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Star profit hit by winning high-rollers

Trevor Chappell  |  16 Feb 2018Text size  Decrease  Increase  |  
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MELBOURNE - [AAP] The Star Entertainment Group (ASX: SGR) wasn't so lucky in the first half of the financial year as the casino operator's win rate against high-rolling VIP gamblers took a beating.

The Star's reported profit for the six months to December 31 slumped 76.8 per cent to $32.9 million, mainly due to an abnormally low win rate in the group's international VIP rebate business.

The actual win rate for the half fell to 1.06 per cent compared to 1.62 per cent a year earlier, and the average of 1.35 per cent.

The Star's bottom line also took a $32 million hit as the group restructured debt, replacing some expensive US private placement bonds with others that had lower interest payments.

Excluding the abnormal win rate and one-off items, The Star's "normalised" net profit rose 12.4 per cent to $120 million.

Chief executive Matt Bekier said the win rate could swing a fair bit.

"We are running a casino: sometimes you win, sometimes you lose," Mr Bekier said on Friday.

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He said although The Star had been unlucky this time against the VIP gamblers, the money that the high-rollers brought with them to play with had risen by 25 per cent to $2.1 billion, and turnover was up 49 per cent to $30.9 billion.

The Star also said that its international high-roller business had returned to the level of activity before the disruption caused by the detention of employees of rival Crown Resorts in China 16 months ago.

Mr Bekier said that The Star's strategy for the last three years had been to entice VIP gamblers from around Asia and become less reliant upon high-rollers from China and Macau.

VIP visitation from China and Macau was now back to normal and visitations from elsewhere in Asia were growing strongly.

Mr Bekier declined to name any standout countries, saying he did not want to telegraph that to the group's competitors.

The Star said its Sydney casino generated broad-based growth across all business segments, with domestic revenue up by four per cent and international VIP revenue up by 55.3 per cent.

The group's Queensland casinos in Brisbane and the Gold Coast also lifted revenue, with all business segments contributing to growth.

At the Gold Coast, domestic gaming revenue rose by 22.2 per cent and non-gaming revenue grew by 17.1 per cent.

"The flavour of these results is good first half, unlucky in VIP, and just executing the playbook that we have talked about which is building up the assets and improving the performance," Mr Bekier said.

The Star said trading levels so far in the second-half had been mixed, but comparisons with a year ago are difficult because of the different timings of the Lunar New Year.

Shares in The Star were 27 cents, or 4.5 per cent, lower at $5.78 at 1043 AEDT.

THE STAR'S H1 WIN RATE DROPS

* Net profit down 76.8pc to $33m

* Normalised net profit up 12.4pc to $120m

* Revenue up 3.3pc to $1.27bn

* Interim dividend flat at 7.5 cents, fully franked

 

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is an AAP journalist.

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© 2021 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

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