Star Entertainment Group Limited · ASX:SGR
Star Entertainment — Investor Presentation (September 2024)
45 slides from Star Entertainment's investor presentation, Sep 26, 2024
Slide 1: FY24 Results Presentation & Update
FY24 RESULTS PRESENTATION & update 26 SEPTEMBER 2024 The Star Entertainment Group Limited ABN: 85 149 629 023
Slide 2: Disclaimer
DISCLAIMER This presentation (Presentation) contains summary information about the current activities of The Star Entertainment Group and its subsidiaries (TSEG or the Group). It should be read in conjunction with the Group’s other periodic and continuous disclosure announcements lodged with the ASX
Slide 3: Basis of Preparation
BASIS OF PREPARATION • Information in this presentation is provided as at the date of the presentation unless specified otherwise. It should be read in conjunction with The Star Entertainment Group Limited’s (TSEG, The Star or The Group) Appendix 4E and Preliminary Financial Report (unaudited) and f
Slide 4: Agenda
AGENDA 1. Business Update 2. FY24 Financial Results 3. Trading Update 4. Regulatory Update 5. Major Project Update 6. Appendices 4
Slide 5: Business Update - Financial performance
BUSINESS Update - Financial performance FY24 RESULTS • The Star’s FY24 EBITDA (before significant items) of $175 million was down ~45% from FY23, with performance deteriorating through the year - 2H FY24 EBITDA (before significant items) of $61 million was down 46% on the first half • FY24 statutory
Slide 6: Business Update - Near term events and liquidity
BUSINESS Update - Near term events and liquidity • On 30 August 2024, the New South Wales Independent Casino Commission (NICC) publicly released the Bell Two report • The Star notes that the Bell Two Report was issued to the NICC and that the NICC is presently “considering next steps” in relation to
Slide 7: Business Update - Initiatives in response
BUSINESS Update - Initiatives in response A RANGE OF INITIATIVES AND OTHER MEASURES HAVE BEEN IDENTIFIED AND ARE IN THE PROCESS OF BEING IMPLEMENTED TO IMPROVE BUSINESS PERFORMANCE AND ENHANCE THE STAR’S LIQUIDITY POSITION • In response to the operating environment, management has identified approx.
Slide 8: FY24 Financial Results
FY24 FINANCIAL RESULTS 8
Slide 9: FY24 Financial Overview
FY24 FINANCIAL OVERVIEW EBITDA (before significant items)1 NPAT (before significant items)1 Revenue FY24 $175m $12M $1,678m FY23 $317M FY23 $41M FY23 $1,868M EBITDA Margin NPAT (statutory) 10.4% ($1,685M) $344m FY23 17% FY23 ($2,435M) 8% vs FY23 EBIT (before significant items)1 Gaming Taxes & Levie
Slide 10: Group Profit and Loss
GROUP PROFIT AND LOSS FY24 FY23 Variance NORMALISED RESULTS $’million $’million % Group Profit & Loss ANALYSIS Domestic gaming revenue 1,336.5 1,514.0 (11.7%) • Group revenue declined 10% due to challenging trading conditions, which in part Non-gaming revenue 341.3 353.5 (3.5%) reflect cost of livin
Slide 11: Revenue by Property
REVENUE BY PROPERTY REVENUE HAS DETERIORATED ACROSS ALL PROPERTIES IN FY24 (VS FY23) PREDOMINANTLY DRIVEN BY A DECLINE IN GAMING REVENUE REVENUE ($M)1 The Star Sydney The Star Gold Coast Treasury Brisbane The Star Entertainment Group (10.2%) 1,013 6 541 (10.8%) 187 854 866 3 812 5 6 78 6 443 450 156
Slide 12: Normalised EBITDA by Property
NORMALISED EBITDA BY PROPERTY WHILE 1H FY24 TRENDED IN LINE WITH 2H FY23, THE DOWNTURN EXPERIENCED SINCE FEBRUARY SAW 2H FY24 EBITDA DECLINE $53 MILLION DOWN (46%) COMPARED TO 1H FY24 NORMALISED EBITDA ($M) (45.0%) 1H FY24 EBITDA vs. 2H FY24 EBITDA 317 • EBITDA has declined $53 million (46%) vs. 1H
Slide 13: The Star Sydney Results Overview
THE STAR SYDNEY RESULTS OVERVIEW NORMALISED RESULTS FY24 FY23 Variance REVENUE: $’million $’million % • Gaming revenue down 12% on pcp reflecting implementation of an uplifted Revenue controls, casino operation reforms, loss of market share and the macro economic environment EGMs 299.7 340.9 (12.1%)
Slide 14: The Star Gold Coast Results Overview
THE STAR GOLD COAST RESULTS OVERVIEW NORMALISED RESULTS FY24 FY23 Variance REVENUE: $’million $’million % • Gaming revenue down 14% on pcp reflecting implementation of an Revenue uplifted controls, casino operation reforms, loss of market share and the macro economic environment EGMs 203.7 233.0 (12
Slide 15: Treasury Brisbane Results Overview
TREASURY BRISBANE RESULTS OVERVIEW NORMALISED RESULTS FY24 FY23 Variance REVENUE: $’million $’million % • Gaming revenue down 8% on pcp reflecting implementation of an uplifted Revenue controls, casino operation reforms, loss of market share and the macro economic environment EGMs 176.2 196.6 (10.4%
Slide 16: FY24 - Monthly Operating Expenses
FY24 – Monthly OPERATING EXPENSEs WITH OPERATIONAL EXPENSES INCREASING IN 2H FY24, OPERATIONAL EFFICIENCY AND COSTS ARE A SIGNIFICANT ONGOING FOCUS OF THE GROUP OPERATING EXPENSE BASE OPERATING EXPENSE BASE FY24 MONTHLY OPERATING EXPENSE BASE • Operating expenses in FY24 were $3 million lower than F
Slide 17: Corporate Costs
Corporate COSTS Group Corporate Overhead Expenses ($m) • In FY24 The Star recorded $301 million of corporate costs +18% within its total operating expenses • The largest categories of Star’s corporate costs were: +19% • Risks and Controls - $95 million, 32% of corporate costs 301 • IT – $64 million,
Slide 18: FY24 - Group Balance Sheet
FY24 – GROUP BALANCE SHEET 30 Jun 2024 $’million 30 Jun 2023 $’million BALANCE SHEET ANALYSIS: Cash and cash equivalents 299.6 88.7 • Cash and cash equivalents increased following completion of capital raising Trade and other receivables 31.5 20.8 of $750 million in October 2023 and debt refinancing
Slide 19: Net Debt Bridge from 1 July 2023
Net debt BRIDGE from 1 July 2023 (NET Debt) / Net Cash Position1,2,3 Positive cashflow of $56 million in 1H FY24 excluding proceeds from capital raise, asset Negative cashflow of $141 million in 2H FY24 800 sales and payment of NSW + Qld fines 600 400 132 (34) 56 (80) nil (43) 171 200 (6) (43) 735 (
Slide 20: Group Capex Profile
GROUP CAPEX PROFILE MANAGEMENT ARE TARGETING MAINTENANCE CAPEX OF $80 MILLION FOR FY25, A REDUCTION ON THE AVERAGE CAPEX FROM FY22 TO FY24 OF $105 MILLION Remediation Capex Group FY24 Capex Group capex ($m) • FY24 capex of $76.4 million - significantly below historical Historical Capex FY14 TO FY25e
Slide 21: Group Debt Maturity Profile
Group DEBT MATURITY PROFILE REVISED DEBT PACKAGE In response the Group’s corporate lenders have executed a commitment letter for a new debt facility (of up to $200 million in two-tranches) which will become effective upon completion of long-form documentation and satisfaction of various conditions p
Slide 22: Trading Update
TRADING UPDATE 22 22
Slide 23: Trading Update
Trading update TRADING UPDATE Group results • July & August 2024 operating performance continued the downward trend experienced during 2H FY24 • Trading conditions were softer than seasonal expectations Monthly average Monthly actual - PGR performance has been in consistent decline since the beginni
Slide 24: Trading Update (cont'd)
Trading update (cont’d) Revenue ($m) – July & August 20241 The Star Sydney The Star Gold Coast Treasury Brisbane Group • All properties have experienced a substantial decline in EBITDA in July & August 2024 compared to the pcp, 143.8 143.1 134.8 reflecting the low revenue and elevated costs 121.8 75
Slide 25: Revenue Initiatives
Revenue Initiatives IN RESPONSE TO CHANGES IN THE COMPETITIVE ENVIRONMENT, THE STAR IS RE-FOCUSED ON IMPROVING REVENUE. MANAGEMENT HAVE IDENTIFIED OPPORTUNITIES TO ENHANCE THE CUSTOMER EXPERIENCE WITH AN AIM TO IMPROVE MARKET SHARE AND DRIVE REVENUE GROWTH initiatives • Improved cross selling and ac
Slide 26: Cost Reduction Initiatives
Cost reduction initiatives IN RESPONSE TO THE OPERATING ENVIRONMENT, MANAGEMENT HAS IDENTIFIED APPROX. $100 MILLION OF ANNUALISED COST SAVINGS TARGETING IMPLEMENTATION BY MARCH 2025. FURTHER WORK IS BEING UNDERTAKEN TO IDENTIFY ADDITIONAL COST SAVINGS initiatives 350 FTE headcount reduction Hiring f
Slide 27: Non-core Asset Sales
non-core asset sales THE STAR CONTINUES TO REVIEW ITS PORTFOLIO AND CONSIDER THE SALE OF NON-CORE ASSETS SHERATON GRAND • Successfully concluded the sale in November 2023 • Recognised proceeds of $56 million on sale MIRAGE GOLD COAST • Treasury Treasury Casino: as announced on 6 September 2024, agre
Slide 28: Regulatory Update
Regulatory UPDATE 28 28
Slide 29: Bell Two Report
Bell Two Report • On 1 August 2024, the NSW Independent Casino Commission (NICC) advised that its request to extend the term of the appointment of the Manager of The Star Sydney Casino by regulation to 31 March 2025 had been approved. In addition, on 30 August 2024, the NICC provided to The Star and
Slide 30: Regulatory & Major Claims Update
REGULATORY & major claims UPDATE ▪ Work is currently underway on an amended remediation plan. The Star is engaging with regulators and the Manager/Special Manager/External Adviser to obtain feedback ▪ The amended remediation plan will result in changes to forecast completion dates and will result in
Slide 31: Regulatory & Major Claims Update
REGULATORY & major claims UPDATE ▪ On 30 November 2022 AUSTRAC commenced civil penalty proceedings in relation to alleged contraventions by The Star of its obligations under the AML/ CTL Financing Act ▪ The Star filed a Statement of Admissions and Factual Contentions (SAFC) on 10 November 2023 AUSTR
Slide 32: Major Project Update
Major Project Update 32 32
Slide 33: The Star Brisbane
The STAR Brisbane THE STAR BRISBANE IS 100% OWNED BY DESTINATION BRISBANE CONSORTIUM (DBC), COMPRISING THE STAR (50%), CHOW TAI FOOK (25%) AND FAR EAST CONSORTIUM (25%) The Operation of THE STAR Brisbane • The Queen’s Wharf Brisbane project was granted its casino licence at 12.01am on 29 August 2024
Slide 34: JV Equity Contributions to DBC
JV equity CONTRIBUTIONS to DBC IN FY24, THE STAR MADE EQUITY CONTRIBUTIONS OF $75 MILLION IN RELATED TO THE DBC JV. FORECAST EQUITY CONTRIBUTIONS INTO THE DBC JV HAVE BEEN REVISED, WHILST THE TIMING OF PAYMENTS HAS SHIFTED REFLECTING TIMING OF CONSTRUCTION AND PRE-OPENING COSTS Forecast JV equity co
Slide 35: Destination Brisbane Consortium JV Debt
Destination Brisbane consortium JV debt THE STAR'S PROPORTIONATE SHARE OF DBC DEBT WAS C.$740M AT 30 JUNE 2024. Destination Brisbane Consortium (DBC) (50% owned by The Star): • Term debt facilities: - $1.48 billion outstanding as at 30 June 2024 (50% to the Star) - Maturity in December 2025 - Schedu
Slide 36: Major Project Update - Gold Coast Resort
MAJOR PROJECT UPDATE – GOLD COAST RESORT A $400 MILLION, 65-STOREY MIXED-USE DEVELOPMENT (‘TOWER 2’) IS BEING DELIVERED BY THE DESTINATION GOLD COAST CONSORTIUM (DGCC) • The JV development across towers 1 and 2 comprises The Star (33% interest in DGCC) and its Hong Kong-based partners, Chow Tai Fook
Slide 37: JV Equity Contributions to DGCC
JV equity CONTRIBUTIONS to DGCC IN FY24, THE STAR MADE EQUITY CONTRIBUTIONS OF $10 MILLION TO THE DGCC JV. Forecast JV equity contributions (The STAR’s SHARE) Total remaining $ million FY24 FY25 FY26+ (FY25 onwards) DGCC JV contributions $10m Nil1 Nil Nil Total DGCC JV equity contributions (Star’s $
Slide 38: Destination Gold Coast Consortium JV Debt
Destination gold coast consortium JV debt DGCC DEBT MATURITY PROFILE AT 30 JUNE 2024 ($M) - THE STAR’S SHARE Destination Gold Coast Consortium (DGCC) (JV 33.33% owned by The Star): • $289 million total debt, $135 million drawn (33.33% The Star): - Tower 1: $60 million facility, fully drawn. Maturity
Slide 39: Appendices
APPENDICES 39 39
Slide 40: A Portfolio of Premium Properties
A PORTFOLIO OF PREMIUM PROPERTIES Phased opening from Casino permanently closed on 29 August 2024 25 August 2024 The Star Sydney The Star Gold Coast The STAR Brisbane Treasury Brisbane Year opened 1997 1985 Phase 1: 29 August 2024 1995 Casino closed 25 August 2024. Hotel and car park remain operatio
Slide 41: Corporate Allocation
Corporate Allocation Property normalised results ($m) The Star Sydney FY22 FY23 FY24 Net Revenue 775.3 984.0 877.5 Gaming taxes and levies ( 211.0) ( 271.3) ( 247.2) • The group operates a centralised corporate Operating expenses (excl Corporate) ( 354.3) ( 432.3) ( 397.8) function and allocates cor
Slide 42: Appendix - Normalised Results by Property
APPENDIX - NORMALISED RESULTS BY PROPERTY The Star Sydney The Star Gold Coast Treasury Brisbane Group FY24 FY23 Variance FY24 FY23 Variance FY24 FY23 Variance FY24 FY23 Variance EGMs 299.7 340.9 (12.1%) 203.7 233.0 (12.6%) 176.2 196.6 (10.4%) 679.6 770.5 (11.8%) Domestic Tables 435.3 497.8 (12.6%) 8
Slide 43: Appendix - Operational Metrics by Property
APPENDIX - OPERATIONAL METRICS BY PROPERTY The Star Sydney The Star Gold Coast Treasury Brisbane FY24 FY23 Variance FY24 FY23 Variance FY24 FY23 Variance EGMs Revenue ($m) 300 341 (12.1%) 204 233 (12.6%) 176 197 (10.4%) NMR/machine/day ($) 548 627 (12.6%) 385 447 (13.9%) 359 397 (9.8%) MTGMs Revenue
Slide 44: Appendix - Glossary of Terms
APPENDIX - GLOSSARY OF TERMS Term Definition AML/CTF Anti-Money Laundering and Counter-Terrorism Financing AUSTRAC Australian Transaction Reports and Analysis Centre CAGR Compound Annual Growth Rate Capital expenditure (capex) Unless otherwise stated, capital expenditure is presented on an accruals
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