Star Entertainment's tax breaks won't stop its $2 billion revenue loss
Embattled Australian casino operator Star Entertainment scored a small victory recently by successfully avoiding a major tax increase. However, the company, which has been convicted of money laundering and other crimes across the country, failed to suppress the bad news, with its latest revenue report showing a loss of A$2.4 billion ($1.54 billion).
The loss in the year ended June 30 was mainly due to writedowns at all of the company's casinos. In response to investigations and penalties for breaches of anti-money laundering regulations, the company informed the Australian Securities Exchange that it had awarded A$2.17 billion (USD) to The Star Hotel Sydney, The Star Hotel Gold Coast and Brisbane Treasury. -USD) has depreciated by US$1.4 billion).
Additionally, Star announced a series of charges that will negatively impact its bottom line. That included A$595 million ($383.6 million) in legal fees, A$54 million ($34.8 million) in debt restructuring charges and A$16 million ($1 billion, $3 million) in redundancy charges.
It could be worse
The good news is that despite the losses, Star grew revenue during the fiscal year. Total profit rose 22% to A$1.86 billion ($1.2 billion), reflecting the recovery from the previous financial year and the impact of COVID-19.
In addition, Star also announced that EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 34% to A$317 million (US$204.37 million). This expansion is due to favorable conditions compared to the previous fiscal year and the impact of the pandemic on the gaming industry.
Despite the difficulties, the company continues to struggle, particularly with its efforts at the Sydney Star. Several factors have impacted the hotel's growth, including increased guest exclusions, operational constraints, competition from Crowne Plaza Sydney and declining customer spending.
Despite the obstacles, Sydney Star Hotel's revenue grew significantly by 26% to AU$984 million (US$634 million). The hotel's EBITDA grew 57% to A$127 million ($81.87 million).
In contrast, the Gold Coast Star has had a strong start to the year, driven by a resurgence in domestic tourism. However, this momentum has slowed as international travel gradually resumes. Revenue and EBITDA increased to AU$509 million and AU$107 million respectively (US$328.15 million and US$68.98 million respectively), up 20% year-on-year.
Brisbane's Treasury Casino reported total revenue of A$375 million ($241.76), up 15 per cent. Once the Star's new Queen's Wharf casino in Brisbane opens, expected early next year, the venue will no longer exist in its current form.
Pier New Legal Dispute
On Tuesday, Star announced that its joint venture to develop the Queen's Wharf complex had received a formal "request for arbitration". Multiplex Constructions Qld Pty Ltd, the main contractor on the project, is not satisfied with the progress of the development.
This latest legal issue is related to another challenge announced last week. The developer has rejected a claim for damages worth nearly A$360 million ($231.7 million) against him over delays to the project. Separately, the company announced it was seeking A$420 million ($270.77 million) from the Star consortium to cover costs incurred due to delays.
The Brisbane Consortium was established in partnership with Star Group, Chow Tai Fook Enterprises Limited and Far East Development Limited. Star Group holds 50% of the shares, while Chow Tai Fook Enterprises Limited and Far East Development Limited each hold 25% of the shares. Multiplex's appeal against the judgment argued that the company should be compensated by the group and held that it was responsible for the delays.
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Source: www.casino.org
