Consolidated gross revenue for the six months to 31 December 2021 was AU$577.1m, down from AU$741.4m in the corresponding period in the previous year.
Star’s Sydney property was closed from 26 June to 11 October, while its Queensland sites were both closed for a short period during the half. The operator also said that fluctuating social distancing requirements, domestic border closures and other pandemic-related health orders impacted domestic visitation, while international border closures continue to “substantially” reduce its international VIP business.
Revenue before commissions from its Sydney operations declined 39.5% year-on-year to AU$240.3m, while in Brisbane, revenue fell 11.1% to AU$160.6m. However, despite Covid-19 measures and restrictions, revenue in the Gold Coast climbed 5.1% to AU$180.4m, driven by the reactivation of hospitality venues throughout its casino property.
Star also faced a series of regulatory-related issues, one of which concerned claims that it ignored a report by KPMG over supposed anti-money laundering (AML) failings. Star initially said media reports over the matter were “misleading”, later issuing an expanded response, which said it was committed to improving its AML compliance.
Last month, the Australian Transaction Reports and Analysis Centre (Austrac) announced it was to expand an investigation into financial irregularities at Star Sydney to assess other entities within the group.
Also in H1, Star revealed that it had withdrawn its indicative proposal made in May last year to merge with rival business Crown Resorts and create a combined operation worth approximately AU$12.00bn, citing concerns over ongoing regulatory processes with Crown in Victoria.
Turning to costs, while government levies and taxes fell 20.8% to AU$145.8m, expenses were up elsewhere. Personnel costs jumped 26.3% to AU$277.4m, costs of sales edged up 5.9% to AU$28.6m, advertising and promotions costs 5.9% to AU$24.9m and other expenses 28.1% to AU$56.6m.
When also including AU$25.0m in financial costs, this left a pre-tax loss of AU$103.9m, compared to a AU$73.7m profit at the same point in the 2020-21 financial year. Earnings before interest, tax, depreciation and amortisation (EBITDA) also fell 86.8% to AU$30.7m.
Star did receive AU$29.7m in tax benefits during the half which reduced the impact of closures and other restrictions, but the operator still posted a net loss of AU$74.2m for the period, compared to a AU$49.7m profit in the previous year.
Star also reported normalised results to reflect the underlying performance of the business as they remove the inherent win rate volatility of its international VIP rebate business. These results are adjusted using an average win rate of 1.35% on actual turnover, taxes and revenue share commissions, excluding significant items.
Normalised gross revenue was 21.5% lower at AU$575.8m, while EBITDA fell 87.0% to AU$29.4m and net loss reached AU$73.7m.
Original article: https://igamingbusiness.com/covid-19-restrictions-lead-to-au65-6m-net-loss-for-star-entertainment-in-h1/
