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Australia’s Star Entertainment Group has disclosed a significant statutory loss for the fiscal year ending June 30, 2024. The reported loss amounts to AU$1.69 billion (US$1.16 billion). This substantial financial downturn is largely attributable to a non-cash impairment charge of AU$1.44 billion (US$987 million), which reflects the adverse trading conditions and the impact of stringent regulatory measures recently introduced.
Financial downturn despite operational efforts:
Excluding this impairment and other significant costs, Star Entertainment would have shown a net profit after tax of AU$ 12 million (US$8.2 million), a notable decrease from AU$ 41 million (US$ 28.1 million) recorded the previous year. The release of these FY24 financial results was postponed by a month following findings from a regulatory inquiry that once again deemed the company unfit to hold a casino license for The Star Sydney. The investigation’s outcome and costs associated with the Queen’s Wharf Brisbane launch nearly led to the company’s financial collapse before it secured a new AU$200 million debt facility from its lenders earlier this week.
As GGRAsia reports, despite these challenges, the overall revenue for Star Entertainment dipped by 10% year-over-year to AU$1.68 billion (US$1.15 billion), with a corresponding 5% decline in EBITDA to AU$175 million (US$120 million). The company acknowledged a deterioration in trading performance during the second half of the fiscal year, a trend that has persisted into the early months of FY25.
Ongoing financial struggles and recovery efforts:
“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,” the company reported. “Monthly operating expenses have trended upward through the second half of FY24, driven by an increase in ongoing transformation and remediation related activities, which offset the cost reduction program previously announced.”
At The Star Sydney, revenues fell by 11% to AU$878 million (US$602 million), with gaming revenues experiencing a 12% decline. Non-gaming revenues were comparatively more resilient but still saw a 2% decrease. The Star Gold Coast and Treasury Brisbane also reported declines in revenues of 10% and 8% respectively, with notable downturns in gaming revenue.
The financial challenges were exacerbated by significant items totaling AU$1.7 billion (US$1.17 billion), dominated by the AU$1.44 billion asset impairment. These costs were compounded by AU$100 million (US$68.6 million) related to regulatory fines, penalties, consultant fees, legal costs, and other expenditures, including AU$16.7 million (US$11.5 million) associated with the Bell Two inquiry.
In response, Star Entertainment’s CEO Steve McCann outlined several strategic initiatives aimed at stabilizing the company. These include enhancing customer experiences, selling non-core assets, reducing maintenance capital expenditures, and implementing annualized cost savings. “There are significant challenges currently facing the business from an earnings, liquidity, and balance sheet perspective,” McCann stated. “We appreciate the ongoing support from our stakeholders as we implement a remediation and transformation program to return the company to a more sustainable footing.”
