GGRAsia – Star Ent posts US$1.2bln annual loss, mulls asset sales

Star Ent posts US$1.2bln annual loss, mulls asset sales

Sep 26, 2024 Newsdesk Latest News, Top of the deck, World

Australian casino operator The Star Entertainment Group Ltd reported on Thursday a net loss after tax of just under AUD1.69 billion (US$1.16 billion), as it wrote down the value of its venues amid what it said were “challenging trading conditions” and “various recent and upcoming regulatory changes which are expected to negatively impact the earnings of the business”.

The casino firm also said it might sell some assets to raise cash, as it flagged near-term liquidity needs for group operations at “current trading levels”, ongoing “remediation” activities, and outflows associated with regulatory matters.

The net loss for the 12 months to June 30 this year was still an improvement on the AUD2.44-billion loss in the prior financial year. The firm did not declare a final dividend, consistent with the previous corresponding period.

“Dividends are suspended until The Star reaches its long-term target leverage range of 2.0 times to 2.5 times, returns to [regulatory] suitability and all of the group’s casino licences are in full force and effect,” the company stated.

Star Entertainment, which remains under scrutiny from regulators over corporate cultural and governance issues, said its trading performance “deteriorated” over the second half of financial-year 2024, a trend that continued into the current fiscal year.

The company reported revenue of nearly AUD1.68 billion for the 12 months to June 30, down 10.2 percent year-on-year. Earnings before interest, taxation, depreciation and amortisation (EBITDA) stood at AUD174.7 million, a 45.0-percent decline from the prior year.

Star Entertainment runs its flagship casino (pictured) in Sydney, in the Australian state of New South Wales. It also holds gaming licences in the state of Queensland, where it launched in late August The Star Brisbane, a new casino resort that is part of the AUD3.6-billion Queen’s Wharf Brisbane.

In terms of regulatory changes, Star Entertainment said the introduction on August 19 – outside the reporting period – of mandatory carded play in certain areas and cash limits at The Star Sydney property negatively impacted revenue.

Daily average revenue – as of September 24 – was “down 10.7 percent compared to the daily average revenue for the four weeks prior to the introduction,” noted the firm.

Preparations are underway for implementation of mandatory carded play and cash limits at the company’s Queensland properties, it added.

In Thursday’s filing, the casino operator said part of its liquidity needs included “further equity contributions” in relation to the Queen’s Wharf Brisbane project.

“The Star continues to review the potential sale of other non-core assets, which together with the remaining Treasury [venue] assets have an estimative value of more than AUD300 million,” the company stated.

The company recently said it would sell the leasehold interest in the Treasury Casino building in Queensland for AUD67.5 million. The gaming venue at the Treasury Casino and Hotel Brisbane closed three days before the opening of The Star Brisbane. The Treasury Brisbane hotel remains operational.

“Sales processes are ongoing for the Treasury hotel and car park which are expected to complete in the second half of financial-year 2025,” said the firm.

The company also said its management had identified about AUD100 million of annualised cost savings, expected to be implemented “by March 2025”.

“The Star will reduce maintenance capex [capital expenditure] – relative to historical levels – to AUD80 million in financial-year 2025, excluding remediation capex of AUD37 million,” it added.

The firm had AUD130 million in cash as of August-end. On Wednesday, Star Entertainment announced that its lenders had signed a “commitment letter” for a new debt facility of up to AUD200 million, to be available for drawing in two-tranches.

Trading in the company’s shares in the Australian Securities Exchange was halted on August 30, pending the financial-year results.