Australia’s Star Entertainment Group reported a net profit after tax of AU$9.1 million (US$5.9 million) in the six months to 31 December 2023 as the impact of regulatory crackdowns and increased compliance costs continue to bite.
While the result was considerably better than the AU$1.26 billion (US$818 million) loss reported a year ago, the result was still well below pre-COVID levels, while revenues have also taken a hit compared with 1H23.
According to information filed Thursday morning, group-wide revenues in 1H24 fell by 14.6% year-on-year to AU$865.7 million (US$562 million) with EBITDA down 43.1% to AU$113.6 million (US$73.8 million).
Star said its revenue and earnings at all properties “now reflects the implementation of necessary uplift in the control environment – resulting in an increased number of guest exclusions and reflecting the introduction of time play management of guests – higher levels of risk and compliance resourcing, higher remediation costs and increased competition together with a weaker discretionary spending environment.”
It also noted that main gaming floor performance held up well but that premium gaming areas have been more significantly impacted in the wake of recent inquiries into its suitability in NSW and Queensland. Those inquiries included a focus on the company’s former relationship with Asian junkets.
All three Star casinos have felt the pain, with The Star Sydney reporting a 16.9% decline in revenue to AU$450.0 million (US$292 million) and a 57.2% decline in EBITDA to AU$37.4 million (US$24.3 million).
The Star Gold Coast saw revenues drop by 13.6% year-on-year to AU$238.1 million (US$155 million) and EBITDA by 32.6% to AU$44.6 million (US$29.0 million) while Treasury Brisbane saw revenues fall by 9.6% to AU$177.6 million (US$115 million) and EBITDA by 31.5% to AU$31.6 million (US$20.5 million).
“While the Group continues to operate in a challenging regulatory environment, The Star has achieved a number of significant milestones in the period,” said Group CEO and Managing Director, Robbie Cooke.
“The Group’s Remediation Plan was approved in Queensland. The resolution of the proposed increase to NSW casino duty rates has removed significant uncertainty for our Sydney property and has protected thousands of jobs for our team members in New South Wales.
“We have strengthened our Balance Sheet with the successful raising of AU$750 million (US$487 million) of additional equity and AU$450 million (US$292 million) in new debt facilities.
“Notwithstanding these achievements, there is still much work to be done. Remediation remains our number one priority. We continue to uplift our risk management, safer gambling and AML capabilities and are starting to embed greater accountability and more robust governance.
“We have invested in enhancing our control environments and are operationalizing and embedding these controls. We are improving our financial crime management and have commenced the introduction of significant harm minimization measures. Our remediation program will track and hold us accountable to the multi-year program we are committed to delivering.
“Despite the challenges of the past 18 months, as a team we are progressing and continuing to work hard to do all that we possibly can to restore our suitability and earn back trust.
“We welcome the inquiry called in New South Wales to assist the NICC in forming a view as to what (if any) action it should take in respect of The Star Pty Ltd (the holder of our NSW license), prior to the end of the Manager’s appointment on 30 June 2024.
“This inquiry will provide an objective forum in which The Star will be able to demonstrate in NSW it is capable of returning to suitability with particular reference to the actions that have been put in place since the Bell report was published on 13 September 2022. The Star intends to participate in the inquiry in an open, transparent and facilitative manner.”
Star has not declared an interim dividend.
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