H1 2015 Report for Star Entertainment Gets Released
Star Entertainment Group, which is formerly known as Echo Entertainment has issued the financial report for H1 2015, which is for the time period of the half year that ended December 31st of 2015. The overall numbers in the financial report represented great news for the shareholders, but on the other hand, the profits went known tremendously following the terrible win rate of the International VIP Rebate business.
The net profits of the company were reported at $60.3 million, which is 37.9% less than the same period of 2014. The normalized net profits increased by 26.1% to reach $142 million, although the normalized gross income of the company increased by 6.7% to reach $1.23 billion, while the normalized earnings before depreciation, amortization, taxes and interest witnessed an increase of 18.6% to each $310 million.
From the above numbers, the numbers seem to be good, but the net profit took a huge hit. This is because the Rebate business of Star VIP reached 0.88%, which went down from 1.33% during the same time in 2014, and it was under the normalized rate that is 1.43%. As a result of the low win rate in the VIP segment the last 2 years, Star Entertainment is going to adjust the normalized rate to 1.35% for the full year results for 2016.
According to a statement by Matt Bekier, the CEO of Star Entertainment, this result was freakish as it was about 6 people who accounted for most of the losses. These players were high rolling and risk taking players who happened to be quite lucky during their run at the casino. He added that most of the losses came from the baccarat tables where the limits reached $500,000.
Despite these results, Mr. Matt Bekier is expecting everything to normalize especially that the VIP turnover increased by 1.5% and the normalized revenue also went up 1.7%. In addition, he stated that the International VIP Rebate and its performance this year is just in line with the expectations of the management.
Although several lucky high rollers caused a drastic downgrade in the net profits of Star Entertainment, the domestic gaming business of the company showed great numbers. The growth in these numbers was a result of the enhanced overall products of the company, the marketing improvements as well as the brand new loyalty program.
The flagship property of the group is The Star Sydney, which has witnessed a drop in gross revenue of 7.2% to reach $738 million. On the other hand, normalized EBITDA increased to reach $223 million after a 21.7% increase. As for the gross revenues from domestic gaming, they increased 14.1% with growth on table gaming of 14.9% and slot machines of 12.4%, which represents great numbers for domestic gaming in the casino.