Star Entertainment Reports Multi-Billion FY23 Loss amid Regulatory Challenges
In a startling revelation, the Australian casino operator, Star Entertainment Group, has reported a full-year loss of A$2.4bn (£1.2bn) for the financial year ending 30 June 2023. This significant loss is attributed to a writedown in the value of its casinos located in Sydney, Gold Coast, and Brisbane.
Star Entertainment's Mind-Blowing Loss
The company's financial statement highlighted "significant items" amounting to $2.8bn. This includes an AU$2.2bn non-cash impairment of goodwill and property assets in Sydney, Gold Coast, and Treasury Brisbane. Additionally, the company incurred regulatory and legal costs of AU$ 595m, debt restructuring costs of AU$ 54m, and redundancy costs of AU$ 16m. After accounting for a positive EBITDA of AU$317m, the after-tax loss stands at AU$2.4bn.
Star Entertainment's challenges have been manifold. The company faced scrutiny over anti-money laundering and social responsibility lapses, primarily due to its ties with Chinese junket operators. This led to potential fines, class actions, and the suspension of state casino licenses in New South Wales and Queensland.
Robbie Cooke, the Group Chief Executive and Managing Director at Star Entertainment commented on the tumultuous year, emphasizing the importance of understanding the privilege and responsibility associated with holding a casino license. He also informed investors that the sale of its Sydney property is off the table following the NSW government's decision to revise a proposed tax increase.
Despite the setbacks, Star Entertainment witnessed a 22% growth in gross revenue, reaching AU$1.9bn for the 2023 financial year. This growth is attributed to the easing of Covid-19 restrictions. The company reported increased revenues across its properties in Sydney, Gold Coast, and Brisbane. However, the second half of the financial year saw a dip in performance due to increased outbound travel and competition from domestic tourism.
AML Overhaul and Trust Regeneration in Focus for 2024
The company is currently awaiting the outcome of a legal action initiated by AUSTRAC for alleged breaches of anti-money laundering and counter-terrorism laws. Star Entertainment has set aside provisions for an AU$150 million penalty in this regard.
Cooke emphasized the company's commitment to regaining trust and highlighted remediation as Star Entertainment’s top priority for the 2024 financial year. Plans include a significant boost in resources for Anti-Money Laundering (AML), a revamp of the senior executive team and board, and a comprehensive overhaul of internal controls. Cooke concluded with a pledge to enhance financial crime management and a commitment to a multi-year program aimed at harm minimization and improved governance.