Embattled casino group, Star Entertainment (ASX:SGR), has posted a staggering loss of $2.4 billion for the fiscal year ending on June 30, primarily due to substantial write-downs in the value of its casinos exceeding $2 billion.
The company informed the ASX that it had devalued The Star Sydney, The Star Gold Coast, and Treasury Brisbane by $2.17 billion, following damaging investigations and penalties related to its failures in complying with money laundering and terrorism financing regulations.
Additionally, the company disclosed expenses including $595 million in legal costs, $54 million in debt restructuring charges, and $16 million in redundancy expenditures.
While the financial loss was significant, Star Entertainment also reported positive growth in revenue, with a 22% increase to $1.867 billion for the year. This improvement was a recovery from the previous financial year (2021-22) that was heavily impacted by Covid-19 lockdowns.
Furthermore, the company revealed a 34% surge in EBITDA to AU$317 million. This growth was attributed to the relatively low comparison base in the preceding year, 2021-22.
However, the company faced ongoing challenges, particularly evident in trading at the Sydney Star casino. Various factors continued to impact The Star Sydney's performance, including an increase in the number of excluded guests, operating restrictions affecting the guest experience, competition from Crown Sydney, and reduced consumer discretionary spending.
Despite these challenges, The Star Sydney managed a 26% year-on-year growth in gross revenue to $984 million, along with a 57% increase in EBITDA to $127 million, primarily due to the absence of Covid-19 restrictions in the 2022-23 period.
The Star Gold Coast experienced strong performance at the start of 2022-23 as domestic tourism recovered, but growth slowed as international travel resumed. Revenues and EBITDA for the Gold Coast property both saw a 20% year-on-year increase, reaching $509 million and $107 million, respectively.
Similar trends were observed at the Treasury Casino in Brisbane, which is set to be incorporated into the Queen’s Wharf Brisbane development. Gross revenue at the Treasury Casino rose by 15% to $375 million, while EBITDA increased by 29% to $83 million.
Star Entertainment's CEO, Robbie Cooke, expressed the challenges the company had faced over the past year and underscored the importance of maintaining a casino license responsibly.
The company had previously incurred significant costs due to regulatory actions. In February, Star recorded a $1.6 billion write-down on its Sydney casino, which was a result of regulatory inquiries leading to the suspension of its casino license and a $100 million fine. Despite this, the company secured relief from tax increases from the new NSW Government.
In August, the NSW Labor government provided The Star Sydney a $310 million tax relief after the company warned of potential casino closure. The agreement entails a minor tax increase in the coming years, a percentage cut of gaming revenue over a certain threshold, and job guarantees.
As a consequence of these financial challenges and commitments, Star Entertainment will not distribute dividends for another year.
