Australian casino operator Star Entertainment Group has put a comprehensive loss of Aus$85.4m (£46.6m/€51.7m/US$61.2m) for its 2020 financial year down to the disruption caused by the novel coronavirus (Covid-19) pandemic to its land-based venues.
Statutory net revenue for the 12 months to 30 June 2020 amounted to $1.49bn, down 31.1% from $2.16bn in the operator’s previous financial year.
Like many other casino operators around the world, Star was impacted by Covid-19, which forced it to shutter its Sydney and Queensland casinos from 23 March. Prior to this point, Star said, it had been trading ahead of the prior year.
Though its Sydney casino reopened from 1 June, towards the end of its financial year, the venue is still subject to a number of restrictions, including occupancy limits, as Australia continues its efforts to prevent a second wave of Covid-19. Its Queensland properties – in Brisbane and the Gold Coast – did not reopen until 3 July, however.
The pandemic's disruption has since continued into the first quarter of its 2021 fiscal year, with the Sydney casino limited to a maximum of 300 patrons from 24 July.
Given the affect the closures had on revenue in the period, Star took a number of steps to help mitigate the impact of Covid-19 on its bottom line. These included placing staff on furlough, securing new funding and reducing operating spend in the period of closure.
Employment costs were down 24.9% to $529.7m, while property costs also fell 20.4% to $64.9m, costs of sales 21.4% to $74.7m, and advertising and promotion costs 22.8% to $82.8m.
Other expenses increased 64.9% to $192.1m and depreciation, amortisation and impairment costs climbed 12.9% to $232.3m, but government taxes and levies were 30.6% lower at $377.3m.
This resulted in a $77.2m loss before income and tax, compared to a profit of $314.0m at the same point last year. Net finance costs totalling $52.2m meant loss before tax stood at $129.4m, down from a $278.7m profit in FY 2019.
Star received $34.8m in tax benefits and also noted an additional $9.2m related to of change in fair value of cash flow hedges taken to equity, but still posted a comprehensive loss of $85.4m, compared to a $192.6m profit last year.
Commenting on the results, managing director and chief executive Matt Bekier said the execution of the operator’s long-standing growth strategy continued to plan over FY2020, despite the impact of Covid-19.
“Comprehensive actions to mitigate the impact of Covid-19 were implemented, safeguarding staff and customers, securing additional funding, and preserving cash,” he said.
“The Star’s business is fundamentally strong, evidenced by the step up in earnings growth from 1H FY2020 into early 2H FY2020. The long-term value uplift from investments in our network of integrated resorts and continuing operational improvements to drive visitation and earnings remain substantial.”
Star also published certain normalised results for the financial year, breaking down the performances of its properties across Australia.
Normalised results, Star said, reflect the underlying performance of the business, as they remove the inherent win rate volatility of the international VIP rebate business. The results are adjusted using an average win rate of 1.35% on actual turnover, taxes and revenue share commissions – all before significant items.
Using this methodology, normalised gross revenue amounted to $1.82bn, while net revenue came in at $1.53bn.
Gross revenue from Star’s operations in Sydney stood at $1.18bn, with domestic revenue accounting for $901m of this total, and VIP player revenue $275m.
In Queensland, namely the Brisbane and Gold Coast properties, gross revenue for the year was $790m, with domestic revenue at $553m and VIP revenue $235m.
Normalised earnings before interest and tax stood at $285m, while net profit after tax and equity accounted investments reached $176m for the year.