Star Entertainment Posts $202.5 Million FY2022 Loss
A massive $202.5 million loss during the FY2022 capped off a terrible twelve months for Star Entertainment. The company’s financial records for FY2022 make miserable reading. It is unsurprising that shares in Star Entertainment are trading at their lowest value since August 2022, the height of the COVID-19 pandemic.
Net revenue from roulette games, casino games, and everything associated with staying at a Star Entertainment property weighed in at $1.527 billion for FY2022. This is a reduction from the $1.545 billion in 2021. Increased costs across the board resulted in the company posting a $202.5 million net loss after tax. Star Sydney suffered the largest drop in revenue. Star’s flagship property remained closed for several periods in 2022.
Employment costs soared from $501.7 million to $598.7 million in FY2022. That rise is not surprising because more staff were on the ground with the COVID-19-related restrictions easing. Star spent more on cost of sales, property costs, and $10.2 million more on advertising and promotions in FY2022 than FY2021. Overall, total operating costs increased 23.1% year on year.
Depreciation, amortisation, and impairment saw the largest cost increase. This figure tipped the scales at $243.8 million in 2021 but a staggering $598.7 million last year.
FY2022: A Year to Forget For Star Entertainment
Being found unsuitable to hold a casino licence hit Star Entertainment hard. The damning report seriously damaged Star’s reputation. Indeed, Star wrote off $162.5 million of goodwill in its FY2022 figures. Rubbing salt in the wounds is the fact the Bell review cost Star $17.4 million. In addition, making right the much-publicised underpayments to its staff cost $12.7 million.
A total lack of high roller casino games revenue from Chinese VIPs was a far from ideal scenario, too. Star ceased using controversial junket operators as part of promises it made following the Bell report. However, before the cessation of junkets, Chinese nationals were not permitted to leave China even under their own steam thanks to border closures COVID_19 outbreaks caused. The well-heeled VIPs usually spend fortunes playing casino games in addition to staying in the most expensive rooms and suites, and using all the property’s facilities.
There is a chance matters could grow worse for the stricken Star. The financial reports lists several possible penalties it could face following the Bell report. Star will endure further hits to its bottom line if any of the following are enforced.
- Cancellation or the suspension of the licence of The Star
- A penalty of up to $100 million
- Amendment of the terms and conditions of the licence
Acting CEO Resigns
Geoff Hogg handed in his resignation less than 24 hours before Star published the FY2022 financial report. Hogg was Acting Chief Executive Officer following Matt Bekier‘s resignation previously. Hogg stepped down from all other positions at Star.
“The Board has accepted his resignation. Mr Hogg’s final departure date is yet to be determined. In the meantime, he will work with the Board to transition his executive responsibilities in an orderly manner.”
“Mr Ben Heap will assume the role of Executive Chairman, on an interim basis, effective immediately and until the commencement of Mr Robbie Cooke as the incoming managing Director and Chief Executive Officer. Mr Heap as declined to be paid any additional remuneration while he is acting in the Executive Chairman role.”
Heap turning down extra wages while he is Executive Chairman seems honourable until one looks at his current package. Star paid Heap $251,970 for attending 41 meetings during FY2022. Heap also received 10,000 free shares. Hogg, who Heap replaces, took home $1,044,890. Star spend a ridiculous $5,854,086 on executive’s remuneration last year. In addition, it spent $2,034,505 on non-executive directors’ meetings attendances. Those are huge casino bonus figures during a time when Star is struggling.
