Star Entertainment Group reported an EBITDA loss of AU$8.5 million for October, bringing its total EBITDA loss for the first four months of the financial year to AU$27 million. The company’s CEO warned that negative cash flow is expected to be a regular occurrence in the short term.
Steve McCann, who was appointed in June to lead Star’s recovery, addressed shareholders at the Annual General Meeting on Thursday, stating that returning to stability would take time due to lower business volumes and significantly higher compliance costs.
He stated, “The business will encounter various challenges in the coming years as we navigate this transformation. We are at a crucial juncture in terms of liquidity, and the business is currently facing significant negative cash flow on a monthly basis.”
McCann emphasized the need for time to implement the reset and remediation plan, which aims to return the business to profitability. He called for continued support from shareholders, lenders, and other stakeholders.
He also pointed out that the costs associated with Star’s transformation, including external advice and assistance, remain high. Additionally, changes in business practices and a tough consumer environment, especially in the premium player segment, are having a negative impact on gaming revenue.
One such change is the mandatory carded play at The Star Sydney, introduced on August 19, 2024, which has caused a 15.5% drop in daily average revenue compared to the four weeks before the change.
McCann stressed that to secure ongoing funding and rebuild shareholder value, Star must improve its trading performance while progressing with its cultural transformation and regaining the trust of regulators and communities. He acknowledged that this process will take time and effort.
Star has secured an AU$100 million debt facility with lenders, with a second AU$100 million available if the company raises another AU$150 million in subordinated capital and gains regulatory approvals for its strategic plan.
As part of its transformation, McCann outlined a shift from a centralized group-led model to a property-led structure, where strategic, financial, risk and operational decisions will be managed by property CEOs. These CEOs will lead the restructure and have greater control over their operations, with each property overseen by an independent State-based board. The new model is designed to improve operational efficiency, reduce costs, and better respond to regulatory feedback.
Star recently reported an 18% year-on-year drop in revenue to AU$351 million (US$230 million) and an AU$18 million EBITDA loss in Q3 2024.
