Cairns casino deals with challenges of pandemic

By William Brown Updated
Man in custody after Cairns casino incident 

The impacts of COVID-19 have caused the Reef Casino Trust to withhold its six-month distribution for the first time in 20 years.

The Market Herald reported that due to the current COVID-19 restrictions, casino and food and beverage outlets at the Reef Hotel Casino in Cairns shut down on March 23, with its hotel operations following soon after.

The company’s operations remain in limbo for the rest of the financial year, despite the casino reopening last month after Queensland’s restrictions were eased.

As a result, Reef Casino was only able to operate for 45 per cent of the half-year period.

This has significantly impacted its cash flow and resulted in a net loss of $23.69 million, compared to a net profit of $755,000 in 2019’s corresponding period.

The loss was mainly attributed to lower earnings before interest, tax, debt and amortisation, which fell to negative $1.7 million from $4.2 million at the same time in 2019.

A non-cash impairment of $19.37 million also contributed to the poor figures.

To help manage its funds during the downturn, the company has chosen not to release a six-month distribution to shareholders.

This is the first time in 20 years that no six-month distribution was made available.

The company considered the move prudent as its per unit loss for the half-year reached 95.14 cents, a dramatic plunge when compared to a per unit net profit of just over 3 cents in the same period in 2019.

However, with operations now back up and running, the Reef Casino is receiving positive rentals and once again returning to profitability.

At the end of last week, the Reef Casino Trust closed 10.1 per cent higher for $2.03 per share.

Queensland government says no to second casino

The Star and Queensland government have thwarted a second casino proposal in the Sunshine State, with the coronavirus pandemic having an enormous impact on businesses around the world.

Casino Aus reported in July that the government decided now isn’t the best time to move forward with plans for a second casino.

The Star Entertainment Group will have to focus on its properties that have lost months of revenue during COVID-19 shutdowns, saving plans for a second casino in Queensland for another time.

Always wanting to expand and grow, Star announced its plans for the project in 2018.

The company said it would invest more than $2 billion into improvements to make the resort on Broadbeach Island an even bigger and more comprehensive property.

At the point of this proposal, Star had already invested $7 billion.

It wanted to add four additional towers for about 3,000 more hotel rooms and apartments, some new restaurants and bars, and new retail stores and resort facilities.

According to chief executive Matt Bekier, “The masterplan in its entirety would see The Star Gold Coast boast more tourism accommodation than any other resort in Australia.”

Partners Chow Tai Fook Enterprises out of Hong Kong and the Far East Consortium were the two major joint venture partners in the deal.

Star inks agreement to be the only NSW casino with pokies

Star Entertainment has reached an agreement with the New South Wales government to set the casino tax rates from 2022 until 2041.

Share Cafe reported in June that Star Entertainment is to remain the sole casino with pokies machines in New South Wales during this time, unless compensated.

Credit Suisse suggests this is positive for the company’s earnings.

The casino group hasn’t let the coronavirus pandemic dampen its project pipeline.

Casino Aus reports that the company executed its funding agreements with its project partners, securing $1.6 billion in debt funding, the first of it to be used next month.

The Star did this in joint partnership with David Chiu’s Far East Consortium and Henry Cheong’s Chow Tai Fook Enterprises.

The terms of the agreement were determined prior to the COVID-19 pandemic and ensuing economic crisis, which means the financials and terms reflect the market conditions at the time.

All necessary conditions for the funding, including the final approval of the Queensland government, should be completed next month.

Once complete, the joint partnership will take the first draw-down on the finding, the rest remaining for construction that is set to begin in early 2021.

In total, the group’s funding is a 5.5-year agreement with three years of operations allowed before refinancing.

Back to top