SGR
The Star Entertainment Group Limited
ASX
2024 Annual Report
Sentiment:
Annual Report
29 October 2024 8:21 PM
The Star Entertainment Group reported a FY24 statutory net loss after tax of $1,685 million, impacted by challenging trading conditions, cost of living pressures, casino operating reforms, and loss of market share, but is pursuing a range of initiatives to improve liquidity and restore shareholder value.
Worse than expected
The FY24 statutory net loss after tax of $1,685 million was significantly worse than the previous year's loss and reflects the impact of challenging trading conditions, regulatory changes, and remediation costs.
Capital raise
The company is seeking to raise at least $150 million in subordinated debt as a condition precedent for the second tranche of its new debt facility.
Summary
- The Star Entertainment Group's FY24 revenue was $1,678 million, a 10% decrease from FY23.
- Operating expenses remained high at $1.1 billion due to increased spending on transformation and remediation.
- Earnings before interest and tax (EBIT) before significant items decreased by 56% to $54 million.
- Significant items totaled $1.7 billion after tax, including a $1.44 billion non-cash impairment charge.
- Normalised net profit after tax was $12 million, compared to $41 million in FY23.
- No dividends were declared.
- Capital expenditure was $76 million, lower than depreciation of $121 million.
- The Star made equity contributions of $98 million to joint ventures.
- Mandatory carded play commenced at The Star Sydney in August 2024, resulting in a 10.7% revenue decrease in the first month.
- The Treasury Brisbane closed in August 2024, and The Star Brisbane opened.
- The Star sold the Sheraton Grand Mirage Gold Coast and the Treasury Casino Building, generating profits.
- The Star faces near-term liquidity pressures and is seeking a $200 million debt facility.
- The company plans to implement cost-saving initiatives to achieve over $100 million in annualised savings by March 2025.
- The Star is undergoing a significant transformation and remediation program to regain trust and casino licenses.
Sentiment
Score: 4
Explanation: The document reveals significant financial challenges and regulatory hurdles, resulting in a low sentiment score. While the company is actively implementing remediation and cost-cutting measures, the uncertainty surrounding regulatory outcomes and liquidity pressures significantly impact the overall outlook.
Positives
- The sale of the Sheraton Grand Mirage Gold Coast generated a $23 million profit.
- The sale of the Treasury Casino Building leasehold interest generated net sale proceeds of $60.5 million (plus GST).
- The Star Brisbane opened in August 2024.
- The company secured commitment letters for a new $200 million debt facility.
- The company plans to implement cost-saving initiatives targeting over $100 million in annualised savings.
Negatives
- FY24 Group revenue decreased by 10% to $1,678 million.
- FY24 EBIT (before significant items) decreased by 56% to $54 million.
- A significant non-cash impairment charge of $1.44 billion was recorded.
- FY24 Normalised net profit after tax decreased significantly to $12 million.
- No dividends were declared.
- The company faces significant near-term liquidity pressures.
- Mandatory carded play at The Star Sydney resulted in a 10.7% revenue decrease in the first month.
Risks
- Significant near-term liquidity pressures.
- Uncertainty regarding the outcomes of the Bell Two inquiry.
- Ongoing regulatory matters, including AUSTRAC proceedings and underpaid casino duty.
- The need to raise additional subordinated debt of at least $150 million.
- The impact of mandatory carded play and cash limits on earnings.
- The potential for further regulatory changes and penalties.
- The uncertainty surrounding the financial performance of The Star Brisbane.
Future Outlook
The Star faces significant near-term liquidity pressures but is implementing cost-saving initiatives and pursuing a new debt facility to address these issues. The company's long-term success depends on successfully addressing regulatory matters, completing its remediation program, and achieving a return to suitability to hold its casino licenses.
Management Comments
- 'In closing out an extremely challenging year I would like to extend my thanks for your patience and support.'
- 'Coming out of the recent Bell Two Inquiry, and having reset our Remediation Plan, we are absolutely focused on the path ahead to drive sustainable long term cultural transformation for the company.'
- 'As you know, The Star has experienced exceptional challenges over the past few years, with the last 12 months being particularly difficult.'
- 'To address these near-term liquidity issues, The Stars existing corporate lenders have executed commitment letters for a new two-tranche term facility of up to $200 million, subject to execution of long-form documentation and satisfaction of various conditions.'
- 'We fully appreciate the privilege and responsibility involved in holding licences in Queensland and New South Wales and are absolutely committed to rebuilding The Star as a transparent, accountable organisation, founded on a strong ethical framework and supported by robust governance, so we may once again have the trust of all of our stakeholders including our guests, regulators, shareholders suppliers partners the community and our dedicated team members.'
Industry Context
The Star's challenges are reflective of broader industry trends, including increased regulatory scrutiny and the impact of operating reforms on casino revenue. The company's struggles also highlight the competitive landscape, with competitors like Crown Resorts facing similar issues.
Next Steps
- Complete the implementation of mandatory carded play across The Star Sydney's entire gaming floor by 19 October 2024.
- Reduce cash limits at The Star Sydney to $1,000 by 19 August 2025.
- Implement mandatory carded play, pre-commitments, and cash limits at Queensland properties.
- Complete the phased opening of The Star Brisbane throughout FY25.
- Open the Dorsett and Rosewood hotels in late 2026.
- Complete the sale of the Treasury Hotel and car park by 1H FY25.
- Implement cost-saving initiatives to deliver over $100 million in annualised savings by March 2025.
- Secure the $200 million debt facility.
- Continue to pursue the sale of other non-core assets.
Key Dates
- 28 November 2016: 33.3% interest acquired in Destination Gold Coast Consortium Pty Ltd
- 20 October 2016: 50% interest acquired in Destination Gold Coast Investments Pty Ltd
- 11 August 2021: Group received amended assessments from the Australian Taxation Office
- 6 September 2021: Group filed an application for judicial review with the Federal Court of Australia
- 5 October 2021: Group lodged an objection against the primary assessments with the ATO
- 30 March 2022: Shareholder class action commenced
- 30 November 2022: AUSTRAC commenced civil penalty proceedings
- 9 December 2022: Group received written notice from the Queensland Attorney-General
- 24 November 2023: Group received confirmation that the Remediation Plan had been approved by the Qld A-G
- 3 November 2023: Sale of the Sheraton Grand Mirage completed
- 10 November 2023: The Star Entities filed a Statement of Admissions and Factual Contentions
- 5 December 2023: Group appealed by commencing proceedings in the Federal Court of Australia
- 28 December 2023: Final instalment of the $100 million penalty issued following the Gotterson Report paid
- 17 May 2024: Group advised by OLGR that the Governor-in-Council approved changing the date of effect of the licence suspensions
- 29 April 2024: Anne Ward appointed as Chair of the Board
- 24 June 2024: Neale O'Connell appointed Acting CEO
- 19 August 2024: Mandatory carded play commenced at The Star Sydney
- 25 August 2024: Treasury Brisbane closed
- 29 August 2024: The Star Brisbane opened
- 30 August 2024: NICC provided the Company and The Star Sydney a copy of the Bell Two Report
- 6 September 2024: Sale of the leasehold interest in the Treasury Casino Building to Griffith University
- 13 September 2024: NICC served a 'show cause' notice on the Company
- 18 September 2024: Amended remediation plan submitted to OLGR
- 20 September 2024: Copies of the amended remediation plan submitted to the NICC
- 27 September 2024: Company lodged its response to the NICC
- 25 September 2024: Group and its lenders executed a commitment letter for a new debt facility
- 27 September 2024: Settlement of the sale of the Treasury Casino Building to Griffith University
- 20 February 2025: Indicative date for FY25 Half Year Results Announcement
- 21 August 2025: Indicative date for FY25 Full Year Results Announcement
- 23 October 2025: Indicative date for 2025 Annual General Meeting
- 28 November 2024: Date of 2024 Annual General Meeting
Keywords
Casino, Gaming, Remediation, Regulatory, Financial Performance, Liquidity, Transformation, Joint Venture, Australia, Annual Report
SGR
The Star Entertainment Group Limited
ASX
Sector: Consumer Services
Filings with Classifications
Delay expected
6 July 2025 7:48 PM
Joint Venture Agreement Update
- The termination date of the Heads of Agreement has been extended from an unspecified prior date to July 31, 2025, indicating a delay in finalising or resolving the agreement.
Worse than expected
6 July 2025 7:48 PM
Joint Venture Agreement Update
- The Star is now obligated to make significant repayments totaling approximately $36.5 million to its joint venture partners, which was not part of the original HoA.
- The initial notice of termination on June 30, 2025, indicates a deterioration of the original agreement.
Delay expected
29 June 2025 8:02 PM
Project Update
- The long form documents between The Star and the Joint Venture Partners with respect to the DBC transaction were required to be entered into by April 30, 2025, but this deadline was not met.
Worse than expected
29 June 2025 8:02 PM
Project Update
- The long-form documents for the binding heads of agreement were not entered into by the April 30, 2025 deadline.
- The Joint Venture Partners issued a notice to terminate the Heads of Agreement, which is a significant negative development for the DBC transaction.
Better than expected
24 June 2025 11:03 PM
General Meeting Results
- The results were better than expected as all resolutions passed with exceptionally high 'For' percentages, indicating strong shareholder alignment and confidence.
Capital raise
24 June 2025 7:26 PM
Strategic Investment Update
- The Star entered into a binding term sheet with Bally's for a strategic investment in the form of a multi-tranche convertible note and subordinated debt instrument with a principal value of $300 million.
- Investment Holdings, The Star's largest shareholder, committed to subscribe for $100 million of this combined strategic investment.
Better than expected
24 June 2025 7:26 PM
Strategic Investment Update
- The strategic investments provide crucial cash funding, helping The Star avoid voluntary administration, which is deemed not in shareholders' best interests.
- The Independent Expert concluded that shareholders would be 'better off' if the strategic investments proceed than if they do not.
Delay expected
26 May 2025 4:37 AM
General Meeting Notice
- The completion of the agreement for The Star to exit its equity interest in Destination Brisbane Consortium (DBC) and consolidate its Gold Coast position has been delayed, as long form documents were required to be entered into by April 30, 2025, but negotiations are ongoing.
- The opening of Queens Wharf Brisbane was ultimately delayed by nearly two years due to project cost overruns and disputes with the building contractor.
- The implementation of mandatory carded play and cash limits in Queensland has yet to be confirmed, despite being legislated.
Capital raise
26 May 2025 4:37 AM
General Meeting Notice
- The Star is likely to need to raise additional capital in the future, even with the financing provided by Bally's and Investment Holdings, to continue as a going concern.
- Any additional equity funding in the future may be dilutionary for shareholders.
- The company may need to increase secured debt, issue subordinated debt, or raise additional equity to address potential future liquidity crises.
Worse than expected
26 May 2025 4:37 AM
General Meeting Notice
- The Star's H1 FY25 normalised revenue was $649.6 million, down 25% from H1 FY24, primarily due to a 32% decline in domestic gaming revenue.
- H1 FY25 EBITDA was a loss of $26.4 million, down 123.2% from H1 FY24, reflecting a sharp deterioration in profitability.
- The company's unrestricted cash balance as at December 31, 2024, was only $78.5 million, down from nearly $200 million six months prior, indicating a rapid depletion of liquidity.
- The Independent Expert concluded that the terms of the strategic investments are 'not fair' based on regulatory policy's theoretical methodology, implying the valuation is below the fair market value on a control basis.
Capital raise
29 April 2025 8:09 PM
Quarterly Activities Report
- The Star has entered into a binding term sheet with Bally's for a strategic investment in the form of a multi-tranche convertible note and subordinated debt instrument for a principal value of $300 million.
- The company is exploring non-core asset disposals, alternate financing initiatives, and other strategic initiatives to raise further cash.
Worse than expected
29 April 2025 8:09 PM
Quarterly Activities Report
- The company's revenue decreased by 9% compared to the previous quarter.
- The company reported an EBITDA loss of $21 million, a significant decline from the previous quarter's loss of $8 million.
Delay expected
29 April 2025 8:09 PM
Quarterly Activities Report
- The conditions precedent required to access the second Tranche of $200 million from the debt facility have not been met, and the Tranche is no longer available.
- The shareholder meeting for the Strategic Investment into The Star by Ballys and Investment Holdings is targeted for late June 2025.
Worse than expected
14 April 2025 10:22 PM
Half-Year Results Presentation
- The company's revenue and EBITDA are significantly lower than the previous year, indicating a worsening financial performance.
Delay expected
14 April 2025 10:22 PM
Half-Year Results Presentation
- The completion of Tower 2 at the Gold Coast property is expected to be delayed due to a water leak event.
Delay expected
14 April 2025 10:21 PM
Half Year Report
- The water leak event in Tower 2 on the Gold Coast property is expected to delay completion of the construction of the apartments and hotel.
Worse than expected
14 April 2025 10:21 PM
Half Year Results
- The company reported a statutory net loss of $302 million, a significant decline compared to the prior corresponding period.
- Normalised EBITDA showed a loss of $26 million, indicating operational challenges.
- Group revenue decreased by 25% compared to the prior corresponding period, reflecting challenging trading conditions.
Delay expected
14 April 2025 10:21 PM
Half Year Results
- Long form documentation for the strategic investment by Ballys and Investment Holdings is currently targeted in the next week, indicating a potential delay.
- A shareholder meeting is currently targeted for late June 2025, suggesting a possible delay in the approval process.
Capital raise
14 April 2025 10:21 PM
Half Year Results
- The Star executed a binding term sheet with Ballys Corporation (Ballys) and a binding commitment letter with Investment Holdings Pty Ltd (Investment Holdings) for a $300 million strategic investment into The Star by way of convertible notes and subordinated debt.
Worse than expected
14 April 2025 10:21 PM
Half Year Report
- The financial results were worse than expected due to a significant decline in revenue and LBITDA, driven by challenging trading conditions, casino operating reforms, and increased remediation costs.
Capital raise
14 April 2025 10:21 PM
Half Year Report
- The Group entered into a binding term sheet with Bally's Corporation for a $300 million strategic investment.
- Investment Holdings may subscribe for up to $100 million of the Investment.
- The first tranche of $100 million was received on 9 April 2025.
- The second tranche of $200 million is payable to the Group following shareholder approval.
Capital raise
7 April 2025 5:20 AM
Strategic Investment Announcement
- The Star Entertainment Group is raising $300 million through a multi-tranche convertible note and subordinated debt instrument.
- Investment Holdings Pty Ltd may subscribe for up to $100 million of the Investment.
Worse than expected
1 April 2025 7:00 PM
Refinancing Update
- The withdrawal of a necessary refinancing proposal indicates a failure to secure crucial funding.
- The company's inability to meet lender conditions signals significant obstacles in its financing efforts.
- Ongoing liquidity issues are confirmed and potentially exacerbated by the failed refinancing.
- The delay in lodging the half-year financial report highlights the severity of the financial situation.
Delay expected
1 April 2025 7:00 PM
Refinancing Update
- The company cannot lodge its half-year financial report for the period ended 31 December 2024 due to the lack of a refinancing solution.
Capital raise
1 April 2025 7:00 PM
Refinancing Update
- The company's statement that it continues to explore 'liquidity solutions' strongly implies that a future capital raise (e.g., equity issuance) is being considered as an alternative to the failed debt refinancing.
Delay expected
27 March 2025 8:30 PM
Regulatory Update
- The Star Sydney's casino license reinstatement is delayed until at least September 30, 2025.
Capital raise
9 March 2025 8:31 PM
Funding Proposal Announcement
- Ballys Corporation has proposed a capital raise of at least A$250 million for The Star Entertainment Group.
- The capital raise would be through the issuance of convertible notes subordinated to The Star's existing senior lenders.
- The convertible notes would be convertible into at least 50.1% of The Star's fully diluted ordinary shares.
- Ballys would underwrite the entire amount of the capital raise, but would be supportive of providing The Star's existing shareholders the right to participate in a significant portion of the offering on a pro rata basis.
Delay expected
7 March 2025 3:25 AM
ASX Announcement
- The Oaktree Proposal has not been able to be finalised at the current time.
Worse than expected
7 March 2025 3:25 AM
ASX Announcement
- The high interest rate on the bridge facility and the need for short-term liquidity initiatives suggest a worse than expected financial situation for The Star.
Delay expected
2 March 2025 7:06 PM
ASX Announcement
- The 1HFY25 Report was not lodged on Friday, 28 February 2025 as required by the ASX Listing Rules.
Capital raise
2 March 2025 7:06 PM
ASX Announcement
- The Company is unlikely to be in a position to lodge its 1HFY25 Report unless, and until, it has secured a refinancing commitment that would enable The Star to refinance all of the Group's existing corporate debt, as well as to provide additional liquidity.
Worse than expected
2 March 2025 7:06 PM
ASX Announcement
- The company failed to lodge its half year financial report by the ASX deadline.
Delay expected
27 February 2025 6:31 PM
Half Year Financial Reporting Update
- The release of the half-year financial report is contingent on receiving and assessing liquidity proposals, indicating a potential delay in its publication.
Capital raise
27 February 2025 6:31 PM
Half Year Financial Reporting Update
- The company is exploring possible liquidity solutions that might materially increase the Group's liquidity position.
- The company anticipates that it will receive one or more liquidity proposals during the course of today.
Worse than expected
27 February 2025 6:31 PM
Half Year Financial Reporting Update
- The company's announcement that there is material uncertainty as to the Group's ability to continue as a going concern indicates worse than expected results.
Worse than expected
16 February 2025 6:03 PM
Financing Announcement
- The document indicates material uncertainty as to the Group's ability to continue as a going concern, which is worse than expected.
Worse than expected
9 February 2025 5:29 PM
Response to Media Speculation
- The announcement highlights that current acquisition proposals do not provide sufficient value, and there is material uncertainty about the company's ability to continue as a going concern.
Capital raise
19 January 2025 5:56 PM
Quarterly Activities Report
- The Group continues to explore other possible liquidity solutions.
- The Group's capacity to raise $150 million of additional capital is challenging.
- There is no certainty that ongoing negotiations for liquidity solutions will be successful.
Delay expected
19 January 2025 5:56 PM
Quarterly Activities Report
- The Star Sydney's license suspension continues and is under the oversight of a NICC appointed Manager until at least 31 March 2025.
- The suspension of The Star Gold Coast's license was deferred until 31 March 2025.
Worse than expected
19 January 2025 5:56 PM
Quarterly Activities Report
- The company reported a 15% decrease in revenue compared to the previous quarter.
- The company reported an EBITDA loss of $8 million, although an improvement from the previous quarter, it is still a loss.
- The company's available cash has decreased significantly to $78 million.
- The company's Sydney license remains suspended.
Capital raise
8 January 2025 2:38 AM
Cash and Liquidity Update
- The company is exploring other liquidity solutions, which could include a potential capital raise.
- The company is working to fulfill conditions to draw down the additional $100 million under Tranche 2 of the new debt facility.
Worse than expected
8 January 2025 2:38 AM
Cash and Liquidity Update
- The company's available cash decreased significantly, indicating worse than expected financial performance.
- The company's cash position was worse than expected despite drawing down on a new debt facility.
Delay expected
6 December 2024 2:32 AM
Regulatory Update
- The suspension of The Star Gold Coast casino license has been delayed until March 31, 2025.
Better than expected
6 December 2024 2:32 AM
Regulatory Update
- The deferral of the license suspension is a positive development, providing The Star with more time to address the issues and potentially avoid a suspension.
Capital raise
27 November 2024 6:28 PM
Annual Report
- The company needs to raise $150 million in subordinated capital to access the second tranche of $100 million in debt facilities.
Worse than expected
27 November 2024 6:28 PM
Annual Report
- The unaudited Group EBITDA loss before significant items for the first 4 months of FY25 was $27 million, indicating significantly worse than expected financial performance.
- Daily average revenue is down 15.5% since implementing mandatory carded play and cash limits, demonstrating a negative impact on revenue generation.
Worse than expected
27 November 2024 2:09 AM
Executive Compensation Update
- The non-achievement of performance hurdles for the FY21 Grant indicates worse-than-expected performance against the targets set for executive compensation.
Worse than expected
29 October 2024 8:21 PM
Annual Report
- The FY24 statutory net loss after tax of $1,685 million was significantly worse than the previous year's loss and reflects the impact of challenging trading conditions, regulatory changes, and remediation costs.
Capital raise
29 October 2024 8:21 PM
Annual Report
- The company is seeking to raise at least $150 million in subordinated debt as a condition precedent for the second tranche of its new debt facility.
Capital raise
21 October 2024 1:22 AM
ASX Compliance Response
- The Star may need to raise additional capital to support its financial position and address the impairment charges.
Worse than expected
21 October 2024 1:22 AM
ASX Compliance Response
- The anticipated impairment charge of $1.44 billion indicates worsening financial conditions compared to previous years.
Worse than expected
16 October 2024 11:17 PM
Regulatory Action
- The \$15 million fine and continued suspension of The Star Sydney's license represent significantly worse-than-expected outcomes for the company.
Worse than expected
16 October 2024 6:53 PM
Trading Halt Announcement
- The trading halt suggests a negative development is pending, indicating worse-than-expected news for investors.
Worse than expected
13 September 2024 12:26 AM
Regulatory Notice
- The show cause notice and potential for significant penalties indicate worse-than-expected results for The Star Entertainment Group, given the severity of the breaches and potential consequences.
Worse than expected
12 September 2024 11:53 PM
Regulatory Notice
- The show cause notice from the NICC indicates that the regulator has serious concerns about The Star's suitability to hold its casino license, suggesting worse-than-expected regulatory outcomes.
Worse than expected
11 September 2024 2:51 AM
Market Update
- The delay in releasing the FY24 financial report and the continued share suspension indicate worse-than-expected performance and financial difficulties for The Star Entertainment Group.
Delay expected
11 September 2024 2:51 AM
Market Update
- The Star Entertainment Group has delayed the release of its FY24 preliminary financial report due to ongoing discussions with stakeholders regarding its financial position.
Delay expected
6 September 2024 5:18 AM
Property Sale Agreement
- The sale is subject to several conditions, including government approvals and a new lease being granted, which could delay the settlement.
Delay expected
4 September 2024 5:21 AM
Market Update
- The release of the FY24 preliminary financial report has been delayed, as the company is currently reviewing its financial and liquidity position.
Worse than expected
4 September 2024 5:21 AM
Market Update
- The delay in releasing the FY24 preliminary financial report and the ongoing review of the company's financial and liquidity position suggest worse than expected results.
Better than expected
16 July 2024 6:42 PM
Missing type for ID: 2057
- ASX:SGR announces better than expected results.
Worse than expected
23 June 2024 6:49 PM
Trading Update and Earnings Guidance
- The company expects lower revenue and EBITDA than previously anticipated due to challenging trading conditions and elevated operating expenses.
Delay expected
16 May 2024 6:26 PM
Regulatory Update
- The license suspensions for The Star Gold Coast and Treasury Brisbane casinos have been delayed from May 31, 2024, to December 20, 2024.
Worse than expected
11 April 2024 6:25 PM
Trading Update
- The company's net revenue and normalised EBITDA decreased compared to the prior corresponding period, indicating worse than expected performance.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.