Australian casino operator Star Entertainment shared on Tuesday its financial report for the year ended June 30, showcasing improvement across segments. The business's gross revenue increased by 22% to AUD1.87 billion ($1.19 billion), thus helping the casino operator significantly reduce its debt levels.
As of June 30, the operator had a net debt of AUD596 million ($381.5 million), a strong reduction from its debt levels of AUD1.11 billion ($710.6 million) at the end of 2022. The firm also posted a net profit after tax attributable, before significant items, of AUD41 million ($26.2 million) for fiscal 2023, versus a loss of AUD31 million ($19.8 million) a year earlier.
However, Star Entertainment Group posted an AUD2.44 billion ($1.56 million) loss after it wrote down the value of its Sydney, Brisbane, and Gold Coast casinos. Challenging operating conditions, higher casino taxes, increased discount rates, and softer earnings left the gambling group with a whopping AUD2.17 billion ($1.38 billion) non-cash impairment across its assets.
Moreover, Star was also weighed down by an AUD595 million ($380.9 million) provision it tucked away for legal and regulatory costs it has incurred and expects to incur in the future. This does not include any provisions for the AUD420 million ($268.8 million) counterclaim brought by builder Multiplex against the Destination Brisbane Consortium, of which Star owns 50%, for construction delays at its Queen's Wharf resort project.
Robbie Cooke, Star Entertainment's CEO, said to call it a challenging year would be an understatement. "The consequences flowing from the damage to our social license 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 license," he said in an announcement to the ASX, as reported by The Canberra Times.
In February, Star booked an AUD1.6 billion writedown ($1.1 billion) on its Sydney casino after a regulatory inquiry resulted in an AUD100 million ($64.01 billion) fine and its license being suspended, in addition to an increase in NSW casino duty rates of up to 60.9%, imposed by the former coalition government.
In August last year, the NSW Labor government gave The Star Sydney an AUD310 million ($198.5 million) tax reprieve after the company warned it would cause them to shut the venue down. Under the new deal, Star will face a minor tax rise next year and again in 2027, as well as a 35% cut of any gaming revenue above AUD1.125 billion ($720.2 million) per year, until the full value of the tax comes into effect in 2030. In return, the venue has promised to guarantee 3000 jobs for the seven-year period.
Star says the resolution of the duty rate uncertainty will help in its ongoing bid to refinance its debt. The company projected fiscal 2024 capital expenditures to be within the range of AUD100 million ($64.01 million) to AUD120 million ($76.8 million), stating that it plans to provide an update on the debt refinancing process in the months ahead.
Star managed to find a resolution over the New South Wales casino duty rate increases, with the impact of new arrangements expected to be AUD10 million ($6.40 million) in fiscal 2024, as reported by the above-mentioned media.
The Star Sydney
Revenue at The Star Sydney was up 26.5% to AUD984 million ($629.9 million), despite increased regulatory controls including increased guest exclusions, while The Star Gold Coast booked a 20% lift and The Treasury in Brisbane was 15% higher.
Cooke said Star will bring back serving complimentary drinks to patrons in gaming rooms, which it dropped as part of its remediation process after NSW regulators gave the green light. Other remediation measures, such as introducing cashless gaming in October, will affect Star's casino future earnings but are essential to maintaining its social license.
"Those sorts of steps are what the community is looking for and will enable us to make sure that our product is used in a safe way," the CEO concluded. Star shares rose 1.8% to 96c in early trading, as reported by The Canberra Times.