Star comes back to net profit even with a 14.6% revenue decline.

Despite also noting a drop in group income, Star Entertainment was able to earn a net profit during the first half of its 2024 financial year.
In H1 at Star, Howlett NSW Crown casino revenue dropped 14.6% to AU$865.7m (£445.4m/€ 520.7m/US$564.3m). With a meagre net profit of $9.1 million, the operator entered the black against a $1.26 billion deficit in the year before.

The writedown in Sydney, Gold Coast, and Brisbane's casino values produced Sydney, Gold Coast, and Brisbane's significant H1 loss. This followed a string of social responsibility and anti-money laundering mistakes at the venues.

Although Star apparently started to recover considerably in H1 of 2024, recent events raise some questions about its future. The New South Wales Independent Casino Commission (NICC) confirmed a second inquiry into Star this month.

This month the New South Wales Independent Casino Commission (NICC) confirmed a second investigation into Star.
running for fifteen weeks and with a final report scheduled on May 31 Examining how Star has followed recommendations from the first inquiry, Adam Bell SC, who oversaw the first Bell report, will lead the investigation. Following the initial inquiry, Star was deemed unfit to have a casino licence in New South Wales in September 2022.

Delayed H1 generates mixed reading.
Not coincidentally, this announcement caused Star to postpone its H1 earnings announcement; this was moved out to today, February 29. CEO Robin Cooke says Star reached several important regulatory goals in H1, however the figures show mixed reading and the operator faces a stressful few weeks while the inquiry is under way.

"While the group continues to operate in a challenging regulatory environment, Star has attained a number of significant milestones in the period," Cooke added. " Queensland accepted our corrective action plan. The conclusion of the anticipated hike to NSW casino duty rates has eliminated major uncertainty for our Sydney site and has preserved hundreds of employment for our team members in New South Wales.

"There is still a lot of work to be done notwithstanding these successes. Our first focus still is remedial work. We are beginning to integrate more responsibility and more strong governance as we keep improving our risk management, safer gambling, AML skills.

These initiatives, according to Cooke, are part of an attempt to rebuild player confidence following first investigations revealing shortcomings. Work is continuous; Cooke notes Star has improved in this area.

Star welcomes the most recent inquiry, he says, and will assist authorities with the findings. 

"Despite the challenges of the past 18 months, as a team we are progressing and continuing to work hard to do all that we possibly can to restore our suitability and earn back trust," Cooke added.

"As a team we are committed to our strategic "North Star," seeking to achieve sustainable outcomes for our visitors, our team members, the communities in which we live and our shareholders, by providing entertainment, gaming, and leisure experiences in a safe, responsible, and ethical manner.

"We welcome the investigation requested in NSW to help the NICC develop an opinion regarding what, if any, action should be taken in reference to Star. This investigation will provide an objective venue in which Star will be able to show in NSW it is capable of returning to appropriateness with special reference to the efforts that have been put in place since the Bell report was published.

Examining Star's performance in H1, domestic gaming activity stayed mostly responsible for income at $683.3 million. This was 16.7% less than the $820.2m reported in the first half of 2023, though.

Domestic gaming income falls 16.7% below the $820.2 million for h2 2023.
Non-gaming income dropped as well, declining 5.6% to $176.4 million. Besides, other income dropped 3.2% to $6.0 million.

Regarding its three casino sites, income was less at each one. With $450.0m, Star Sydney was once more the central location; albeit this was 16.9% less than the prior year. The operator attributed decreased consumer spending as well as new regulatory and responsible gambling policies at the casino for this.

Revenue at Star Gold Coast fell 13.6% to $238.1 million in meantime. Star claimed this was a result of consumer expenditure becoming more normal following the advantage of a post-Covid spending boom in 2023. It also highlighted once more the influence of a required boost in the Treasury Brisbane surroundings in line with corporate-wide developments.

Revenue at the Treasury Brisbane dropped 9.6% to $177.6 million at last. Star once more emphasised the importance of additional restrictions, but she also pointed out that after the epidemic visiting the area is still low. Furthermore noted was a change in market share due to increasing promotional activity and loyalty programs implemented by bigger bars and clubs undergoing remodelling projects.

Back in the black following less spending
Turning now to expenses, they were generally lower. Gaming tax and levies dropped 13.6% to $210.5 million; operating expenses dropped 5.0% to $541.6 million. At $62.2 million, depreciation and amortisation dropped also 38.3%.

This left 48.0% increase in earnings before interest and tax, or $51.4m. Star also highlighted other financial figures, including $3.7 million in net profit from an affiliate, down 44.6%, and $18.6 million in net funding.

ebitda for 2024's h1 dropped 43.1% to $113.6 million.
Star paid $11.5 million in taxes, leaving a net profit of $25.0 million before major items down 42.7% from $43.6 million in 2023. But after including $15.9 million in significant items, the bottom line appeared quite different from the $1.31 billion in the prior year brought on by the write-downs. 

Comparatively to the $1.26 billion recorded in 2023, statutory net profit after tax hit $9.1m. EBITDA before major items dropped 43.1% to $113.6m, nevertheless.

How does H2 for Star start?
Looking to H2, Star noted early income and EBITDA is essentially consistent with H1 and only somewhat less than the previous year. 

Group EBITDA run rate, kept in January, is $20.0 m per month. Group EBITDA dropped 6.5% during the month; EBITDA was also lower at each of the three of its casino sites. 

"The start of this calendar year has seen income and earnings track our first half run rate," Cooke said.