Star Entertainment warns net loss could hit AUS$75m in H1

The business is also working to repay current and former staff that were underpaid over the past six years, something that is likely to cost the business $13.0m.

In a trading update, Star said statutory net loss for the six months to 31 December 2021 is set to amount to between $73.0m and $75.0m, compared to a net profit of $51.2m in the corresponding period in the previous year.

Statutory earnings before interest, tax, depreciation and amortisation (EBITDA) before significant items is forecast to be between $30.0m and $32.0m, both of which would be down from $233.2m in H1 of 2021.

Star said H1 earnings were materially impacted by Covid-19 related property shutdowns across Australia, as well as operating restrictions and border closures also caused by the pandemic.

This was accelerated due to the prevalence of the Omicron variant of Covid-19 towards the end of the half, which impacted trading results in December and January.

However, Omicron’s impact has since eased, and trading continues to progressively improve.

The operator is scheduled to publish its full results for the first half on 17 February.

Meanwhile, Star certain current and former staff were have been underpaid, launching a process to reimburse the affected workers.

The issue was identified through a six-year retrospective wage review of salaried staff. In some cases, Star said team members were found to not be “better off overall” as their annual salaries were not sufficient to compensate the staff for their equivalent award entitlements such as overtime and penalty rates.

During the period, the number of staff on annualised salaries underpinned by an award was approximately 2,200. As such Star plans to take a provision of approximately $13.0m in its H1 FY2022 accounts for the expected cost of remediation. 

This provision includes estimated back payments, interest and superannuation contributions, where applicable. 

The entire Star workforce was paid approximately $3.3bn across the same six-year period.

Star said it had informed the Fair Work Ombudsman and the United Workers Union of the situation and also noted that it had improved its processes, systems and training, as well as put in place a plan in place to ensure salaried workers’ pay is correct moving forward.

“We apologise to any team member impacted by the payment shortfall and we are committed to doing the right thing by acting transparently,” Star managing director and chief executive Matt Bekier said. “Our priority is to address this issue and to ensure that it doesn’t happen again.”