CHAIRMAN’S MESSAGE

John o'neill ao

It was another year of earnings growth, improved performance and continuing to position the company for future growth.

This robust approach to ‘more of the same’ ensured ongoing momentum in the business while, more broadly, solid progress on projects at each of our properties was intrinsically aligned to the vision of becoming Australia’s leading integrated resort company. We are capitalising on the opportunities presented us, by nature of great locations in Sydney, Brisbane and Gold Coast for our tourism assets, and macro conditions that point to existing rates of inbound visitation, particularly from China, continuing long-term.

Turning to the financial performance for the year, statutory net profit after tax (NPAT) for the Group was $194.4 million. This was up 14.9% on the prior year and represents a 33% compound annual growth rate over the last three years. Normalised NPAT for the 2016 financial year was $241.3 million, up 23.4%.

Statutory earnings before interest, tax, depreciation and amortisation (EBITDA) increased 7.5% on the prior year to $488.8 million and normalised EBITDA was up 14.1% to $556.2 million (applying the normalised win rate of 1.35%), with margins increasing as a result of good expense management.

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Consistent, strong and stable leadership across the Board and executive management team, with a focus on sustained delivery of financial performance and strategic priorities, was a hallmark of the 2016 financial year.

CEO’S MESSAGE

matt bekier

This change of corporate identity will in time lead to a rebranding of all of our properties under The Star banner and goes hand in hand with the articulation of our vision – to become Australia’s leading integrated resort company. To achieve this vision, we will work tirelessly over the coming years to continue delivering shareholder value, improve our customer service, develop our properties, energise our staff and help improve our communities.

OPERATING PERFORMANCE The 2016 financial year was a good year for the company. We grew revenue in every gaming segment of our business. Actual gross revenue across the Group grew 4.4% to $2,358 million, with The Star Sydney growing by 7.5% and the Queensland properties declining by 2.2% for the year. The Queensland result was impacted by disruptions caused by major capital investment projects throughout the year. Normalised gross revenue grew 6.0% to $2,431 million, with 8.6% growth at The Star Sydney and a small decline of 0.2% at our Queensland properties for the year.

Domestic gaming revenues grew 6.8% to $1,515 million across the Group in the 2016 financial year, with a good spread across tables and electronic gaming. We attribute the continued growth to incremental improvements in our customer service, solid macro-economic conditions in our markets and continued enhancements to our loyalty program and marketing strategies. The impact of these efforts was moderated by the disruption caused to operations from construction activities at our properties in Sydney and the Gold Coast.

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Echo Entertainment Group was renamed The Star Entertainment Group during the 2016 financial year, over which time the Group delivered a further year of solid earnings growth.

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