Star Entertainment Group has swung to a huge A$2.43bn statutory net loss for the 12 months ending June 30, 2023, as the numerous challenges encountered across recent times continue to take their toll on the company.
That figure includes A$2.82bn of significant items that comprise a non-cash impairment of The Star Sydney, The Star Gold Coast and Treasury (A$2.17bn), debt restructuring costs (A$54m) and redundancy costs (A$16m).
Furthermore, A$593m in ongoing regulatory and legal costs includes NICC and OLGR fines, AUSTRAC civil proceedings, unpaid NSW casino duty and costs associated with ongoing regulatory reviews.
The casino and entertainment operator has also reached an agreement with the New South Wales government to amend a proposed hike in casino tax rates.
This will result in a A$10m uplift in duty payable, however, Star suggested that the agreement is “ designed to protect the jobs of thousands of NSW team members”.
Reflecting on the group’s numerous troubles, Robbie Cooke, CEO and Managing Director, did not shy away from the challenges encountered, but reiterated confidence in its recovery strategy.
Star has previously been found unsuitable to hold a casino licence in New South Wales and Queensland and was subsequently hit with a pair of A$100m penalty packages as well as further remediation orders.
The company was also the subject of enforcement action from Australia’s financial watchdog AUSTRAC, and counted four class action lawsuits being levelled against the group.
“To say it has been a challenging year completely understates the lived experience at The Star over the last 12 months,” Cooke commented.
“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.
“The ancillary challenges that have arisen in the year, and there are many, all follow from the breaches of trust identified in the Bell and Gotterson reports. 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. Remediation is our number one priority.
“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.
“We are improving our financial crime management and our overall approach to harm minimisation. Our remediation program will track and hold us accountable to the multi-year program we are committed to delivering.”
Group revenue through the 12 months increased 22 percentage points to A$1.86bn, with Queensland beginning the year strongly. However, the Gold Coast softened during H2 due to a general weakening in tourism, while Sydney suffered from uplifted controls (resulting in increased guest exclusions), higher levels of risk and compliance resourcing, certain operating restrictions, increased competition and weaker consumer discretionary spending.
Net profit before significant items increased to A$41m, while normalised EBITDA of A$317m, up 34 per cent, closed slightly above a guidance range of $280m to $310m.
“In terms of trading performance our statutory EBITDA for FY23 was $317m, up 34 per cent on the prior year, and slightly above the top end of the previously announced guidance range. Our statutory net loss was $2.4bn,” Cooke concluded.
“The resolution of the NSW casino duty proposed increase has removed significant uncertainty in relation to FY24 and beyond for our Sydney operation and has protected the jobs of thousands of NSW team members.”
