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- Statutory EBITDA: $175 million for FY24, down 45% from FY23.
- Statutory Loss: $1.69 billion, including $1.44 billion of impairments and other significant items.
- Impairments: $337 million for Sydney, $274 million for the Gold Coast, and $819 million for Brisbane.
- Second Half EBITDA: $61 million, down 46% from the first half.
- Monthly Run Rate EBITDA: Declined from $19 million (July '23 - January '24) to $4.6 million in the last five months.
- Available Cash Balance: $130 million as of August 31.
- Operating Expenses: Increased from $91 million per month in the first half of FY24 to $99 million in July.
- Corporate Costs: $301 million in FY24, up 40% from $215 million in FY22.
- Cost Savings Target (NYSE:TGT): Over $100 million of annualized cost savings identified, to be delivered by March 2025.
- Maintenance CapEx: Reduced to $80 million.
- Asset Sales: $300 million of additional assets identified for sale.
- New Debt Facility: Up to $200 million in two tranches.
- Remediation Spend: $360 million total, with about 50% spent to date.
- Outstanding Equity Contributions for Queen's Wharf: $358 million, with $174 million in FY25 and $183 million in FY26 and beyond.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Star Entertainment Group Ltd (EHGRF) has secured a new debt facility agreement, providing short-term liquidity and enabling the company to resume trading.
- The Star Brisbane has opened and received positive feedback, with initial revenues substantially higher than Treasury Brisbane.
- The company has identified over $100 million in annualized cost savings, with plans to implement these by March 2025.
- Non-gaming revenue has shown an upward trend, indicating potential for diversification and growth in this segment.
- The company is actively pursuing asset sales, including non-core assets, to improve liquidity, with an estimated $300 million in additional assets identified for sale.
- Statutory EBITDA for FY24 was $175 million, down 45% from the previous year, indicating significant financial challenges.
- The company reported a statutory loss of $1.69 billion, including $1.44 billion in impairments and other significant items.
- The performance of the business has continued to deteriorate, with EBITDA for the second half of FY24 down 46% from the first half.
- Operating expenses have increased, driven by remediation and transformation activities, and are expected to remain elevated.
- The introduction of mandatory carded play and reduced cash limits has negatively impacted revenue, with a 10.7% decline in the first four weeks of implementation.
A: Steve McCann, Group CEO and Managing Director, explained that the focus is on short-term liquidity runway, driven by discussions with lenders to secure liquidity through late calendar '25. The plan includes obtaining covenant relief and a $150 million sub-debt raise, which could have an equity component. The goal is to ensure liquidity covers various scenarios, including potential impacts from mandatory carded play.
Q: Is the decline in EBITDA driven by the rollout of mandatory carded play or other factors?
A: McCann noted that the initial impact of mandatory carded play saw a 10.7% revenue decline in the first four weeks. However, ongoing weakness is also due to the current economic environment, state of the business, and competitive pressures. The full rollout of mandatory carded play across the Sydney gaming floor by October 19 could further impact EBITDA.
Q: Can you provide details on the cost-out exercise and the areas where headcount reductions will occur?
A: McCann mentioned that the cost-out exercise involves reducing over 1,000 corporate headcount, with reductions varying by area. Specific areas were not disclosed to protect employee privacy, but the focus is on achieving significant cost savings while maintaining essential functions like Risk and Control.
Q: Why release unaudited results today ahead of the audited financial statements due in a few days?
A: Neale O'Connell, Interim Group CFO, explained that releasing unaudited results was necessary to resume trading and finalize the debt package. The audited financial statements will be released by September 30.
Q: What non-core assets are being considered for sale to improve liquidity?
A: McCann identified several non-core assets, including the Treasury hotel and carpark, The Darling hotels in Sydney and the Gold Coast, and other assets like car parks and the Event Center in Sydney. The goal is to sell assets without materially impacting revenue, subject to regulatory approvals.
Q: Is the step-up in August revenue and operating expenses due to seasonality or other factors?
A: McCann and O'Connell clarified that the increase in August was driven by non-gaming revenue from events, which also led to higher expenses. Operating expenses continue to grow, reflecting the challenging environment.
These highlights provide a comprehensive overview of the key points discussed during The Star Entertainment Group Ltd's FY24 earnings call, focusing on liquidity, cost management, and strategic asset sales.For the complete transcript of the earnings call, please refer to the full earnings call transcript.