Star Entertainment Reports Net Loss And Staff Repayments

The first half of the current fiscal year for The Star Entertainment Group was a rough one. The bottom line for the six months ending 31 December 2021 showed a net loss of A$74.2M. EBITDA for that period was only A$29.4M, down 87%. The resurgence of Covid-19 in the second half of 2021 was the biggest culprit. Meanwhile, The Star Sydney acknowledged that it did underpay approximately 2,200 staff members over the past six years. And it will cost approximately A$13M to remedy that problem.

Big Numbers, Big Losses

There was no way to sugarcoat the results. The first half of FY2022, ending 31 December 2021, showed a normalized group revenue of $580M, EBITDA of only $29M, and a net loss of $74M.

The numbers speak for themselves:

  • Gross revenue $581.3M, down 22.5% year-on-year from $749.9M in H1 FY 2021
  • Net revenue $577.1M, down 22.2% year-on-year from $741.4M
  • EBITDA before significant items $30.7M, down 86.8% year-on-year from $$233.2M
  • EBIT before significant items -$72.4M, down 156.8% year-on-year form $$127.4M
  • NPAT before significant items -$72.8M, down 207.9% year-on-year from $67.5M
  • Total assets $5.4B, down 1.8% year-on-year
  • Total equity $3.5B, down 1.4% year-on-year

The pandemic hurt the company’s bottom line again. “Covid-19 related property shutdowns, operating restrictions, and border closures materially impacted revenues and earnings,” the overview read.

Positives from H1

Every results presentation needs positive points, and The Star had them. The key performance highlights started with the Sydney property revenue up 29% from 11 October 2021 upon another reopening. The Queensland property revenue remained stable despite border closures and pandemic-mandated restrictions.

In addition, the Dorsett Gold Coast Hotel and facilities opened in December 2021. And pre-sales of Gold Coast Tower apartments were strong at 94% sold. Also, the company sold a VIP jet for about $40M.

Overall, a previously-announced cost reduction program made significant progress.

Regarding specific properties, Sydney took an EBITDA loss of $25M. But on the positive side, domestic revenues shot up 28% upon reopening, and non-gaming revenue soared 46.5%. They brought operating costs down 9.5% but were impacted due to payments to staff for much of the most recent shutdown period.

As for the Gold Coast, operating costs increased 27%. However, domestic revenue increased 6%, with non-gaming revenue up 35% despite shutdowns and restrictions. The slots market share was up. And revenue was strong in peak periods such as weekends and holidays.

Brisbane revenue decreased 11%, but non-gaming revenue increased 10%. And operating costs were up 19%. As for Queen’s Wharf Brisbane, the latest update reveals it will begin opening progressively in the middle of 2023.

Priorities for Upcoming Year

When there’s not much to be done about the pandemic-related losses, it’s best to simply focus on the next period. And at the top of that list, recover from Covid-19 setbacks and challenges. And along with that, the goal is to maintain cost-benefit programs implemented and executed in the past couple of years.

More specifically, The Star wants to:

  • Push its government proposal to increase the number of slots in Sydney.
  • Move toward cashless gaming alternatives.
  • Compete the first part of the sale of Treasury Brisbane assets.
  • Work on the potential sale of the Sydney minority holding.
  • Complete the Dorsett Gold Coast opening.

One of the most challenging tasks in the coming months will be to handle whatever comes of the investigations. The AUSTRAC enforcement investigation  was expanded through January 2022. And the ILGA (Independent Liquor and Gaming Authority) review of The Star Sydney report will be due at the end of June 2022.

Internal Wage Investigation

The Star conducted an internal investigation regarding fair wages – or lack thereof. The result of said self-inquiry was that certain current and former employees on salary were underpaid. The six-year retrospective wage review found that their annual salaries were not sufficient to compensate them for overtime and other “awards.”

Ultimately they determined that approximately 2,200 employees were underpaid, cumulatively totaling about $13M. That is the expected amount of repayment, though it may vary somewhat due to interest fluctuations.

The Star released its investigation results to the Fair Work Ombudsman and United Workers Union before making a public filing. The result of the process is that employees’ pay was corrected and will continue to be up to date moving forward.

CEO Matt Bekier noted, “We apologize to any team member impacted by the payment shortfall, and we are committed to doing the right thing by acting transparently. Our priority is to address this issue and to ensure that it doesn’t happen again.”

 

Rose Varrelli avatar
Rose Varrelli
Senior Casino & News Writer

Hi there! I’m Rose, and with nine years behind me in the iGaming industry, I craft engaging narratives at CasinoAus. My education in Communication across Europe has sharpened my skills in fintech, casino legislation, and digital marketing. Backed by a strong foundation in SEO, storytelling, and cross-cultural communication, I’m passionate about creating content that resonates globally and educates our audience.

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