Star Entertainment : Appendix 4D & 2022 Half-Year Financial Report

ASX Announcement

For personal use only

17 February 2022

APPENDIX 4D & 2022 HALF-YEAR FINANCIAL REPORT

The Star Entertainment Group Limited (ASX code: SGR) (The Star) provides the following documents in accordance with ASX Listing Rule 4.2A:

1. Appendix 4D;
2. Directors' Report and Financial Report for the half-year ended 31 December 2021.

Dividend Reinvestment Plan

The Star's Dividend Reinvestment Plan remains suspended as no interim dividend has been declared.

Authorised by:

The Board of Directors

For more information contact:

Financial analysts	Harry Theodore	Tel: + 61 2 9657 8040
	Chief Financial Officer
	Mark Wilson	Tel: + 61 407 145 501
	General Manager Business Development and Investor Relations
Media	Peter Jenkins	Tel: + 61 439 015 292
	Group Executive External Affairs

STARENTERTAINMENTGROUP.COM.AU T + 61 7 3228 0000

THE STAR ENTERTAINMENT GROUP LTD ABN 85 149 629 023

Level 3, 159 William Street, Brisbane QLD 4000

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Current period

Previous

corresponding period

Appendix 4D

Financial Report

for the half year ended 31 December 2021

1. Results for announcement to the market

(all comparisons to the half year ended 31 December 2020)

The Appendix 4D should be read in conjunction with The Star Entertainment Group Limited's audited Directors' Report and Financial Report for the year ended 30 June 2021 lodged with the Australian Securities Exchange (ASX) on 19 August 2021.

	Results in accordance with Australian Accounting Standards			Current period	% change
					$m
	Reve ue from ordinary activities				577.1	(22.2%)
	L ss from ordinary activities after tax attributable to members of the parent			(74.2)	(249.3%)
	Net l ss after tax for the period attributable to members of the parent			(74.2)	(249.3%)
only
		Current Period			Current Period	% change
		Normalised 1	% change		Statutory 2
		$m			$m
	R v nue	575.8	(21.5%)		577.1	(22.2%)
	Earnings before interest, tax, depreciation and	29.4	(87.0%)		30.7	(86.8%)
	amorti ation
	Depreciation and amortisation	(103.1)	(2.6%)		(103.1)	(2.6%)
	Earnings before interest, tax and significant items	(73.7)	N.M. 4		(72.4)	N.M. 4
use
	Share of associates' profits	(6.6)	407.7%		(6.6)	407.7%
	Net interest expense	(22.9)	(14.9%)		(22.9)	(14.9%)
	Significant items (net of tax) 3	N/A	-		(1.4)	(92.1%)
	Income tax expense	29.5	N.M. 4		29.1	N.M. 4
	Net profit after tax	(73.7)	N.M. 4		(74.2)	N.M. 4

1	Normalised results reflect the underlying performance of the business as they remove the inherent win rate volatility of the International VIP Rebate business. Normalised
	results are adjusted using an average win rate of 1.35% on actual turnover, taxes and revenue share commissions. It does not include adjustments to doubtful debts.
	Normalised earnings exclude significant items.
2	Statutory results disclose revenues and expenses at actual win rates and include significant items.
3	Significant items include one-offCOVID-19 related expenditure, accounting for software change, business interruption and Crown merger costs, disposal of jet and
	dispute settlement.
4	Movement not meaningful.
personal

2. Dividend information

Int rim fully franked dividend declared (amount per share)1

Record Date

Date Payable

1 No interim dividend was declared for the period ended 31 December 2021. In accordance with terms associated with the waiver of covenants at 30 June 2020 from debt providers, no further cash dividends will be paid until gearing, which represents the ratio of net debt to 12 month trailing statutory EBITDA, is below 2.5 times.

Dividend reinvestment plan

The key terms of The Star Entertainment Group Limited's dividend reinvestment plan (DRP) in operation for the interim dividend are:

	The last date for receipt of election notices for the dividend reinvestment plan is:		N/A
For3. Net tangible assets per share
Current period		Previous
			corresponding period
	Net tangible asset backing per ordinary share 1	$1.77		$1.81

1 Excludes Right-of-use assets.

Additional Appendix 4D disclosures and other significant information may be found in The Star Entertainment Group Limited's Directors' Report and Financial Report for the half year ended 31 December 2021, and the media release lodged with the ASX on 17 February 2022.

For personal use only

The Star Entertainment Group Limited

A.C.N. 149 629 023

ASX Code: SGR

and its controlled entities

Directors' Report and Financial Report for the half year ended 31 December 2021

For the half year ended 31 December 2021

For personal use only

Contents
Directors' Report................................................................................................................................................................	1
Auditor's Independence Declaration............................................................................................................................	5
Financial Report................................................................................................................................................................	6
Consolidated income statement...................................................................................................................................	6
Consolidated balance sheet.........................................................................................................................................	7
Consolidated statement of cash flows..........................................................................................................................	8
Consolidated statement of changes in equity...............................................................................................................	9
Notes to the financial statements................................................................................................................................	10
A	Key income statement disclosures..........................................................................................................................	10
B	Key balance sheet disclosures................................................................................................................................	13
C Commitments, contingencies and subsequent events............................................................................................	15
D	Group structure.......................................................................................................................................................	17
E	Accounting policies and corporate information.......................................................................................................	18
Directors' Declaration.......................................................................................................................................................	21
Independent Auditor's Report on the Half Year Financial Report.....................................................................................	22

Finance costs (excluding significant items) of $22.9 million are down 14.9% on pcp reflecting lower average drawn balances throughout the period.

Net loss after tax (NLAT) was $74.2 million, down 249.3%, including significant items of $1.4 million. Significant items include one-off COVID-19related expenditure, accounting for software changes, business interruption and Crown merger costs, partially offset by gain on disposal of the second Bombardier Jet and settlement of supplier disputes. Refer to note A5 for more details of the Group's significant items.

1

Depreciation and amortisation expense (excluding significant items) of $103.1 million was down 2.6% on the pcp primarily due to the disposal of the second Bombardier Jet. Capital expenditure was well below depreciation and amortisation expense in the period, which along with the asset impairments and write-downsat 30 June 2021, has contributed to the reduced asset base for depreciation.

Operating expenses (excluding significant items) of $400.6 million were up 23.6% on pcp. Excluding the impact of the $57.7 million JobKeeper benefit in the pcp, operating expenses are up 4.9%. This reflects investment in maintaining overall staffing levels and an operating footprint to position the business for the re-openingand increased costs due to staff shortages, staff absenteeism and other additional COVID-19related operating restrictions. Additional investment was also made into regulatory, compliance and responsible gambling functions, including costs associated with the ongoing AUSTRAC and ILGA reviews. Government taxes and levies of $145.8 million were down 20.8%, in line with the reduction in gaming revenue.

Net statutory revenue of $577.1 million was down 22.2% on the prior comparative period (pcp), primarily due to the aforementioned COVID-19closures and restrictions. Sydney performed strongly post re-openingon 11 October 2021, with revenue up 29% on pcp. Queensland had stable revenues when open despite the domestic and international border closures and COVID-19restrictions.

Group performance continued to be significantly impacted by COVID-19in the current reporting period. The Sydney property was closed from 26 June to 11 October 2021 while the Queensland properties were both closed for up to twelve days during the reporting period. Fluctuating spatial distancing requirements, domestic border closures and other COVID-19related health orders constrained domestic visitation. International border closures continue to substantially reduce the International VIP Rebate business. Overall, earnings before interest, tax, depreciation and amortisation (EBITDA) (excluding significant items) of $30.7 million was down 86.8% on the pcp. Normalised EBITDA of $29.4 million was down 87.0%. Statutory and normalised results for the current period are largely consistent given the limited International VIP Rebate business revenue.

3. Financial results and review of operations

The Group holds casino licences to operate its properties: The Star Sydney, expiring in 2093; The Star Gold Coast, perpetual licence; Treasury Brisbane, perpetual licence that expires in 2070. The Group owns Broadbeach Island on which The Star Gold Coast casino is located.

The Group operates The Star Sydney (Sydney), The Star Gold Coast (Gold Coast) and Treasury Brisbane (Brisbane). The Group also manages the Gold Coast Convention and Exhibition Centre on behalf of the Queensland Government and invests in a number of strategic joint ventures.

The principal activities of the Group are the management of integrated resorts with gaming, entertainment and hospitality services.

2. Principal activities

Richard Sheppard

Non-ExecutiveDirector

Sally Pitkin AO

Non-ExecutiveDirector

Katie Lahey AM

Non-ExecutiveDirector

Ben Heap

Non-ExecutiveDirector

Gerard Bradley AO

Non-ExecutiveDirector

Matt Bekier

Managing Director and Chief Executive Officer

John O'Neill AO

Chairman and Non-ExecutiveDirector

Directors

The names and titles of the Company's Directors in office during the half year ended 31 December 2021 and until the date of this report are set out below. Directors were in office for this entire period.

1. Directors

only The Directors of The Star Entertainment Group Limited (the Company) submit their report for the consolidated entity comprising the Company and its controlled entities (collectively referred to as the Group) in respect of the half year ended 31 December 2021.

For usepersonal

Directors' Report

For the half year ended 31 December 2021