Home > Finance > Star Entertainment posts £1.2bn loss
Troubled Australian casino operator Star Entertainment Group has announced a full-year loss of A$2.4bn ($1.6bn/€1.5bn/£1.2bn) as it counted the cost of a writedown in the value of its casinos in Sydney, Gold Coast and Brisbane.
Star Entertainment, which has faced a string of fines and penalties in recent years, announced $2.8bn of outgoings labelled “significant items” for the year to 30 June 2023.
This consisted of an AU$2.2bn non-cash impairment of the Sydney, Gold Coast and Treasury Brisbane goodwill and property assets. There were also regulatory and legal costs of AU$595m, debt restructuring costs of AU$54m, and redundancy costs of AU$16m.
Those costs, minus a positive and growing EBITDA of AU$317m, means an after tax loss of AU$2.4bn.
During the financial year, Star has faced a series of challenges relating to anti-money laundering and social responsibility failings. These were in the main due to connections to Chinese junket operators. These included a potential AUSTRAC fine, four class actions and two suspended state casino licences in New South Wales and Queensland.
Star Entertainment reeling after difficult year
Robbie Cooke, group chief executive and managing director at Star Entertainment, said: “To say it has been a challenging year completely understates the lived experience at the Star over the last 12 months.
“The consequences flowing from the damage to our social licence are felt daily by team members on multiple levels, reinforcing the critical need to understand the privilege and responsibility that comes with holding a casino licence.”
Cooke told investors in a call following the release of the results that the group is no longer considering the sale of its Sydney property after the NSW government recently decided to scale back a proposed tax hike.
Revenue rises after end of Covid controls
Star Entertainment’s gross revenue climbed 22% to AU$1.9bn for the 2023 financial year, a figure which Covid-19 restrictions affected last year.
Sydney revenue was up 26.5% year-on-year with EGMs up 30%, tables up 19% and nongaming revenue up 49%. Revenue was impacted by uplifted controls from mid-September 2022 increasing the number of excluded guests. It also faced increased competition from the nearby Crown Resorts property.
Star Entertainment’s Gold Coast revenue was up 20% year-on-year. This saw EGMs up 9%, tables up 7% and non-gaming revenue up 52%.
The Star Gold Coast started the year strongly benefiting from a surge in domestic tourism and consumer spending post-Covid along with a return in convention business.
Outband travel competes with domestic tourism
However this performance softened in H2 FY23 impacted by a rebound in outbound travel competing with domestic tourism. Uplifted controls resulted in an increased number of excluded guests.
Brisbane revenue was up 15% year-on-year with EGMs up 17%, tables up 8% and non-gaming revenue up 34%.
Star Entertainment reported that statutory EBITDA, excluding any significant items, grew slightly above previously announced guidance. The total of $317m was an increase of $79m.
Star waiting for outcome of AUSTRAC legal action
Star Entertainment is still waiting on the outcome of legal action launched by AUSTRAC for alleged breaches of anti-money laundering and counter-terrorism laws. It has provisioned for an AU$150 million penalty. Its rival, Crown Resorts, agreed to a $450m regulatory settlement.
CEO Cooke added: “As a team we are determined to earn back the trust and confidence of our community including our regulators, governments, shareholders, employees and guests.
“We fully understand the responsibility involved in holding our licences and are committed to transforming our leadership and culture. This journey has started and we know there is still a lot to be done.”
Cooke described remediation as Star Entertainment’s “No 1 priority” moving into the 2024 financial year. This will include significant uplift in resources in AML. A refresh of the senior executive team and board and an overhaul of all internal controls is also on the cards.
“We have commenced the uplift in our risk management, safer gambling and AML capability and are starting to embed greater accountability and more robust governance. We have invested in enhancing our control environments and are operationalising and embedding these controls.”
He added: “We are improving our financial crime management and our overall approach to harm minimisation.
“Our remediation programme will track and hold us accountable to the multi-year programme we are committed to delivering.”
Source: Read Full Article