Star Entertainment released its delayed FY24 results as well as a business update on Thursday (26 September). Taken together, they paint a dire picture for the beleaguered operator.
According to Star, its group revenue for FY24 was AU$1.67bn (US$ 1.15bn/£858m/€1bn), with EBITDA of $175m. Those represent year-on-year declines of 10% and 45%, respectively. Its net profit after tax was $12m, a 71% drop from last year’s total of $41m. The company’s net loss, meanwhile, was $1.68bn.
Star was delayed in releasing the results and was halted from trading on the ASX for several weeks. The ASX stopped trading on the company after the latest Bell report and its failure to publish the financial report by 31 August.
Overall, the company said its trading performance “deteriorated” over the second half of the year. This trend “has continued into the beginning of FY25”, with July and August posting EBITDA losses of $6.6m and $1.1m respectively. Operating expenses have increased due to “ongoing transformation and remediation related activities”, in reference to the regulatory obligations related to the first and second Bell inquiries.
The figures are made more difficult by the fact that Star “faces significant near-term liquidity requirements”. Among these are its standard operating expenses, its added remediation spend, contributions to its Queen’s Wharf Brisbane (QWB) joint venture and potential civil penalties from AUSTRAC, Australia’s financial crime regulator.
New debt facility expected to help
On Wednesday (25 September), Star announced it had negotiated a new debt facility of $200m with its lenders. As a result, its original $450m facility has been reduced to $334m, which is fully drawn.
The $200m is to be split into two tranches. The first is available to be drawn from 31 October through 20 December and the second, which is “subject to more extensive conditions”, can be drawn starting next year with “a four-month availability period following the drawing of the first tranche”.
CEO Steve McCann, who came on in late June, didn’t mince words about the status of the company.
“There are a number of significant challenges currently facing the business from an earnings, liquidity and balance-sheet perspective,” he said in a statement. “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 programme and return the company to a more sustainable footing.”
Performance by property
Thursday’s report shed light on how each of Star’s three properties have fared over the last year. Its flagship Star Sydney, the subject of the Bell inquiries, posted $878m in revenue and $52m in EBITDA. The company attributed the results, which were YoY declines of 11% and 59%, to “cost of living pressures as well as casino operating reforms and loss of market share.” Non-gaming revenue was “more resilient”, but still declined 2%.
Star Gold Coast had a similar revenue decline of 10%, from $509m last year to $456m this year. Its EBITDA was the strongest of three properties YoY, declining 33% from $107m to $71m in FY24. The company said the same difficulties applied here and non-gaming revenue dropped 5% “primarily due to a decline in restaurant and bar gross revenue.”
Treasury Brisbane, which closed 25 August due to the opening of QWB, tallied the best revenue of the three YoY. It reported $344m in revenue, “a more moderate” decline of 8%. Its EBITDA was $52m, down 38% from last year.
Speaking of QWB, which began its phased opening on 29 August, Star said it contributed $75m to the venture in FY24. It expects to contribute $174m in FY25 and $183m in FY26 and beyond. QWB is a joint venture with Far East Consortium and Chow Tai Fook Enterprises. The multibillion-dollar mixed-use development is among Star’s biggest hopes for revival.
Star to respond to Bell report on 27 September
In the update, Star made multiple mentions to the ongoing Bell Two inquiry regarding the suitability of Star Sydney. The final report was submitted to the NSW Independent Casino Commission (NICC) on 31 July and was made public on 30 August. Its contents paint a grim picture of a casino struggling to find its footing after two rulings of unsuitability in three years.
The NICC issued a show cause notice to Star on 13 September and is still “considering next steps”. In its update, the company confirmed it will submit a formal response on Friday (27 September).
“The company and The Star Sydney are also reflecting on the recommendations and guidance in the Bell Two report and, subject to any response to the Bell Two report by the NICC, will seek to implement relevant recommendations at an appropriate time, noting that the company has already completed a comprehensive reset of the remediation plan,” Star said.
There are several potential outcomes from the inquiry. Star could face more fines and further regulatory restrictions, or an outright licence revocation. The latter would be unprecedented and would open up a range of possibilities.
Source : IGamingBusiness