Star Entertainment reports full-year loss of $2.4bn, despite a revenue rises

The Gold Coast and Brisbane operations of the troubled Star Entertainment Group reported a jump in revenue as tourists returned but it was not enough to prevent a monster full-year loss of $2.4bn.

The Queensland operations of the embattled Star Entertainment have taken a hit despite a return in domestic tourism failing to rein in the group’s massive full-year loss of $2.4bn.

It has been a horror 12 months for The Star but even analysta were surprised having factored a loss $1bn less than what was announced after the Group had to writedown the value of its Sydney and Queensland properties and having to pay hundreds of millions of costs associated with two bombshell inquiries.

Star chief executive Robbie Cooke said that to say it has been a “challenging year completely understates the lived experience”.

“The consequences flowing from the damage to our social licence 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 licence,” he said.

Last year the Bell Review in NSW and the Gotterson Review in Queensland led to findings that Star was “unsuitable” to hold casino licences in Sydney, the Gold Coast and Brisbane. The Star was issued a $100m fine and given 12 months to “get its house in order” by the Queensland Government.

The Star and its partners are also in a legal stoush with Multiplex which is building the $3.6bn Queen’s Wharf Brisbane development over disputed constructions costs.

Star announced on Tuesday that Multiplex had sought an adjudication with the Queensland Building and Construction Commission in relation to the dispute. The adjudication claim is separate to the Supreme Court proceedings.

Work on the $3.6bn Casino Queens Wharf.

Mr Crooke said Queen’s Wharf was on track to open its first stage in April despite delays, with workers currently fitting out the gaming floors.

But he warned current litigation with builders Multiplex could last years.

The Star‘s shares closed 2 cents higher at 96 cents but over the past 12 months they have dropped by more than 62 per cent.

The Star postponed the release of its accounts by five days to give it more time to finalise an impairment charge and digest the NSW government delayed casino tax hikes.

It reported a full-year statutory loss of $2.4bn and normalised net profit of $41.3m. This compared with Bloomberg consensus estimates of a $1.3bn full year loss with normalised net profit after tax at $17.4m.

The company made a non-cash impairment of The Star Sydney and The Star Gold Coast and Treasury of $2.17bn, while it was hit with ongoing regulatory and legal costs of $595m.

Debt restructuring costs of $54m and $16m worth of redundancy costs with an exodus at board and executive level.

Star Entertainment Group chief executive Robbie Cooke.

Mr Crooke said the company’s overall $100m cost-cutting program was completed and forecast remediation costs to total $35m to $45m in the year ahead.

“The foreshadowed 50 per cent reduction in remediation costs is not expected to occur until FY26”

The company reported that revenue at Star Sydney in July and until August 22 had fallen 23 per cent on the previous corresponding period but firmed 3 per cent on the fourth quarter of the 2023 financial year.

However, Mr Cooke said the performance of the Gold Coast and Brisbane properties was a bright spot for the company.

Star Gold Coast delivered a 20 per cent jump in revenue to $509m, while normalised EBITDA rose 20 per cent to $107m.

“The Star Gold Coast started the year strongly benefiting from a surge in domestic tourism and consumer spending post Covid along with a return in convention business,” Mr Cooke said.

“However, this performance softened in H2 FY23 impacted by a rebound in outbound travel competing with domestic tourism; uplifted controls resulting in an increased number of excluded guests; and weaker consumer discretionary spending.”

The Star casino Gold Coast at night.

In the financial year to date, Gold Coast revenue has dropped 17 per cent on the same period last year but is up 5 per cent compared with the three months to June 30.

Mr Cooke said Star Brisbane had a strong start to last financial year with a “slight slowdown in the second half”. Revenue increased 15 per cent to $375m, while normalised EBITDA firmed 29 per cent to $83m.

In the first seven weeks of this financial year, Brisbane revenue has fallen 14 per cent compared with the same period last year but is 2 per cent higher that the three months to June 30.

Mr Crooke said the company’s hotel and casino development on the Gold Coast was a microcosm of what Star planned for Queen’s Wharf with not only retail and gaming opportunities but business conventions.

“We will have 1000 hotel rooms and hectares of public space,” he said.

The company said it would also start a formal market process for the sale of the Treasury Brisbane assets after property giant Charter Hall pulled out of the $248m deal to buy the heritage-listed Casino and Treasury Hotel buildings and the Queen’s Gardens Car Park on George St in the CBD in a partial leaseback deal.