Vertigo hits Reef

Reef Casino Trust (RCT) has announced the estimated distribution for 2H (2nd half year) 2016. Not an outstanding result anticipated:

With slightly more than 3 weeks’ trading to go before the end of the financial year, our current estimate of the distributable profit* for the full year 2016 is approximately $12.0 million, compared to 2015’s distributable profit of $14.96 million.
For the Reef Hotel Casino’s financial year to date, hotel operations have performed strongly. Table games performance was slightly up on last year.  However, the disruptions caused by our major renovations on the ground floor of our complex, including the reduction in entertainment, combined with increased local competition have had a greater impact on electronic gaming than anticipated.
Our major renovations will be largely completed by the end of the year and we can look forward to our new facilities on the ground floor of our complex providing an even more competitive product to our local and international patrons and customers

I would be more confident in the explanation here if it didn’t follow a softer 1H result when none of these factors were apparently relevant. Also uncertain what the increased local competition is?

The disruptions as I understand almost entirely related to the entrance area and previous Vertigo Bar, now creatively renamed and reopened as Bar36, with no direct impact on gaming facilities? Must drop by for a look while awaiting release of full results and commentary in February.

RCT reports on a calendar financial year with the 2H tourism season generally outperforming 1H:

reef1

That’s the lowest annual result since 2012 when the upper casino level was closed most of H1 for renovations. It’s the lowest 2H result since 2010. Results here in the graph have been adjusted to strip out one-off costs from the failed Aquis takeover in 2014.

Five year candlestick history from the depths of what was the bottom for RCT in 2012 with the ‘Aquis bump’ prominent:

reef2

 

Lots happening in the gaming sector. Ken Chapman has departed board of Aquis Entertainment which has been prominently noted in Cairns. All the big Australian & NZ casino operators have been significantly discounted following arrest of Crown marketing team in China.

Key RCT stakeholder Casinos Austria is also subject to a takeover offer in Europe. Trading in RCT was more active than usual since the open of trade yesterday even before the RCT announcement.

*Wikipedia: vertigo is a sensation of spinning while stationary.

 

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