Casinos in Australia: The Star defends non-disclosure of US$966bn impairment charge
The Star has responded to a letter from the Australian Securities Exchange.
Australia.- The Star Entertainment Group has addressed questions from the Australian Securities Exchange (ASX) regarding its decision not to recognise an AU$1.44bn (US$966bn) non-cash impairment charge in its financial report for the year ended June 30. The operator said the charge would not impact underlying cash earnings.
The Star had recorded a non-cash impairment of AU$2.17bn (US$1.46bn) on the value of its properties in Sydney, Gold Coast and Brisbane due to changed operating conditions, increased casino duty rates, increases in discount rates and softness in earnings, but did not recognise a further impairment.
“A further non-cash impairment (or one of AU$1.44bn), which did not impact The Star’s underlying cash earnings, as part of its financial statements for the year ended 30 June 2024 would not have been a surprise to the market, or otherwise constituted market sensitive information,” the operator said in its response.
The company announced a new AU$200m (US$134m) debt facility agreement in September. The Star said this announcement was made without delay in alignment with ASX disclosure regulations.
The Star said it considered its existing arrangements to be adequate. It said: “The Star has always ensured, and will continue to ensure, that its personnel are aware of The Star’s Market Disclosure Policy and Code of Conduct and that its dealings with advisers and other third parties that involve price sensitive information include appropriate confidentiality obligations to ensure compliance with current rules.”
For the financial year 2023/24, The casino operator reported revenue declined 10 per cent in year-on-year terms from AU$1.86bn (US$1.26bn) to AU$1.67bn (US$1.13bn). The company attributed this to cost of living pressures, casino operating reforms and loss of market share. The company posted a net loss of AU$1.68m (US$1.14m). EBITDA (before significant items) declined 45 per cent to AU$175m (US$119m).
The Star Sydney revenue was AU$878m (US$597m), down 11 per cent year-on-year. EBITDA was AU$52m (US$35.3m), down 59 per cent. The Star Gold Coast revenue was AU$456m (US$309.1m), down 10 per cent, while EBITDA was AU$71m (US$48.2m), down 33 per cent. Treasury Brisbane revenue was down 8 per cent to AU$344m (US$233.9m), with EBITDA of AU$52m (US$35.3m), down 38 per cent.
NICC fines The Star and extends Sydney casino licence suspension
The New South Wales Independent Casino Commission (NICC) has extended the suspension on The Star Entertainment’s casino licence in the state. It has also fined the casino operator AU$15m (US$10m). Meanwhile, Nicholas Weeks will remain in place as the NICC-appointed manager until at least March 31, 2025, when the regulator will reassess The Star’s suitability to regain its casino licence.
The NICC has also required the company to submit additional financial and operational reports between now and March 2025. It also proposed more prescriptive requirements on the constitution of the board of directors and key management personnel.
According to NICC chief commissioner Philip Crawford, “Bell Two” identified continuing compliance failures at The Star. Crawford said: “Despite more prescriptive supervision that prevented the type of misconduct seen in the first inquiry, numerous shortcomings in governance, regulatory compliance, technology and risk man
