The ongoing impact of COVID on gambling looks to be over for casinos operator Star Entertainment Group (ASX: SGR) which has reported their first profitable half-year since the start of the pandemic as Aussies have been quick to return to the pokies as soon as legally possible.
For H2 FY22, Star Entertainment reported normalised net profit after tax of $42 million. This was a substantial reversal on the $74 million loss from H1 FY22, but wasn’t quite enough to inflect the full year loss of $32 million where the first half was impacted by lockdowns.
Nonetheless, it is a huge turnaround in terms of timing for Star Entertainment which has been the subject of regulatory scrutiny for both their casino operations and anti-money laundering which have seen mass turnover at the Board and Executive levels. To steady the business, there has also been changes in their operating model which have seen the closure of all their international marketing offices and severance of partnerships with junket operators as part of the Renewal Program to win back the trust of stakeholders.
While their casino operations will continue to be the core of their profitability, the changes have meant that non-gaming revenue, such as hotel and hospitality, saw a 22% increase for the year in Sydney and 69% in Gold Coast.
Gross revenue for the Group across FY22 was $1.53 billion which was a 2% increase on the previous year, but this accounted for 102 days of operating restrictions at The Star Sydney and 11 days at The Star Gold Coast.
“COVID-19 related disruptions and regulatory reviews have presented significant challenges. I would like to acknowledge the commitment of our 8,000 team members and express my appreciation for their tireless efforts,” said Star Entertainment Interim Chairman, Ben Heap.
“The underlying strength of the business has enabled a strong rebound post COVID-related property shutdowns and operating restrictions. The quality of the business also provided opportunity to attract high quality senior executives to drive future change and growth.”
The bottom line was impacted by a 7% increase in operating costs to $482 million with Star citing increased labour expenses. It was also the first full year without any JobKeeper payment assistance where Star was handed $62.4m in FY20 and $94.9m in FY21.
Included in Star’s executive leadership overhaul is the appointment of Robbie Cooke as Managing Director and CEO who brings a strong background in payments regulation as the current Managing Director of Tyro Payments (ASX: TYR).
“Robbie is well placed to lead The Star and restore confidence in the organisation. He has the expertise and experience to guide the company through its critical Renewal Program, a body of work already underway that will deliver a number of near and medium-term initiatives focussed on governance, culture, training, and risk,” added Heaps.
“The Renewal Program is integral to our commitment to earn the confidence and trust of our stakeholders. We are taking action across the business, improving our systems and controls, as we build a safer and stronger business.”
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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