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THE STAR Entertainment Group (ASX: SGR) is beginning to reap the fruits of its labour from major capital works, today posting a 36 per cent increased net profit (NPAT) of $264.4 million.
Crediting domestic revenue growth, The Star powered to deliver record statutory results across the board including an EBITDA figure of $586.2 million, up 19.9 per cent on FY16.
While the company felt the pinch of a disrupted Asian market and less turnover in its International VIP gambling division, which brought normalised NPAT down to $214.5 million, The Star remains optimistic that ongoing property developments will lay solid foundations in FY18.
Overall, The Star racked up a capital expenditure of $420 million in FY17 and the expectation is that the group will spend a similar amount in FY18.
Chairman John O'Neill AO says customers are responding well to The Star's portfolio gems its new and improved Gold Coast and Sydney locations respectively.
"FY2017 saw further advancement in the Group's strategy of investing in our core domestic assets and diversifying our international business," says O'Neill.
"The gaming and non-gaming offerings at our Sydney and Gold Coast properties have been improved following the completion of major capital works."
On the Gold Coast, revenue grew by 9.9 per cent following the transformation and rebranding of the former Jupiters Casino to The Star.
Managing director Matt Bekier says both Gold Coast and Brisbane markets have been a key focus in the past year.
"FY17 continued the transformation of our Gold Coast property, with the completed refurbishment of all hotel rooms and opening of two new restaurants in 1H17 supporting solid revenue growth in 2H17 post disruption," says Bekier.
"Management is focused on stabilising and reversing Brisbane revenue trends through a range of initiatives."
In partnership with the Destination Brisbane Consortium, Chow Tai Fook Enterprises and Far East Consortium, The Star acquired 13 hectares in the Brisbane CBD in January to progress development on the Queen's Wharf integrated resort.
O'Neill says foundation works on the Queen's Wharf development are expected to begin in early CY18.
"Construction is planned to commence in early CY18, subject to the completion of a successful apartment pre-sales program," says O'Neill.
"Completion of this tower is expected in CY21, with potential for a further four towers, subject to market conditions."
The group declared a total fully franked dividend of 16 cents per share, up 23.1 per cent on FY16.
SGR shares are trading up 3.3 per cent at $5.27 at the time of writing (11:42am AEST).
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