Surpassing the turbulence of the past, Star Entertainment has managed to steer back into profitability in the first half of the fiscal year 2024, as announced in their latest financial disclosure. Despite a pronounced decline in revenue, which plunged 14.6% to AU$865.7 million, the casino operator recorded a net profit of $9.1 million. This figure stands in sharp contrast to the staggering $1.26 billion loss it suffered in the previous year, primarily due to a significant writedown in the values of its casinos located in Sydney, Gold Coast, and Brisbane—as a consequence of various anti-money laundering and social responsibility oversights.
The initial losses and ensuing challenges have laid the groundwork for a period of reflection and reform for the embattled gaming giant. The financial upheaval follows on the heels of revelations that surfaced during the first inquiry into the company’s operations by the New South Wales Independent Casino Commission (NICC). The outcomes of that inquiry saw Star declared unfit to hold a casino license in New South Wales as of September 2022.
This backdrop of regulatory scrutiny continues, with the NICC only this month unveiling plans for a second, 15-week-long inquiry into the company, helmed once more by Adam Bell SC—the architect of the first examination. Bell is tasked with evaluating the effectiveness of the measures Star has undertaken since the initial findings were revealed, ahead of a final report due on 31 May. The gravity of this investigation was reflected in the delay of the H1 results, which were only announced today, 29 February.
Robin Cooke, Star’s CEO, responding to the H1 results, highlights the company’s efforts to transcend its previous lapses, featuring regulatory achievements such as the approval of the remediation plan in Queensland. He mentioned the resolution of the proposed increase in New South Wales casino duty rates as a positive that eased uncertainty and preserved thousands of jobs. However, he candidly clarified, “Remediation remains our number one priority,” explicitly elucidating Star’s dedication to overhauling its approach to risk management, safer gambling, and anti-money laundering (AML) operations to rebuild trust with players and regain regulatory approval.
The financial report reveals a domestic gaming revenue plummet of 16.7% to $683.3 million, a decline in non-gaming revenue by 5.6% to $176.4 million, and a dip in other revenues by 3.2% to $6.0 million. Each of Star’s three casino properties witnessed reduced revenue, with Star Sydney taking the hardest hit—a 16.9% fall to $450 million. The Star Gold Coast earnings decreased by 13.6%, and the Treasury Brisbane’s dipped by 9.6%, all due to factors ranging from regulatory and gambling measure implementations to soft consumer spending.
On a brighter note, operating costs were curtailed across all sectors. Operating expenses were slashed by 5% to $541.6 million, gaming tax and levies spending decreased by 13.6% to $210.5 million, and depreciation and amortisation dropped by 38.3% to $62.2 million. This gleaned an improvement of 48% in earnings before interest and tax, arriving at $51.4 million. After considering the significant items, the statutory net profit after tax settled at $9.1 million, a refreshing turnaround from the previous year’s colossal loss.
Star also shed light on their expectations for the second half of the year, indicating that initial revenue and EBITDA would remain consistent with H1 but slightly softer when compared to the same period the year before. They mentioned maintaining a group EBITDA run rate of $20 million per month as of January, although experiencing a minor 6.5% decrease during the month, with EBITDA lower across all three properties.
Looking ahead, despite the challenges, Star shows a measure of cautious optimism underscored by Robin Cooke’s closing remarks: “The start of this calendar year has seen revenue and earnings continue to track our first-half run rate.” Star’s report communicates a tale of resilience and steadfast adherence to a strategic path that they hope will lead them back to good standing, both with industry watchdogs and within the broader sphere of public trust.
