Struggling casino group, Star Entertainment (ASX:SGR), has taken its losses over the past two years to more than $4 billion, with another substantial deficit revealed in unaudited annual accounts released Thursday afternoon.
The way Star downplayed its trading performance since July 1 suggests the company is in for another challenging year in 2024-25—one that will test its ability to stay afloat.
Star reported a statutory loss after tax for 2023-24 of $1.69 billion, an improvement from the 2022-23 loss of $2.44 billion. However, this improvement is illusory—the latest loss is still enormous.
EBITDA (excluding all write-downs and other costs) was only $175 million, down 45% from the previous year.
Revenue declined by 10% due to lower patronage, mechanical problems at its Sydney casino, and higher costs, particularly legal and compliance-related expenses.
Gambling of all types has lost its appeal for cash-strapped consumers.
Additionally, the company said it expects to respond to the NSW casino regulator’s show cause notice from earlier this month on Friday (today).
Star stated that trading performance worsened over the second half of the year to June, and this trend has continued into the beginning of FY25.
For the months of July and August, Star reported an EBITDA loss of $6.6 million and $1.1 million, respectively.
Significant items of $1.7 billion, net of tax, were recognised during the period, primarily reflecting a non-cash impairment charge of $1.44 billion.
The company explained that the impairment of a net $1.44 billion was due to "challenging trading conditions as well as various recent and upcoming regulatory changes," which are expected to negatively impact its earnings.
(In other words, the company’s impairment test of its cash-generating units containing the casinos failed, as they missed benchmarks on expected revenue and cash returns.)
Monthly operating expenses increased over the final months of the financial year as Star undertook more transformation and remediation activities related to its casino licences, particularly The Star in Sydney. These offset the company’s previously announced cost reduction program.
On Wednesday evening, the company confirmed that its existing $450 million debt facility had been reduced to $334 million, while lenders had agreed to provide a new facility of up to $200 million—at a steep interest rate of 13.50% per annum.
Trading in Star shares is now expected to resume Friday (today) after the accounts were lodged with the ASX. The shares have been suspended since September 2, when Star failed to lodge them in time.
The shares ended at 45 cents before the suspension, valuing the company at $1.29 billion.
One final point: the annual results are unaudited, and there is no indication of when the audited accounts will be issued. This remains an important unresolved issue for the company's future.
