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Profit excluding significant items such as charges for regulatory and legal costs was $15.9 million, which beat analyst expectations of $13 million. This outperformance drove the group’s share price up by more than 7 per cent to 52¢. Star Entertainment shares have more than halved since this time last year following multiple regulatory and taxation hurdles, to the chagrin of investors.
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The swing back to profit followed a net loss after tax of $1.26 billion in the previous December half, which was marred by shareholder class actions and the suspension of the company’s Sydney casino licence. Sales fell 14.6 per cent to $865.7 million in the six months to December 31, The Star said in a statement to the ASX on Thursday morning.
Earnings before interest, tax and significant items, excluding those significant charges, slumped 48 per cent to $51.4 million over the half, 48 per cent lower than the prior period.
Cooke said the group has achieved milestones despite the many challenges over the past 18 months – including the approval of its remediation plan in Queensland and the resolution of the proposed doubling of its tax rate in NSW – and said the inquiry by the NSW Independent Casino Commission would be a chance for the company to demonstrate it was capable of regaining its coveted casino licence in NSW.
“Despite the challenges of the past 18 months, as a team, we are progressing and continuing to work hard to do all we can possibly can to restore our suitability and earn back trust,” Cooke said.
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Barrenjoey equity analyst Matt Ryan told clients The Star’s earnings before interest, taxes, depreciation, and amortisation was 9 per cent below the investment bank’s forecast and 16 per cent below consensus expectations. Barrenjoey has an overweight rating on the stock and expects seasonally lower performance for the remainder of this financial year.
The casino operator had expected the worst of is financial turmoil to be over when it posted a whopping $4 billion loss – driven by a writedown in the value of its three casinos in Sydney, the Gold Coast and Brisbane – last year. The loss followed two damning state inquiries, four shareholder class actions, looming multimillion-dollar fines and two revoked state casino licences.
But what the NSW regulator decides to do after the 15-week second inquiry could ultimately lead to the closure of its Pyrmont casino.
Philip Crawford, the chief commissioner of the NSW Independent Casino Commission, ordered a fresh inquiry into Star Sydney last week, two years after an earlier inquiry found anti-money laundering and counter-terrorism failings. The new inquiry will again be headed by Adam Bell, SC, and will focus on the casino’s culture since it was disgraced in 2022.
Star Sydney’s licence has been suspended since 2022. The casino has been operating under special manager Nicholas Weeks, whose term has been extended three times because the regulator is not satisfied by the casino business’s remediation process.
The Pyrmont casino may be shut down entirely if Bell finds The Star has failed to meaningfully progress since his last report.
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