Operator News

Australia – Star expects revenues to return to normal with strong June

The Star Entertainment Group expects to report normalised revenue of $1.53bn in the 12 months to 30 June 2022 with the ‘domestic revenue recovering strongly with all properties open on an unrestricted basis’ in the June quarter.

Domestic revenue in the June quarter was up 11 per cent on pre-COVID levels (2019) to $512m with slots revenue up 28 per cent and non-gaming revenue up 26 per cent. Domestic table revenue had not fully recovered but was within five per cent of pre-COVID levels.

The Star Gold Coast performed strongly (with domestic revenue up 48 per cent on pre-COVID levels, benefiting from a recovery in domestic tourism and the opening of The Dorsett Gold Coast Hotel and The Star Residences during the year. Brisbane domestic revenue was up 13 per cent on pre-COVID levels while The Star Sydney domestic revenue returned to pre-COVID levels.

The full year result will be impacted by the first half net loss associated with the property closures, operating restrictions and border closures as well as costs associated with the regulatory reviews and increased investment in regulatory and compliance functions.

Trading in July remains above pre-COVID levels (2019), demonstrating similar trends to the June quarter. The Star Sydney has seen further improvement in table games performance and is currently trading above pre-COVID levels. Both Queensland properties are performing strongly and remain above pre-COVID levels.

The Star expects net debt to be $1.15bn as at 30 June 2022. The company has $513m of liquidity on hand with undrawn facilities of $433m and cash on hand of $80m.

Due to higher than average rainfall in FY2022 and the impact of COVID-19, the Queen’s Wharf Brisbane Integrated Resort Development (IRD) is now expected to open from 2H CY2023 (subject to various approvals), which represents a delay from prior guidance of mid CY2023.
Total project costs are expected to be up down 10 per cent per cent on prior guidance of $2.6bn due to escalating construction material costs, labour shortages, supply chain challenges and the program delay as well as the inclusion of capital equipment required to open the IRD. Pre-opening and other operational readiness costs would be in addition to this estimate.

The Star, together with its joint venture partners, proposes to fund the majority of the increase in expected costs through additional equity contributions in accordance with the existing joint venture interests (The Star 50% and Chow Tai Fook and Far East Consortium each 25%). The remainder is expected to be funded from future operating cashflows.