billion at the Queensland operations, up 87.5 per cent on the previous year.

However, the group’s gains were offset by a plummeting VIP performance at The Star Sydney.

The Darling, Broadbeach infinity pool.

Chairman John O’Neill AO said the results reflected progress for the group’s expansion plans.

“We are delivering continued growth in key segments of our business as well as exhibiting effective management of capital expenditure,” he said.

“Our existing and new customers are responding positively to the newly unveiled attractions which provides optimism for the future.”

Operational costs increased 7.5 per cent compared to last year, reflecting the higher costs of running the new additions to The Star Gold Coast.

The Gold Coast’s normalised gross revenue was up 22.6 per cent, with domestic table revenue up 8.3 per cent and non-gaming revenue rising 7.2 per cent.

The company said more Gold Coast highlights were in the pipeline with the groundbreaking for The Dorsett Hotel and Residences, approval of its master plans, opening of its VIP room The Oasis and Harvest Buffet.

The Star Gold Coast Masterplan Development (viewed from Broadbeach) — the site is home to the original hotel and gaming complex, the Darling suite hotel and Nineteen restaurant and bar, Tower 1 to start construction in August, 2018 and four proposed further towers

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The company said the outlook for the remaining financial year was positive, as growth in domestic revenue had continued across slots, tables and non-gaming.

Capital expenditure in the first half, excluding joint venture contributions, was $166m as capital works complete, with no change to the $300-350m expected for FY2019.

In addition, the group contributed $41m to joint venture projects, with no change to the $100-125m expected for FY2019.

The Star Gold Coast Masterplan Development (viewed from the West) in Broadbeach. Star has bold plans for five new towers on the site which is already home to the original Star complex and Darling suite hotel. Tower 1 starts construction in August with four proposed to come after that over the next decade.

Managing director and CEO Matt Bekier said the half had delivered solid growth in key segments.

“Pleasing growth in domestic and international volumes in the Gold Coast support our growth strategy and confidence in the long-term potential of that location,” he said.

“Construction of the first joint venture tower has commenced with scheduled completion in FY2022.

“The Queen’s Wharf Brisbane project remains on time and budget.

“The Group remains focused on executing our longstanding strategy of investing in privileged assets to drive visitation and earnings.

“Management priorities remain focused on execution — improving earnings, delivering on the next stage of our capital plans, commercialisation of our expanded joint venture with Hong Kong-based partners Chow Tai Fook Enterprises and Far East Consortium, and fully implementing an enhanced operating model.”