Star posts FY loss after Sydney casino hit
Casino operator Star Entertainment Group has swung to an annual loss, weighed down by extended COVID-related closures and a hefty writedown at its flagship Sydney casino amid regulatory troubles.
Australia's second-biggest casino operator on Monday posted a full year loss of $198.6 million for the year to June 30, compared to a $57.9 million profit a year earlier.
The company said it took a financial hit after its three properties on the east coast were collectively closed for 125 days in the first half of the year due to pandemic restrictions.
It also slashed the value of goodwill for its main Star Sydney property by $162.5 million "due to regulatory and other uncertainties".
Star said normalised net loss, excluding the significant items, was $32 million. Revenue for the year to June 30 dipped 1.2 per cent to $1.53 billion.
"Clearly, in the regulatory environment we're working our way through it was appropriate to consider a higher level of risk and so we effected that through the weighted average cost of capital. The consequence of that was an impairment on the Sydney property," interim Chairman Ben Heap told AAP.
By 1415 AEST, shares in the company were down 1.7 per cent to $2.86, adding to the nearly 20 per cent drop in value so far in 2022.
Star's fortunes have sagged in recent months amid regulatory scrutiny after hearings at an NSW inquiry unearthed allegations about money laundering, fraud and links to organised crime at its Sydney casino.
The company is now awaiting the outcome of that review into its suitability to hold a NSW casino licence by the end of this month.
It faces a separate investigation from the financial crimes regulator, as well as an inquiry on its suitability to hold a casino licence in Queensland, which is set to hear from witnesses from Tuesday.
Star is also facing competition from bigger rival Crown, which opened the doors of its Sydney casino earlier this month following the long-delayed green light from the NSW watchdog, after recently emerging from its own regulatory troubles.
Star, currently the dominant casino operator in Sydney, says it's too early to form a view on the impact of Crown, but added that "it recognises that it will be operating in a competitive marketplace".
While domestic gaming demand has picked up, international business is still down significantly as Australian casinos steer clear of junket operators, which previously contributed significant numbers.
They have also been affected by the slow recovery of the international tourism market, which is likely to rebound to pre-COVID levels only over the next couple of years.
Still, the group says it's seeing the positive revenue trends from the fourth quarter of FY22 continuing into the current financial year.
Domestic revenue for the period from July 1 to August 18 rose 9 per cent on the comparative pre-COVID period of 2019, largely thanks to a 26 per cent recovery in the Gold Coast's domestic revenue.
Domestic revenue at the Star Sydney was in line with pre-COVID levels.
"That sort of run rate is very encouraging. It indicates our growth sits above pre-COVID numbers, and given all the factors that we're facing at the moment, the underlying performance of the business has been terrific," Mr Heap said.
Star will not pay any final dividend, meaning it has not paid any dividend for the FY22 year.
