Despite a 14.6% decline in revenue, Star Entertainment returned to a net profit in the first half of its 2024 financial year, showing signs of recovery. However, the company faces challenges with a second inquiry by the New South Wales Independent Casino Commission (NICC) into its operations.
Summary
- Star Entertainment returned to a net profit of $9.1m in H1 of its 2024 financial year, compared to a $1.26bn loss in the previous year.
- Revenue fell 14.6% to AU$865.7m in H1, with domestic gaming revenue down 16.7% to $683.3m.
- Star Sydney, Star Gold Coast, and Treasury Brisbane all experienced revenue declines, attributed to new regulatory measures, normalisation of consumer spending, and increased competition.
- Operating expenses were cut by 5.0% to $541.6m, and gaming tax and levies spend fell 13.6% to $210.5m.
- Despite challenges, CEO Robin Cooke highlighted achievements in regulatory milestones and progress in remediation efforts.
- Star faces a second inquiry by NICC, led by Adam Bell SC, focusing on the implementation of recommendations from the first inquiry.
- H2 started with revenue and EBITDA consistent with H1, with group EBITDA down 6.5% in January.
- Star aims to regain player trust, improve risk management, and embed greater accountability and robust governance.
Star Entertainment Group Announces Delay in H1 2024 Financial Results Release
Star Entertainment Group, has announced a delay in the release of its financial results for the first half of the 2024 financial year. Initially scheduled for February 21, the company will soon announce a revised release date.
The decision to postpone the results announcement comes in the wake of the New South Wales Independent Casino Commission (NICC) launching a second investigation into the operations of Star's Sydney casino. This inquiry, led by Adam Bell SC, is set to last 15 weeks, with a final report expected by May 31. The focus will be on evaluating Star's implementation of recommendations from the initial inquiry.
Star Responds to New NICC Inquiry
In light of the NICC's announcement, Star Entertainment has requested a trading halt on the Australian Securities Exchange (ASX). The company views the inquiry as an "objective forum" to demonstrate its suitability for holding a casino license in NSW. It should be noted that Star was deemed unsuitable for a casino license in the state in September 2022.
The market reacted strongly to the news, with shares in the casino operator plummeting by 25.9% to A$0.415 in early trade, marking the most significant intraday drop ever when trading resumed after a halt on Monday. As of 0002 GMT, the stock was down 23.2% at A$0.430, threatening a three-day winning streak in heavy trade. Nearly 60 million shares were traded on Tuesday, significantly exceeding the 30-day average of approximately 15.7 million shares.
The new inquiry aims to assess the suitability of Star Entertainment Group's association with the management or operations of its Star Sydney casino. The NICC has expressed dissatisfaction with Star's progress on remedial measures, leading to the extension of regulator-appointed management for the second time in December of the previous year.
Star Entertainment Group is committed to fully cooperating with the NICC and is dedicated to addressing the concerns raised. The company will continue to update stakeholders on the revised release date for its H1 2024 financial results and developments related to the inquiry.
Second Inquiry into Sydney's Star Casino Announced by Gaming Watchdog
The NSW Independent Casino Commission has announced a second inquiry into Sydney's Star Casino, following unsatisfactory progress in addressing compliance failures identified in the first inquiry of 2022. The upcoming inquiry, led by Adam Bell SC, will be conducted privately, with a report expected in May.
The initial investigation uncovered serious issues at The Star, including connections with a gang-linked junket operator and the misrepresentation of Chinese debit card transactions. Despite having 18 months to rectify these problems, the casino has failed to convince the commission of its ability to reform.
Interim manager Nicholas Weeks' appointment has been extended for the final time as the casino struggles to demonstrate that its remediation efforts are self-driven rather than being solely the result of external oversight. The upcoming inquiry aims to provide the commission with the necessary information to decide on The Star's future, considering its impact on employees, stakeholders, and the broader community.
Amidst these developments, a deal has been struck between the NSW government, Star, and the United Workers Union to ensure a minimum staff headcount until 2030. However, opposition treasury spokesman Damien Tudehope criticized the Treasurer for prioritizing deals over ensuring the casino meets its obligations.
In response to the announcement, trading in Star Entertainment Group shares was halted on the ASX on Monday morning, pending a statement from the company.
Trading Halt Due to Capital Restructuring
Star Casino news has reported a trading halt for Star Entertainment Group Ltd (ASX: SGR) shares. This pause in trading is a result of the company's significant financial adjustments and strategic efforts towards capital restructuring.
The Star Entertainment Group Ltd (ASX: SGR) has initiated a trading halt as part of its crucial capital restructuring measures. Trading will remain suspended until the company unveils detailed capital structure initiatives or resumes regular trading on September 27, 2023.
Focus on Capital Raising and Debt Management
A central pillar of their financial strategy is a substantial capital-raising effort amounting to $750 million, led by Barrenjoey. This initiative aims to retire existing debts and propel ambitious projects like Queen's Wharf in Brisbane. The company recognizes the importance of refinancing and implementing pivotal initiatives to establish a robust foundation for future success.
FY23 Financial Performance
Despite the temporary trading pause, The Star Entertainment Group Ltd (ASX: SGR) achieved remarkable financial results for FY23. Notably, they recorded a significant 35% increase in normalized EBITDA. However, the company did face substantial challenges resulting in a loss in statutory net profit. These challenges encompassed factors such as an impairment charge for The Star Sydney, legal costs, debt restructuring, and redundancy expenses. Overall, The Star Entertainment Group experienced a notable loss in its recent full-year results primarily due to the devaluation of its casinos.
Share Price Declines and Transformative Changes
It's noteworthy that The Star Entertainment has witnessed substantial declines in its share price in recent times, with a 69% drop over the past year and an 84% decrease over the last five years. These turbulent trends reflect the challenges and transformative changes that the company is currently navigating. Additionally, Star Casino is awaiting the outcome of an AUSTRAC fine related to money laundering within their casinos.
Strategic Financial Endeavor
Star Entertainment, a widely recognized Australian casino operator, is embarking on a significant financial endeavor with a carefully planned strategy to raise an impressive $481 million.
In addition to raising capital, Star Entertainment is implementing a strategic plan for capital restructuring. As part of this plan, they are offering equity at A60c per share, representing a 20% discount compared to the previous Friday's closing price of A75.
Conclusion
The trading halt for Star Entertainment Group Ltd (ASX: SGR) shares is a result of the company's efforts towards capital restructuring and significant financial adjustments. This strategic pause aims to pave the way for a stronger financial foundation, including a substantial capital-raising initiative and debt management. Despite challenges and share price declines, the company is focused on its transformative journey and future success
