Australia’s Star Entertainment Group has reported a statutory loss of AU$1.69 billion (US$1.16 billion) for the 12 months to 30 June 2024, with the loss primarily due to a non-cash impairment charge of AU$1.44 billion (US$987 million) on challenging trading conditions and the impact of new regulatory requirements.
Without the impairment and other significant items, the group would have reported a net profit after tax of AU$12 million (US$8.2 million), down from AU$41 million (US$28.1 million) a year earlier.
Star’s FY24 financial results, originally due for release a month ago, had been delayed after the company was again found unsuitable to hold a casino license for The Star Sydney following a second inquiry into its operations. That finding and costs related to the launch of Queen’s Wharf Brisbane had also pushed Star to the brink of collapse before it announced earlier this week a new AU$200 million debt facility agreed by its lenders.
Nevertheless, the company’s FY24 results do not paint a rosy picture, with group-wide revenues falling another 10% year-on-year to AU$1.68 billion (US$1.15 billion) and EBITDA by 5% year-on-year to AU$175 million (US$120 million).
Star noted that its trading performance had deteriorated in the second half of the financial year and this trend has continued into the beginning of FY25.
“For the months of July and August 2024, The Star incurred an EBITDA loss of AU$6.6 million (US$4.5 million) and AU$1.1 million (US$754,000) respectively,” it said.
“Monthly operating expenses have trended up through 2H24 driven by an increase in ongoing transformation and remediation related activities offsetting The Star’s previously announced cost reduction program.”
At The Star Sydney, FY24 revenues fell by 11% to AU$878 million (US$602 million), primarily on a 12% decline in gaming revenues. Non-gaming revenue was “more resilient”, Star said, although still down 2% year-on-year.
At The Star Gold Coast, revenue fell by 10% to AU$456 million (US$313 million) including a 14% decline in gaming revenue, while Treasury Brisbane – recently close down and sold following the Queen’s Wharf Brisbane opening – saw revenues down 8% to AU$344 million (US$236 million).
While Star remained EBITDA positive in FY24, it noted that significant items impacted the company to the tune of AU$1.7 billion (US$1.17 billion) – most of that related to the AU$1.44 billion asset impairment. This, the company explained, included an AU$819 million (US$562 million) impairment in Brisbane, AU$337 million (US231 million) in Sydney and AU$274 million (US$188 million) on the Gold Coast.
Significant items also included AU$100 million (US$68.6 million) associated with regulatory fines, penalties, duty, consultant, legal and other costs, among them AU$16.7 million (US$11.5 million) in relation to the Bell Two inquiry.
In order to address its current predicament, Star outlined a range of initiatives it is in the process of implementing – primarily boosting revenues by enhancing the customer experience, improving on-site offerings and enhancing its marketing initiatives. The company is also looking to sell off non-core assets, reduce maintenance capex and roll out a series of annualized cost savings.
Star Group CEO Steve McCann said, “There are a number of significant challenges currently facing the business from an earnings, liquidity and balance sheet perspective. We recognise and appreciate the support provided to date by our stakeholders as The Star puts in place a new management team and strategy to implement a remediation and transformation program, and return the company to a more sustainable footing.
“We have identified a range of initiatives to improve business performance and cashflow, as well as providing the organization with additional liquidity. However, time and flexibility is required to implement these initiatives.
“As we work through these initiatives, the Board and management team remain focused on demonstrating suitability to hold our casino licenses and regaining the trust and support of our regulators and the broader community while seeking to enhance shareholder value.”
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