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Star rolls on with casino growth plans

AAP logoAAP 25/08/2016 Trevor Chappell

Casino operator The Star Entertainment Group has made a good start to the financial year but says its ambitious expansion plans will have an impact, with high rollers being disrupted by jackhammers and construction.

The company is building more hotel rooms and improving gaming facilities at The Star in Sydney and Jupiters on the Gold Coast, primarily to attract more tourists from Asia.

It also owns Brisbane's Treasury Casino, and is in the process of getting regulatory and planning approvals for a new $2 billion integrated casino resort at Queen's Wharf in Brisbane.

Chief executive Matt Bekier said the total impact of refurbishments was hard to quantify, but in the 2015/16 financial year the group lost about $10 million in earnings due to the closure of existing hotel rooms.

"The big impact of disruption is that we can't put high-value guests into those rooms because there is jackhammering, problems with access and so on," he said.

Building work is also disrupting gaming, although revenue from its casino operations rose in 2015/16.

Star Entertainment's net profit rose 15 per cent to $194.4 million in the year to June 30, with 13 per cent earnings growth at The Star offsetting a slight fall in earnings from its Queensland operations.

"Disruption from capital investment works across the gaming and non-gaming business will continue to impact revenues and earnings into FY2017, although the impact is expected to reduce in the second half," Star Entertainment said.

Gross revenue in the first seven weeks of the 2016/17 year was up 4.1 per cent on the same period a year earlier, it said.

Up to $1 billion is being spent on new hotel rooms and apartments, new VIP high-roller gaming facilities, private gaming rooms and new restaurants at The Star.

After that work is completed in 2020 or 2021 - when James Packer's rival Crown casino and resort at Barangaroo is set to open - The Star will need even more hotel rooms, Mr Bekier said.

Star Entertainment and its partners are also spending up to $845 million on expanding Jupiters, potentially taking its number of room and apartments to 1,400.

A six-star hotel at the Gold Coast property is scheduled to be completed in time for the 2018 Commonwealth Games.

The company's capital expenditure in 2016/17 is expected to be between $375 million and $425 million.

Shares in Star Entertainment closed steady at $6.04.

STAR ENTERTAINMENT OVERCOMES ITS OWN DISRUPTIONS

* Full year profit up 15pct to $194.4m

* Revenue up 6pct to $2.27b

* Final dividend up 1.5 cents to 7.5 cents, fully franked.

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