The Star Entertainment Returns To Profit In 2020-2021

The Star Entertainment, one of the biggest hotel and casino operators in Australia, has reported a profit for the full 2020-2021 fiscal year, despite the continued negative effects of the novel coronavirus pandemic.

However, those effects are evident when looking at the company’s revenue. The Australian group has reported a revenue of 1.55 billion dollars in the 2020-2021 fiscal year, a drop of 10.9 percent compared to 2019-2020. However, operating expenditure was also cut by 10.5% to 740.0 million dollars. Taking that into account, earnings before interest, tax depreciation and amortisation (EBITDA) amounted to 426.7 million dollars, representing an increase of 51.3 percent year-on-year.

The biggest chunk of that revenue came from domestic gaming, which brought the company 1.36 billion Australian dollars. That figure represents an increase of 9.6 percent compared to the previous year. However, revenue from international VIP customers dropped by 96.7 percent due to travel restrictions.

Moreover, revenue from non-gaming activities decreased by 16.4 percent to 183.8 million dollars. After taking player rebates and commissions into account, the company’s net revenue was 1.54 billion dollars, up 3.9 percent year-on-year.

The company’s Sydney location generated 828.2 million Australian dollars in revenue, 29.1 percent less than what it made in the previous year. Most of the revenue from the Sydney casino came from domestic table games, which brought in 458.1 million dollars, while slots generated 277.7 million dollars.

The operator’s Gold Coast venue brought in 381.3 million dollars, up by 16.3 percent compared to 2019-2020. At this location slots generated the most revenue, bringing in 203.9 million dollars while domestic table games brought in just 100.8 million dollars.

The company’s Brisbane location generated revenue of 347.6 million dollars, a rise of 38.1 percent compared to the previous year. Slots were more popular here as well, bringing in 173.8 million dollars, while domestic table games generated 149.5 million Australian dollars.

In May 2021, The Star Entertainment Group made a proposal to merge with Crown Resorts, the biggest land-based casino operator in Australia. The offer consisted in a nil-premium share exchange ratio of 2.68 shares in The Star per Crown share. The proposal also came with a cash alternative worth 12.50 dollars per Crown Resorts share, for up to 25 percent of the company’s issued share capital.

However, at the end of July the proposal was withdrawn. The withdrawal came shortly after the counsel assisting the Royal Commission into Crown Melbourne had asked the Commissioner to find the company unsuitable to retain its casino license in the state of Victoria.

The merger between the two gaming giants could have created a very powerful new entity, with Crown shareholders set to own 59% of the combined business and Star shareholders the remaining 41%.

Source: “Full Year Results to 30 June 2021“. Star Entertainment Group. August 19, 2021.