31 Oct

Gambling News

Embattled Star reports an EBITDA loss of AU$18 million in the most recent quarter.

Star Entertainment has disclosed an EBITDA loss of AU$18 million (£9.2 million/€10.9 million/US$11.8 million) for the preceding quarter as it navigates regulatory challenges and its recently launched Star Brisbane joint venture.

In an ASX filing on Tuesday, 29 October, Star disclosed revenue of AU$351 million. This was an 18% decrease compared to the previous year and an 11% decrease from the last quarter. The business ascribed the decline to “a difficult operational landscape and the ongoing enforcement of obligatory carded play and cash restrictions.”

This report was the inaugural one following the Bell Two verdict, in which Star was once more deemed inappropriate for licensure in New South Wales on 17 October. Star Sydney was penalised AU$15 million and will face further controls; nonetheless, its licence remains intact.

The corporation announced on Tuesday that the penalty would be remitted in three installments: December 31, March 31, 2025, and June 30, 2025.

Star Sydney reports an EBITDA loss of AU$22 million.
Star Sydney's revenue of AU$186 million in Q1 decreased by 16% compared to the previous year and by 11% relative to the preceding quarter. However, its EBITDA loss of AU$22 million significantly hindered the company's overall performance.

“Revenue persists in its downward trajectory, reflecting a $4.4 million impact due to system outages in July 2024,” stated Star. The demanding consumer landscape and alterations in corporate procedures have significantly impacted the gaming industry, especially within the premium market.

The obligatory use of loyalty cards for all gaming activities, mandated by state authorities to monitor player activity, was partially instituted on 19 August and fully deployed across the casino on 19 October. Cash limitations of AU$5,000 have been established, which will decrease to AU$1,000 next August. Star observed that these modifications had expedited income decreases.

The business stated, "In the 50 days preceding the implementation of mandatory carded play and cash limits on 19 August 2024, revenue declined by 11% relative to the FY24 average and was 6% lower than the 4Q24 average." “As of 19 August 2024, revenue experienced an additional decline of 12%.”

Star Brisbane and Gold Coast exhibit greater potential.
The most commendable element of the Q1 report originated from Star Gold Coast. The property generated AU$108 million in revenue, reflecting a 6% rise from the previous quarter. Nonetheless, its AU$7 million in EBITDA represented a 70% decline from the previous year.

Similar to Star Sydney, the business cautioned that “legislation mandating carded play, obligatory pre-commitments, and cash limits” in Queensland is imminent.

The multibillion-dollar Star Brisbane complex accrued AU$45 million in sales within 33 days of its inauguration on 29 August. The portion allocated to Star amounted to AU$4 million. The project is a collaborative endeavour between Chow Tai Fook and Far East Consortium. The two partners each possess 25%, while Star holds the remaining 50%.

Currently, just the initial phase of the property is accessible. This includes the casino and several amenities, with more phases scheduled to operate into 2025.

Rising cash reserves, declining expenditures
Star's operational expenses amounted to AU$287 million in Q1, reflecting a minor decrease of 1% from the previous quarter. In September, expenditures totalled AU$83 million, in contrast to AU$106 million in August. The corporation announced the initiation of a cost-reduction program aimed at achieving a minimum of $100 million in first annualised cost savings, with execution scheduled for March 2025.

The cash on hand at the conclusion of the quarter was AU$149 million, an increase from AU$130 million at the end of August. The business obtained AU$60.5 million in net profits from the sale of its Treasury Brisbane casino on 27 September. The company recently secured a AU$200 million debt facility arrangement, divided into two tranches of AU$100 million each.

“The initial tranche is anticipated to be accessible for withdrawal, contingent upon conditions precedent (including comprehensive documentation), until 20 December 2024,” stated Star.