Star Entertainment : Half Year Results Announcement and Accounts

16 February 2017

The Star Entertainment Group Limited (The Star Entertainment Group) provides the following documents in accordance with ASX Listing Rule 4.2A:

1. Media Release; and

2. Directors' Report and Financial Report for the half-year ended 31 December 2016.

The Directors have declared an interim dividend of 7.5 cents per share, fully franked at the company tax rate of 30%, to be paid on 22 March 2017.

The Record Date for the purpose of entitlement to the interim dividend will be 22 February 2017.

The Star Entertainment Group's Dividend Reinvestment Plan (DRP) will operate for the interim dividend. There will be no discount and no underwriting applicable to the DRP. The price at which shares will be issued under the DRP for the interim dividend is the daily volume weighted average market price of The Star Entertainment Group shares sold in the ordinary course of trading on the Australian Securities Exchange over a period of ten trading days beginning on the fourth trading day after the Record Date.

Shareholders who may participate in the DRP are those with a registered address in Australia or New Zealand. To participate in the DRP for the interim dividend, DRP elections must be received by The Star Entertainment Group's share registry (Link Market Services Limited) by the end of the business day following the Record Date (i.e. 23 February 2017).

Information regarding the DRP can be found on The Star Entertainment Group's website at www.starentertainmentgroup.com.au.

STARENTERTAINMENTGROUP.COM.AU THE STAR ENTERTAINMENT GROUP LTD ABN 85 149 629 023

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Thursday, 16 February 2017

• Statutory NPAT of $141.8 million (up 135.2% on the prior comparable period (pcp)), impacted by a high win rate in the International VIP Rebate business

• Normalised2 NPAT of $107.1 million (down 17.7% on pcp) (after equity accounted investments)

• 1H FY2017 results demonstrate a period of investment in the business with significant capital works progressed, loyalty program relaunched and new capability built to deliver future returns

  • Strong statutory results with Group revenue of $1,230.2 million (up 11.1% on pcp) and EBITDA of $300.4 million3 (up 55.9% on pcp)

  • Normalised gross revenue of $1,173.9 million (down 3.7% on pcp) impacted by disruption from capital works at Sydney and Gold Coast properties, and International VIP Rebate business volumes following the detention of Crown Resorts employees in China in October 2016

  • Operating expenses4 of $484.0 million (up 2.9% on pcp) reflecting the investment in marketing, loyalty program relaunch and wage indexation, offset by lower volumes and continuing effective cost management

  • Normalised EBITDA of $250.6 million, down 14.5% on pcp

• Improving momentum in domestic revenues as capital works projects are completed in Sydney and at the Gold Coast

• International VIP Rebate business front money up 4.4% on pcp. Statutory International VIP Rebate business revenue up 63.6% on pcp, with turnover down 11.9% affected in part by the high win rate of 1.62%5 (0.88% in pcp)

• Interim dividend (fully franked) of 7.5 cents per share (up 36.4% on pcp) reflecting strong statutory results

• Strong balance sheet maintained - 1.1 times Net Debt6/ Statutory 12 month trailing EBITDA

• Strategic initiatives and capital works to deliver future earnings progressing well

Chairman John O'Neill AO said: "1H FY2017 has been another period of good progress for the Group in executing its strategy to be Australia's leading integrated resort company. Major capital

1 This release should be read in conjunction with The Star Entertainment Group Limited's 1H FY2017 Results Presentation and Directors' Report and Financial Report for the half year ended 31 December 2016.

2 Normalised results reflect the underlying performance of the business as they remove the inherent volatility of the International VIP Rebate business. Normalised results are adjusted using an average win rate of 1.35% of turnover, unless otherwise stated.

3 Before share of net profit (loss) from equity accounted investments.

4 Operating expenses exclude gaming taxes, levies and commissions.

5 The International VIP Rebate business win rate of 1.62% excludes the Premium Mass business (1.64% including Premium Mass). 6 Net debt is shown as interest bearing liabilities less cash and cash equivalents less net position of derivative financial instruments. Derivative financial instruments reflect the position of currency swaps entered into for the USPP debt and interest rate hedges.

works were completed, resulting in significant improvements to gaming and non-gaming offerings at our Sydney and Gold Coast properties. These enhancements have drawn pleasing initial responses from customers. The Board has declared an interim dividend of 7.5 cents per share (fully franked), up 36.4% versus the pcp, reflecting a 44% payout ratio.

"On 1 January 2017, together with our Destination Brisbane Consortium (DBC) partners Chow Tai Fook Enterprises (CTF) and Far East Consortium (FEC), the Group took possession of the Queen's Wharf Brisbane development site to begin demolition and enabling works on its $2 billion world-class integrated resort development. This game-changing project in the Brisbane CBD is a significant, tangible and enduring commitment by the Group to Queensland and to tourism, while securing our long-term position in the city.

"In addition to the Queen's Wharf Brisbane development, the Group, together with our partners CTF and FEC, continues to demonstrate the depth of our long-term dedication to the development and prosperity of South East Queensland through the masterplan for the Gold Coast. In December 2016, we announced the next step in the transformation of our Gold Coast property with the Queensland Government's approval of the Group's application to construct a new approximately $400 million, 700 key hotel and apartment tower. Construction is planned to commence in 2017 subject to successful apartment pre-sales, with completion expected in 2020. Further, we completed the acquisition of the beachfront resort, The Sheraton Grand Mirage Gold Coast, with CTF and FEC on 27 January 2017.

"In Sydney, the Group, CTF and FEC continue to progress the development application in relation to the proposed approximately $500 million, 400 key The Ritz-Carlton hotel and apartment tower."

Statutory gross revenue increased in 1H FY2017 versus the pcp, largely due to an above average win rate in the International VIP Rebate business (1.62% versus 0.88% in 1H FY2016). Normalised gross revenue declined in 1H FY2017 versus the pcp, driven by the impact of disruption from capital works, a softer macro-economic environment, lower International VIP Rebate turnover, and lower hold rates in the domestic business.

Statutory EBITDA increased 55.9% to $300.4 million7 (normalised EBITDA decreased 14.5% to

$250.6 million). Operating costs remain well managed, up 2.9%, inclusive of the investment in marketing, loyalty program relaunch and wage indexation.

Gearing levels remain conservative at 1.1 times 31 December 2016 Net Debt to statutory last 12 month trailing EBITDA, positioning the Group well to continue executing on its growth projects.

Statutory gross revenue increased in 1H FY2017 versus the pcp, largely due to an above average win rate in the International VIP Rebate business, whilst normalised gross revenue declined.

Statutory EBITDA increased 107.5% to $188.1 million over the year (normalised declined 24.4% to

$156.4 million).

Aggregate domestic gaming revenue increased versus the pcp, despite the impact of disruption from capital works to the Astral Tower and main gaming floor, and lower hold rates for domestic gaming. Electronic gaming market share for Q1 FY2017 declined versus the pcp, with 5% fewer machines available versus the pcp as the Group executed works on the main gaming floor8.

Managing Director and Chief Executive Officer, Matt Bekier said: "The improving momentum of our Sydney property into early 2H FY2017 is pleasing, as customers respond to the upgraded offerings with the completion of major capital works. The investment in gaming and non-gaming offerings advances our long term strategy to deliver a differentiated value proposition based on our brand, renewed loyalty program, guest satisfaction and staff engagement."

7 Before share of net profit (loss) from equity accounted investments.

8 Q2 FY2017 market data not available at the date of this release.

Statutory and normalised gross revenue increased in 1H FY2017 versus the pcp, largely due to increased International VIP Rebate business turnover. Statutory EBITDA increased 10.0% to $112.3 million (normalised up 9.5% to $94.2 million). The disruption from capital works at the Gold Coast and lower hold rates in domestic gaming impacted domestic revenues in the period. The Gold Coast had 3% fewer electronic gaming machines available versus the pcp as a result of capital works projects.

Mr Bekier said: "1H FY2017 continued the transformation of our Gold Coast property, with the completed refurbishment of all hotel rooms and opening of two new restaurants in December."

Results for the International VIP Rebate business are included in the property performance overviews above.

International VIP Rebate business front money was up 4.4% on pcp, with turnover of $20.8 billion down 11.9% on pcp. Turnover was impacted by the high win rate of 1.62% in the half (0.88% in pcp) which resulted in a lower turn of 12.2 times (down 15.5% versus pcp), as well as the uncertainty created following the detention of Crown Resorts employees in China in October 2016. Turnover in November and December 2016 was down 27.0% on pcp.

Statutory International VIP Rebate business revenues increased 63.6% to $339.4 million on pcp (normalised revenue decreased 11.2% to $283.1 million).

International VIP Rebate business EBITDA was impacted by higher player rebates as the high win rate in 1H FY2017 increased revenue share junket commissions, as well as the investment in sales staff and marketing costs as the Group continues its diversification of international revenues.

Collections remain well managed, with receivables past due not impaired less than one year at December 2016 of $26.9 million, down from $31.5 million at June 2016.

Mr Bekier said: "We are executing against our strategy of diversifying our international revenues, including through South East Asian VIP and Asian Premium Mass. We continue to assess the North Asian VIP business as the China situation develops."

Trading levels in early 2H FY2017 are exhibiting satisfactory growth on pcp, with improving momentum as capital projects continue to progress and more capacity becomes available. Gross revenue, excluding International VIP Rebate business is up 11.4% on pcp, from 1 January 2017 to 12 February 2017. International VIP Rebate business volume comparisons to prior year are difficult to make given the timing of Lunar New Year, but the trends experienced at the end of 1H FY2017 are continuing into the early part of 2H FY2017. Disruption from capital works across the gaming and

non-gaming business that impacted 1H FY2017 is abating.

Capital expenditure in 1H FY2017 was $216 million, with expectations in the range of $375 million to

$425 million for the full year, excluding around $120 million in equity contributions to DBC for the Queen's Wharf development, in line with prior guidance. The majority of growth and maintenance activities for FY2017 relates to the execution of expansion plans at the Sydney and the Gold Coast properties. Preliminary works commenced at the Queen's Wharf development on 1 January 2017.

Mr Bekier said: "The second half of FY2017 has commenced well. The completion of major capital works projects in Sydney and the Gold Coast has returned capacity and delivered an improved offering that customers are responding to positively. The Group continues to focus on executing its previously disclosed long-term strategy of pursuing capital expansion opportunities while improving operational results."

The full 2017 financial year result may be impacted by a number of factors (which may be material in nature) including general macro-economic conditions, potential hold and win rate volatility in the