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Star delays H1 results announcement amid second Bell inquiry

| By Robert Fletcher
Star Entertainment is to delay posting its H1 results after the New South Wales Independent Casino Commission (NICC) confirmed a second inquiry into the casino operator.
Paf 2023

Announced yesterday (19 February), the inquiry will run for 15 weeks, with a final report due by 31 May. Adam Bell SC, who undertook the first Bell report, will lead the inquiry, looking at how Star has implemented recommendations from the first inquiry.

In the wake of the announcement, Star requested a trading halt on the Australian Securities Exchange (ASX). 

The operator has now also confirmed it will delay reporting its results for the first half of its 2024 financial year. Star had been due to report the results tomorrow (21 February) but this will now be pushed back. The operator says it will provide an updated release date in the coming days.

Star: Inquiry will provide an objective forum

Reacting to the inquiry, Star says it welcomes the decision from the NICC. Star says that the inquiry will offer an “objective forum” to demonstrate it can return to licence suitability in NSW. It was declared unsuitable to hold a casino licence in the state in September 2022.

“Star intends to participate in the inquiry in an open, transparent and facilitative manner,” it said. “Further, while noting the inquiry is expected to run over the next 15 weeks, a critical period for Star in executing against its multi-year remediation plan, Star will dedicate all necessary resources to the inquiry to ensure it meets all its requirements and expectations.

“Finally, Star notes under the inquiry’s terms of reference it is considering the suitability of Star Sydney to ‘be concerned in or associated with the management and operation of Star casino in Sydney’.” 

In addition, Star referenced how the NICC is giving it “every chance” to demonstrate it has capacity to achieve suitability. Star says it will provide all the information necessary for the regulator to decide its future in NSW.

“Star appreciates the opportunity to demonstrate it has the ability to regain suitability,” the operator said. “We will continue to do all in our power to work cooperatively with regulators including the NICC and its appointed manager. 

“Star remains committed to and focused on executing its remediation plan and earning back the trust of the community.”

Second ring of the Bell for Star

As to what the second Bell report will cover, there are several key focus areas.

As well as examining the fallout of the first report, the second inquiry will look at the culture at Star. This includes risk management culture and management and reporting lines.

The inquiry will also consider whether Star has been able to secure the financial resources needed to support Star Casino.

Adam Bell SC’s first report outlined anti-money laundering and social responsibility failings at Star Sydney stretching back years. One year later, a report into Star Sydney’s progress found the casino had implemented 22 of 30 recommended measures from the initial report.

The report ultimately led to it being declared unsuitable for a licence in NSW. However, Star also faces uncertainty in other states, including a similar suspension in Queensland, four class actions and a potential AUSTRAC fine. Most of these relate to connections to Chinese junket operators.

Impact of regulatory decisions on financial performance

Understandably, regulatory action has impacted Star’s financial performance. For Star’s 2023 financial year, it posted a net loss of AU$2.4bn (£1.25bn/€1.46bn/US$1.57bn).

At the time, Star noted $2.8bn of outgoings labelled “significant items”. These related to the series of fines the operator faced. 

They include a $2.2bn non-cash impairment for Sydney, Gold Coast and Treasury Brisbane goodwill and property assets. In addition, it noted regulatory and legal costs of $595m, debt restructuring costs of $54m and redundancy costs of $16m.

Those costs, minus a positive and growing EBITDA of AU$317m, meant an after-tax loss of AU$2.4bn.

The impact of the decisions on Star’s performance in the most recent H1 will be stated in the delayed results announcement.

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