Reef Casino: bleached by night?

Despite the recent flow of positive tourism news Reef Casino seems to have turned in a weaker first half going by the recent distribution announcement: Reef Casino Trust profits in Cairns falls by $700,000. The ‘reef by night’ slogan may have missed its target on these numbers.

With another week’s trading before the end of the first half financial year, our current estimate of the distributable profit* for the six months ended 30 June 2016 is approximately $5.7 million.   This compares well with the average of the previous 4 first-half years (2012 – 2015) of $4.9 million. In 2015, it was $6.4 million.

I’m not sure that 4 year average comparison works for me as previous years, not inclusive of 2016, also include the additional one-off costs of the collapsed takeover and weaker trading periods, particularly back in 2012 when the upper level was closed throughout the first half for refurbishment. The most recent update on trading was at the AGM in May:

Overall, our performance for the first 4 months is within our expectation for trading during this time of the year.  Table games grind revenue and hotel revenues, especially room revenues are higher than last year.  Electronic gaming revenues were slightly lower compared to 2015 which set new records as I had earlier mentioned.  Premium revenue is lower compared to the same period last year due to a lower premium play win rate however it is not unusual for premium play win rates to fluctuate in the short term.

Reef is the only listed Casino operator which doesn’t provide ‘normalised’ profit results with accounts adjusted for theoretical premium win rate. I did query Alan Tan on this at last years AGM and it was indicated that this wasn’t considered a large enough component of the Reef business to be material.

I will await release of full half yearly results to dig out and update my old analysis files from the Aquis takeover. Updated chart:

ReefNote: 2014 results adjusted for one-off costs related to Aquis takeover and a high roller bad debt. 2016 1H is in line with the average of the most recent 4 years (2013-2016).


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