Star, the leading Australian integrated resort operator, faced a challenging year marked by the impact of COVID-19 and ongoing regulatory reviews. While the company’s group revenue remained relatively stable, the effects of property shutdowns and operating restrictions resulted in a net loss for the year, in contrast to the previous year’s net profit of $57.9 million. Star’s domestic revenue in Australia experienced a recovery during the second half of the year as COVID-19 measures were lifted. However, increased spending, including a significant one-off goodwill impairment charge related to the Star Sydney property, contributed to the net loss. Regulatory reviews further added to the uncertainties surrounding the business, with the outcomes potentially impacting its value. Nevertheless, Star remains committed to its Renewal Programme and has made strategic executive appointments to drive the company forward.
Challenges Posed by COVID-19 and Regulatory Reviews:
The ongoing challenges presented by COVID-19, including property shutdowns and operating restrictions, affected Star’s financial performance. Despite the rebound in domestic revenue following the removal of COVID-19 measures, increased spending, primarily driven by a one-off goodwill impairment charge of $162.5 million, resulted in a net loss. The impairment charge specifically relates to the Star Sydney property and is influenced by various factors, including the future regulatory outlook for the venue amid an ongoing review. Regulatory reviews have also impacted Star’s operations, with a review of Star Sydney expected to conclude by the end of August and an independent review of Star’s suitability to hold a casino license in Queensland announced in June.
Importance of the Renewal Programme and Executive Appointments:
Star acknowledges the significant challenges posed by COVID-19 disruptions and regulatory reviews. The company emphasizes the commitment and efforts of its 8,000 team members in navigating these difficulties. The underlying strength of the business has allowed for a strong rebound following COVID-related property shutdowns and operating restrictions. The Renewal Programme, aimed at earning the confidence and trust of stakeholders, has played a crucial role in navigating these challenges. Star has also appointed Robbie Cooke as the new Managing Director and Chief Executive to lead the organization. Cooke’s expertise and experience will be instrumental in driving the Renewal Programme, focusing on governance, culture, training, risk and compliance systems, and technology, including obligations related to anti-money laundering and customer identification.
Financial Performance and Costs:
Star’s revenue for the 12 months ending June 30 amounted to $1.53 billion, representing a marginal decrease of 1.2% compared to the previous year. The Star Sydney property contributed the highest gross revenue of $781 million, despite being closed for 102 days due to COVID-19 restrictions. Star Gold Coast reported $424 million in revenue, while Star’s Brisbane site generated $326 million in gross revenue. However, increased spending across all areas, particularly in depreciation, amortization, and impairment due to the one-off goodwill impairment charge, impacted the financial results. Employment costs accounted for the highest outgoing expense at $597.1 million, and government taxes and levies totaled $387.7 million.
Net Loss and Earnings:
Loss before interest and income tax (EBIT) reached $147.7 million, compared to earnings of $138.4 million in the previous year. After factoring in $42.3 million in net finance costs, the pre-tax loss amounted to $200.0 million, contrasting with a $79.8 million profit in 2021. The net loss, including tax benefits of $1.4 million and changes in the fair value of cash flow hedges, was $178.1 million, in contrast to a $51.65 million profit in the previous year. Earnings before interest, tax, depreciation, and amortization were 45.0% lower year-on-year, totaling $237.0 million.
Star’s financial performance for the year was impacted by COVID-19 challenges and ongoing regulatory reviews. Despite a relatively stable group revenue, increased spending, including a significant one-off goodwill impairment charge, led to a net loss. Regulatory reviews, particularly regarding the Star Sydney property and the company’s suitability for a casino license in Queensland, further contributed to uncertainties. However, Star remains confident in its fundamental earnings prospects, underpinned by long-term licenses and ongoing transformation into globally competitive integrated resorts. The Renewal Programme and strategic executive appointments are key to restoring confidence and driving the company forward. Throughout these challenging times, Star expresses gratitude to its guests and dedicated employees for their unwavering support.