Thursday, February 13, 2014

Reef Casino: revenue up, expenses down

Reef Casino previously indicated with their distribution announcement a 30% lift in distributable profit. Full year results and preliminary report were released yesterday and presented as A truly excellent year. A significant contributor to that result was actually a decline in operating expenses.

Total revenue was up by 14%. Total expenses declined by 1.2% driven by a fall in operating expenses of 2.6%. That combined to provide the 28.7% lift in profit. So the big jump in profit may not be quite so significant?

This is the CEO report on component performance:

Complex performance


Casino visitations: Casino visitations were up 4.4% on last year with both our “Locals strategy” and “China strategy” contributing to this growth.

Table games: Total revenues were up 15.2% on last year with growth from local, domestic and especially international tourist (mainly China) markets. Premium play performed very well with an excellent “above theoretical” win rate. The Reef Casino achieved a record level of table games revenue in 2013.

Electronic gaming: Electronic gaming machine turnover was up 6.2% on last year and revenues were up 4.1% on last year. Patron support from local and domestic markets was strong throughout the year. The Reef Casino achieved a record level of electronic gaming machine turnover and revenue in 2013.


Rooms: Rooms revenues were 4.5% lower compared to last year, an expected outcome because of the refurbishment of all hotel guest rooms throughout the first half of 2013 which reduced the number of rooms available for sale.

Food and beverage: Beverage revenues were up 2.5% on last year reflecting increased casino visitations with regular special promotions throughout the year. Food revenues were lower by 4.6% compared to last year due to lower banquet/conferencing activity.

Complex cost control, Trust rental

Due to continuing excellent cost control outcomes throughout the complex and growth in complex revenues, the overall rental paid to the Trust was up 14.1% on last year.
The performance on table games and the premium play win rate is particularly noted. I may have a look through the full preliminary report later but there doesn't seem to be much else of particular note in comments except for an update on the Aquis takeover proposal:

The Board understands that Aquis, the bidder of the proposed takeover offer for the Trust, is seeking government and other approvals in order to complete the takeover. As is usual with acquisitions of gaming businesses, the probity review and approval process is expected to take some time. In this respect, the Trust expects that the takeover, if successful, would take not less than 6 – 9 months to complete. In the meantime until completion, it is “business as usual” for the Trust and the Reef Hotel Casino, subject to customary obligations which may be agreed in relation to the operation of the business in the bid implementation agreement and other transaction documents relevant to the proposal.

The takeover proposal was announced 3 months ago in November and it isn't clear to what period the 6-9 months relates?

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