Australian casino operator Star Entertainment Group has shared its financial results for the first half of fiscal year 2022 ending Dec. 31, 2021. The report comes amid ongoing investigations into the company’s controls against criminal activity, as the business faces an expanded AUSTRAC investigation into “potential serious non-compliance”
The group claims earnings were heavily impacted by pandemic-related restrictions, including property shutdowns, operating restrictions and border closures. In consequence, Star posted a net loss of A$74 million ($53.2 million), down from a profit of A$64.2 the prior period, and normalized EBITDA of A$29 million ($20.8 million).
However, the group claims that upon re-opening on October 11, 2021, its Sydney property –The Star Sydney– has recorded strong revenue growth of 29%. Meanwhile, Queensland Casinos’ revenue remained stable when open.
Non-gaming revenue was up 10% during the period, with the group opening the Dorsett Gold Coast Hotel and additional facilities in December 2021. Pre-sales for apartments in Gold Coast Tower 2 have been strong, with 94% pre-sold.
The Star Sydney
Amid pandemic-related inefficiencies and investments for re-opening, the company introduced a cost reduction program which has now been materially completed. The group now has substantial liquidity, with A$520 million ($374 million) in cash and undrawn facilities as of December 31.
Despite the setbacks faced during the period, Star’s CEO Matt Bekier expressed optimism for the near term. In conversation with Bloomberg TV on Thursday, the executive said he expected the casinos to return to pre-pandemic levels as remaining Covid restrictions are lifted and international tourism returns.
“We’re very optimistic about what the rest of the year looks like,” Bekier said. While he doesn’t expect Australia to be able to replace the loss of Chinese tourists, as the Asian nation is still enforcing a Covid Zero policy, he stated that, in the short run, Star could “compensate” with domestic travel. But in the long run, “the future of Australian tourism hinges on China and Southeast Asia.”
Still, there is much to look forward to this month for Star and other Australian companies depending on tourism. The country will open its borders to international travel starting Monday, following two years of strict control, and restrictions will be further eased in New South Wales, where capacity restrictions in entertainment venues will be lifted next week.
“The group continued executing its strategy well in the context of the extraordinary COVID-19 related challenges,” Chairman John O’Neill said in a filing with the ASX. “The fundamental earnings prospects for The Star’s domestic business remain attractive.”
O’Neill further says the company’s domestic business is underpinned “by valuable long-term licenses in compelling locations,” and expects the company to further advance in the transformation of its properties “into globally competitive integrated resorts.”
In its H1 report, the company also tackled the issue of the ongoing money laundering probe launched by Australia’s financial crime regulator last year. Last month, it was revealed the AUSTRAC would be expanding the scope of its investigation to other entities within The Star group, besides the initial probe at its Sydney casino.
The Star lists as a priority for the year ahead to “continue to fully cooperate with AUSTRAC” in relation to its requests for information and documents amid the investigation. Moreover, the company expects the report of an Independent Liquor & Gaming Authority (ILGA) review of The Star Sydney, currently underway, “by June 2022.”
In terms of gaming, the company intends to advance a roadmap towards cashless gaming alternatives during the rest of the year, while also seeking to advance a proposal to government to increase the number of slots in Sydney.
“The past year has demonstrated how resilient our business is and how quickly customers return when the properties are allowed to open and operate under varying forms of restrictions,” Bekier concluded the company’s report. “This gives us great confidence as vaccination levels increase and a return to normality approaches.”
Original article: https://www.yogonet.com/international/news/2022/02/17/61442-the-star-posts–53m-net-loss-in-h1-fy22-amid-austrac-probe-ceo-confident-on-future-prospects
