Troubled casino firm Star has reported a $302 million loss for the first half of the financial year, after pulling back from the brink of collapse.
Star Entertainment Group lodged its half year financial results with the stock exchange more than a month late, and its shares will return to trade on the ASX tomorrow, following suspension due to its failure to meet the reporting deadline.
“Clearly our performance continues to be very challenged as we navigate through a very difficult trading environment,” Star chief executive Steve McCann told analysts and investors.
“We have been working very hard on establishing additional liquidity for the company to continue to trade through, which has led us to the Bally and Investment Holdings announcement …
“The ongoing impact of regulatory reforms, the impact of mandatory carded play, cash limits, time limits and our loss of market share across Sydney and Gold Coast properties has had a material impact on the business.“
The company has already received the first $100 million tranche of funding from a rescue deal secured last week.
Star will receive a further $200 million, from US gaming giant Bally’s and pub billionaire Bruce Mathieson’s Investment Holdings, subject to shareholder approval.
The deal followed months of concern Star would run out of cash and enter administration, as it repeatedly warned its future faced material uncertainty.
In its half-year results announcement, the company said it had $98 million of available cash and has waivers in place with lenders through to the end of June.
However, it restated that “there remains material uncertainty regarding the group’s ability to continue as a going concern”, despite the cash injections it has secured to date.
Star working to win back customers
The company said its trading performance deteriorated again in the last six months of last year, hit by the impact of mandatory carded play and cash limits at its Sydney casino.
Its Gold Coast operations were affected by casino operating reforms and a loss of market share.
Overall, group revenue fell 25 per cent, while domestic gaming revenue dropped by nearly a third, including the impact of the closure of the Treasury Brisbane Casino.
Mr McCann said Star would need to work at winning back punters and market share, after people were put off by a “very poor customer experience” when implementing the gambling reforms.
“People have been impacted by the suddenness of the communications occurring, by the way that their play has had to change.
“We are working hard on re-establishing those customer relationships and reactivating some customers who are not coming to the Star anymore because they don’t like that combination of impacts, they don’t experience that at the pubs and clubs,” Mr McCann said.
The chief executive said the group was not considering the sale of any further non-core assets “at this point of time”, under its deal with Bally’s.
When bidding for a controlling stake in Star, Bally’s chair Soo Kim told The Business he viewed the opportunity to get involved as “most exciting” if the group was kept together.
“I think that there’s a lot of synergies for it to be one. If you start to split it up actually the operational turnaround becomes harder and so that’s why we decided to get involved,” he said in March.
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Mr Kim noted at the time that Bally’s had been watching Star for a year and decided to lob its bid when Star started offloading assets.
Star reached a deal with Hong Kong investors Far East Consortium International and Chow Tai Fook Enterprises to sell its 50 per cent stake in the Brisbane Queen’s Wharf casino development, giving it access to $53 million.
In return, Star would gain full control of its Gold Coast project.
The company also recently finalised the sale of its Sydney events centre for $60 million and sold its leasehold of the Treasury Brisbane Casino building.
