Thank you for standing by and welcome to the Star Entertainment Group Limited first-half FY 2024 results conference call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Robbie Cooke, MD and CEO. Please go ahead.
Thank you. Good morning, welcome, and thanks for joining the Star's half-year results call for FY24. I'm here with Christina Katsibouba, our Group CFO, and Giovanni Rizzo, our Head of Investor Relations. The plan this morning is to spend about 30 minutes or so running through our results. We'll talk through the slide pack we released this morning, and then we'll take questions. So if that works for everybody, we'll get started, and if you could turn to slide 3 of the pack if you have it handy, please. We introduced our strategic North Star in the half. It redefines our vision as a team for the future of the Star.
With the damage to our social license caused by the acts of the past, it was the right time to clearly articulate our commitment to providing our entertainment, gaming, and leisure experiences in a safe, responsible, and ethical way, focusing our entire team on safer gambling and good business practices.
Our cultural renewal and uplift process is a multi-year journey, and at its heart is reaching a place where everybody on our team is empowered to speak up and challenge, operating with the mindset of should we, not just could we, in making day-to-day business and operational decisions. In a snapshot, this sums up the way the Star does and will continue to operate in the future. Turning to slide 4, despite the challenges of the past year, we continue to work hard to ensure we restore our suitability and earn back trust.
This has seen a number of key regulatory-related milestones being achieved in the half-year, including receiving in early August 2023 the final root cause analysis report from Deloitte, looking at the fundamental causes of the failings identified in the Gotterson and Bell reviews. This report was commissioned by the company in December 2022.
Receiving at the end of June last year, an extensive culture review report from the highly credentialed and respected The Ethics Centre. This report was also commissioned by the Star in December 2022. All recommendations made in this report are being implemented. Of note, we delivered at the beginning of October 2023 our detailed multi-year remediation plan to our New South Wales and Queensland regulators. Pleasingly, the Queensland Attorney General approved our plan in November 2023 under the provisions of the Queensland Casino Control Act.
I do highlight that there is no equivalent legislation requirement in New South Wales for the regulator to approve our remediation plan. Among other things, our plan will deliver the required uplift to our risk management. It will embed greater accountability and more robust governance across the entirety of the Star.
Our key focus this half is on delivering as many milestones from our remediation plan as rapidly as possible without compromising quality so as to return the Star to suitability in New South Wales and Queensland. Finally, on the 19th of February, we received notification from the New South Wales Independent Casino Commission that it had appointed Mr.
Adam Bell SC to preside over an inquiry to assist the Commission in forming a view as to what, if any, action it should take in respect of the Star Sydney's license prior to the end of the manager's appointment on 30 June 2024.
We welcome the second Bell inquiry, which will provide an objective forum in which to demonstrate our capability of returning to suitability with particular reference to the actions that we put in place since the first Bell report was issued. We will fully participate in the inquiry in an open, transparent, and facilitative manner as you would expect. Turning to slide five, as a team, we have, without reservation, acknowledged and accepted the failures of the past as identified in the Bell and Goddison reviews.
We fully appreciate the responsibilities involved in holding our licenses and have taken significant steps to transform our way of doing business, our leadership, and our culture. As a team, we are united in our commitment to earn back the trust and confidence of our community, including our regulators, governments, shareholders, team members, and guests.
We have made good progress in our transformation journey in the last 12 months, acknowledging there is still a lot to be done. Remediation, above all else, has been our number one priority in the half-year. To this end, I'd like to highlight a few of the significant steps we have taken. Firstly, and as I mentioned, our remediation plan was approved in Queensland on the 23rd of November 2023. This plan will track and hold us accountable to our multi-year program of key work streams and milestones.
We have expanded our AML team from 26 to 115 full-time employees. We've more than quadrupled our safer gambling team with 82 full-time employees up from 18. We have introduced expanded time-play management rules to increase guest engagement on safer gambling matters. We have introduced standardized exclusions and exclusion revocation processes across the group.
On the 30th of June 2023, we replaced all our Sydney internal controls, a project completed in eight months by around 150 of our team members and involving more than 540 unique controls. Alongside this, we've been working with the Queensland Office of Liquor and Gaming Regulation to uplift our Queensland internal controls. We've also commenced an organizational restructure designed to create a simpler framework with more decision-making power at a property level while maintaining appropriate oversight from a group level.
The entire board of The Star has been replaced with all current independent non-executive directors joining the board as directors since the 1st of July 2022. We continue to refresh our senior leadership team with seven new key external appointments on my team, including the recent appointments of our new CEO for Sydney, our new CEO for Brisbane, our new Group Chief Audit Officer, and our new Group General Counsel.
Turning to slide six, we've made significant progress in the half resolving a number of major business challenges. This has included entering into binding documentation to give effect to the amended duty arrangements agreed with the current New South Wales government. We appreciate the constructive engagement with New South Wales Treasury in this process and of our union, the United Workers' Union, in relation to the jobs guarantee.
These new arrangements will protect the jobs of our Sydney team and enable us to continue the important ongoing work required to restore the Star Sydney to suitability. Also, the Destination Brisbane Consortium, of which we own 50%, entered into a settlement deed with Multiplex to resolve a long-running dispute between Multiplex and DBC.
This was a significant and positive step, removing considerable uncertainty and distraction and enabling the project team to now focus solely on the delivery of the Queen's Wharf precinct, which is expected to have a phased opening from August this year. In September 2023, we successfully conducted a AUD 750 million equity raise and secured AUD 450 million in new debt facilities, comprising a AUD 150 million four-year revolving credit facility and a AUD 300 million four-year term loan.
This refinancing and further capital structure initiatives have provided The Star with a significantly strengthened balance sheet with increased financial flexibility to address known and expected liabilities over the medium term and help finance the ongoing needs of the business and expected joint venture contributions. Our next step maturity now occurs in FY28 under these new arrangements.
Two additional matters will continue into the second half of FY24 and beyond, namely our AUSTRAC proceedings. The Star filed a statement of admissions and factual contentions on the 10th of November 2023. AUSTRAC and The Star are continuing a dialogue to focus on narrowing the issues in dispute. We file further admissions on the 12th of February 2024, and the parties are due to file a joint list of issues requiring agreement, as well as a list of topics for expert evidence by the 8th of March.
Confidential settlement discussions are continuing with AUSTRAC. The second matter relates to our class actions. Four separate proceedings were commenced in the Supreme Court of Victoria alleging misleading and deceptive conduct in relation to disclosures made to the market. In September 2023, the court ruled that one plaintiff firm would be granted carriage of the proceedings. The other three proceedings were permanently stayed.
The Star will defend the class action with our defense due for filing on the 12th of March 2024. There is also the ASIC action against a number of former directors and executives. I stress that The Star is not a party to those proceedings. Turning now to slides 7 and 8, as we all know, the casino regulatory environment has changed following the findings of the Bell Inquiry and the Bell and Goddison reviews.
In New South Wales, carded play and cash limits have been legislated for implementation from August this year. We've already commenced a trial involving 51 poker machines and 8 gaming tables at The Star Sydney. In relation to our casino licenses, the term of the appointment of the manager for our Sydney casino was extended to 30 June 2024.
The New South Wales Independent Casino Commission has advised that it intends this to be the final extension of the manager's term, subject to the outcome of the second Bell Inquiry, which has been recently initiated, as I mentioned. In Queensland, the suspension of our Queensland casino license has been deferred until 31 May 2024 to give The Star an opportunity to further remediate its operations. The term of the appointment of the special manager in Queensland was extended by 12 months to the 8th of December 2024.
We've introduced Time-Play Management for our guests across all our properties in the half to increase guest engagement on Safer Gambling matters. As we'll discuss later in today's presentation, the required uplift in our controls has had an impact on our revenue at all three properties.
We also note the need for government to ensure policy initiatives in relation to safer gaming and financial crime that have driven the Carded Play and cash limit initiatives needs to be deployed statewide if the desired policy objectives are to be achieved. A shift of patronage from the casinos to pubs and clubs would be a policy failure. Neutrality in operating conditions within Queensland and New South Wales is essential.
Turning to slide 10, in terms of our operating results, we're now seeing gaming revenue reflecting implementation of the necessary uplift in our controls environment, which has seen all three properties record higher rates of exclusions, an impact from Time-Play Management on visitation levels, and an impact from the temporary suspension of certain complementary services and benefits in premium gaming areas.
There are additional factors specific to each individual property that have also had an impact on revenue, and this includes, in Sydney, increased competition on the Gold Coast, as is the case for all operators on the coast. The market is dealing with lower tourism numbers following the post-COVID surge and the rediscovery of international travel by Australian holiday makers. In Brisbane, the CBD is experiencing softness generally, with market occupancy rates in the 70% range.
Across New South Wales and Queensland, consumer discretionary activity was impacted by higher interest rates and inflationary pressures. These factors contributed to a 15% reduction in net revenue for the half compared with the prior corresponding period.
This lower revenue, together with an uplift in our cost base and higher regulatory costs and enhanced control environment, increased employee EBA rates, higher New South Wales casino duty rates, offset to an extent by savings generated from our AUD 100 million cost-out program, has seen our group EBITDA decrease by 43.1% to AUD 114 million for the half. Impact for the period on a normalized basis was AUD 25 million, with significant items of only AUD 16 million in the half compared to the AUD 1.4 billion last year. Our statutory impact was AUD 9 million.
Christina will talk to our results in more detail shortly, but in brief, I'll just run through each of our operations performance. Starting with Sydney on page 12, as mentioned earlier, all our properties have been impacted by the necessary implementation of uplifted controls, which have resulted in increased guest exclusions and the time-play management of guests.
There was also an impact for most of the period from certain operating restrictions impacting our customer experience, principally the cessation of complementary drinks in our private gaming rooms, reducing the performance of both our EGMs and table games in those facilities. Competition from Crown in the Sydney market to table games had an impact on table revenue, while our market share shift to pubs and clubs had an impact on EGM revenue as did consumer discretionary spending softness.
Overall revenue from our Sydney gaming and non-gaming activities was AUD 450 million, down 17% on the prior corresponding period. Gaming revenue was down 19%, with table games down 21% and EGMs down 16%. Our premium gaming rooms have seen a significant decline in visitation, with table games and premium rooms showing a 51% decline and EGMs and premium rooms showing a 23% decline.
Operating costs of AUD 287 million were down 7%, and we produced AUD 37 million in normalised EBITDA from our Sydney operations. Turning to the Gold Coast and on slide 13, on the whole, the same factors impacting our Sydney property, other than the complementary drinks, were also evident in our Gold Coast operations. The unique factor was lower tourism numbers following the post-COVID surge, as I mentioned, as a result of the rebound in outbound international travel.
Revenue from our Gold Coast gaming and non-gaming activities was AUD 238 million, down 14% on the PCP. Gaming revenue was down 17%, with table games down 23% and EGMs down 15%. Our premium gaming rooms, similar to Sydney, have also seen a significant decline in visitation, with table games and premium rooms showing a 58% decline and EGMs and premium rooms showing a 20% decline.
Operating costs of AUD 153 million were down 5%, driven by the cost-out program, slightly offset by higher employee EBA rates and compliance and remediation costs. Our Gold Coast operation produced AUD 45 million in normalized EBITDA, down 33% on the PCP. Finally, turning to Brisbane and slide 14, Treasury Brisbane has also been impacted by the necessary implementation of uplifted controls.
A more significant factor impacting revenue in Brisbane was increased competition from those larger pubs and clubs that initiated renovation projects, introduced loyalty programs, and invested in greater promotional activity. Coupled with this, the subdued visitation to the Brisbane CBD following COVID continued, with general CBD occupancy rates hovering around the 70% level.
Overall, Brisbane revenue from our gaming and non-gaming activities was AUD 178 million, down 10% on the PCP. Gaming revenue was down 10%. Gaming revenue from our main gaming floor showed strong resilience, with EGM revenue up on the prior corresponding period and table revenue only slightly down. Non-gaming revenue also held up well in the period, generating AUD 17.1 million compared to AUD 17.6 million in the PCP, which had benefited from strong hotel occupancy levels.
Operating costs of AUD 101 million were flat on the prior corresponding period, reflecting the benefits of the cost-out program, offset by higher activity levels, and the investment in management capability ahead of the opening of Queen's Wharf Brisbane. Queen's Wharf Brisbane is expected to commence a staged opening from August 2024 and, as such, had no other impact on the half's results.
I'll now hand over to Christina to provide some in-depth commentary on our financial performance and balance sheet, and then I'll come back and conclude with some comments on our key areas of focus for the current year and our performance year to date. So over to Christina.
Thank you, Robbie. Moving to slide 16, as Robbie has covered revenue performance, I will focus on costs. Operating expenditure across the group of AUD 542 million was down AUD 28 million, or 5%, on the first half of FY23.
The cost reduction program is the main driver of this reduction. This reduction has been partially offset by increases in enterprise bargaining agreement wage rates and investments in risk controls and compliance resources in accordance with the remediation program. Depreciation and amortization decreased by 38% on a reduced asset base following impairments in FY23.
Normalised net funding costs decreased by 45% as a result of the debt restructure and proceeds from the equity raise. Turning to the balance sheet on slide 17, cash increased as a result of the AUD 750 million capital raising and the AUD 450 million debt refinancing, which was partially offset by the repayment of the debt. The company had a net cash balance of AUD 171 million at 31 December. CapEx for the half year was AUD 33.6 million, and depreciation was AUD 62.2 million.
The decrease in income tax receivable relates to a AUD 15 million refund for prior year income taxes. Provisions decreased by AUD 71.2 million, primarily due to the financial installments sorry, the final installments for each of the NICC and OLGR fines, which were paid in December. Other liabilities increased primarily from AUD 56 million in proceeds from the sale of the Sheraton Mirage in the Gold Coast.
This will be recognized against the investment pending the finalization of the tax calculations. On slide 18, the cash flow, you'll see here we have included a waterfall on the sources and uses of funds, reconciling from an opening net debt position of AUD 595 million to a closing net cash position of AUD 171 million. The key elements include the equity raise, the establishment of the new syndicated loan, as well as their associated costs.
Net cash derived from operations was AUD 132 million, and we have separately shown the payment of fines, proceeds from the sale of the Sheraton and joint venture contributions. Moving to slide 19, all previous existing debt has been repaid and canceled, with AUD 450 million of new debt facilities secured, including a more flexible covenant package and ensuring no debt matures until FY28, as Robbie mentioned.
The facility includes a AUD 150 million four-year revolving credit facility and a AUD 300 million four-year term loan, with the flexibility to further optimize this structure over time as operating uncertainties are resolved. Dividend payments remain suspended until the adjusted net leverage ratio is below one and a half times. OzTrack proceedings are resolved, and the refinancing is complete for Queen's Wharf Brisbane.
On slide 20, for CapEx and joint venture contributions, you'll see capital expenditure of AUD 33.6 million in the first half was significantly below depreciation and amortization, as I mentioned. CapEx guidance for the full year is revised to a range of AUD 80 million-AUD 100 million, with depreciation and amortization expected to be between AUD 130 million and AUD 140 million for the full year.
JV equity contributions paid in the half were AUD 14 million, relating to Gold Coast Tower 2. Full year contributions are projected to be approximately AUD 174 million for this financial year. The majority relates to DBC. The FY25 investments into the joint ventures are expected to be AUD 227 million. Again, the majority relates to Brisbane for the remainder of the cost to complete. Thank you, Robbie. Back to you.
Thanks, Christina. If you could turn to slides 22 and 23, I'll talk a little about our performance for January this year and provide some insights relevant to considering the remainder of the financial year. Trading in January, while slightly down on January 2023, was broadly consistent with the fourth quarter of FY23 and with the first half of FY24.
In particular, Sydney EBITDA was down only 1.3%, Gold Coast EBITDA was down 4.2%, and Brisbane EBITDA was down a more substantial 20%, albeit off a small base, and clearly showing the impact of the lower CBD visitation rates and competition from pubs and clubs that have undergone significant investment to compete more aggressively in the Queensland market, as I mentioned earlier on. At a group level, EBITDA was down 6.5%.
In considering the remainder of FY24, note should be had to the fact that our remediation costs for the full year are expected to be around AUD 45 million, with half two costs higher than half one due to the ramp-up in resourcing following the approval of a remediation plan in the latter part of the first half.
Also, it should be noted that Sydney Star Casino, resumed providing complementary services and benefits in our Sydney private gaming rooms, and that occurred from November 2023. The AUD 20 million monthly EBITDA run rate we presented at our AGM last year was sustained for the remainder of the first half and end of January. This is also in line with what we achieved in the fourth quarter of FY23.
This is a positive sign for the business following all the challenges and changes in our control environment, competition, and other significant challenges the business has faced. It sets a good base for the future as we work towards suitability and focus on lifting our operational performance.
I also stress that while the group EBITDA run rate of AUD 20 million has been maintained in January, we are expecting a seasonally lower performance for the remainder of the financial year as per normal. Finally, and turning to slide 24, I'd like to touch on our key priorities for the remainder of the year ahead. First and most significantly, as a team, we will continue to have the comprehensive focus on the remediation actions contained in our remediation plan, doing all possible towards returning to suitability in Sydney and Queensland.
Our key focus is on delivering the milestones scheduled in our Remediation Plan with a drive to achieve these milestones as rapidly as possible without compromising quality. We note that ultimately, it will be for the relevant regulator in each of our jurisdictions to make its own assessment of the adequacy of the completion of our milestones.
Without diminishing our remediation focus, we will also fully engage, as I mentioned previously, in the Bell Inquiry in an open, transparent, and facilitative manner to seek to demonstrate our capability of regaining suitability in New South Wales. Given the significant impact to our earnings in the first half, we will focus on management of the competitive environments in both Sydney and Queensland and seek regulatory and government understanding of the need to adopt neutrality in relation to Safer Gambling and financial crime policy settings within those markets.
We will seek a resolution of our OzTrack proceedings in the half to close out a further significant impact on our business caused by the acts of the past. The preparation for the opening of the amazing Queen's Wharf Brisbane is also one of our key priorities. We are just six months away from the phased opening of Queen's Wharf Brisbane, a transformational property ultimately with four hotels offering 1,000 rooms, luxury retail, more than 50 restaurants, bars, and cafes, a 1,500-person ballroom, an amazing Sky Deck, and 7.5 hectares of public space.
This project will transform Brisbane's leisure and entertainment offering. We've taken possession of several dining, entertainment, and gaming areas on levels five and six of the main development and have bumped in the gaming equipment and the dining and entertainment areas of those floors.
Already, we have secured over AUD 20 million in forward bookings for our event centre, clearly displaying the potential of this property. The other major development initiative in train is the delivery of the next component of our Gold Coast master plan, Tower 2. Construction has reached level 42 of a total of 65 levels.
We've demonstrated the success of adding additional room capacity on the coast, and we look forward to the contribution of Tower 2 when completed in FY25. With that, I'll hand back to the operator to moderate the Q&A session.
Thank you. If you do wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. And if you are on a speakerphone, please pick up your handset to ask your question.
Your first question comes from Andre Fromyhr at UBS. Please go ahead.
Thank you. Good morning. I was hoping we could talk about operating costs to start with. What sort of remaining flexibility or opportunity do you have on your OpEx if conditions don't improve or indeed if they were to worsen? And I'm also fascinated to know what role the commitments that you've made in New South Wales might play in that equation.
Andre, I might touch on the commitments in New South Wales, and I might hand over to the CFO just to talk more generally about the cost base and just where we may have some flexibility there just to answer the hypothetical question you've made there in terms of softness and what we do.
But look, in terms of the arrangements with the New South Wales government and the jobs guarantee, that has been constructed in a way where there is some flexibility to deal with changes in the operating environment. So things like if there's changes that flow from the changes to Carded Play and cashless play, there's flexibility there. There are also other events where we do have some flexibility. And you'd appreciate the numbers and the way we've looked at that.
We've reflected in those numbers just where the business is and just how we see the business performing in New South Wales. So look, we're comfortable with those arrangements. They do provide us with some flex.
Thanks, Robbie. I might just also touch on this point. Andre, thank you. So costs are, as you know, heavily fixed skewed. So we run at about a 70% fixed cost base to our total.
So there is sort of flexibility in that 30%, but they are often revenue-generating activities and things you don't really conversely go against you if earnings are not performing. So at the moment, our focus is fully on the Remediation Plan, and so cost focus or any other major cost out programs are not on the agenda. And so Robbie's point about just maintaining what we've got is our focus.
Okay. Maybe I could also ask about a couple of the potential revenue drivers that you've mentioned previously. So the reintroduction of complementary beverages and then potentially the reintroduction of rebate play. Can you just give us an update on timelines and maybe from what you've done on beverages so far, a sense of the impacts?
Yeah. So I'll pick up the first one. So I'll just pick up on complementary beverages.
So they were introduced across the two private gaming rooms, slightly different times. One was late November oh, sorry, early November, and the other one was sort of early December. Across the first four weeks, right before we headed into the peak period, we saw some really good demand lift in the VIP table game space.
So we sort of attribute that directly to that complementary drinks coming back on because it happened around at exactly the same time. What happened then is we got straight into peak period into December, and it became difficult to isolate the impact of that and how that's continued. But we're keeping a close watch on that.
Yeah. And then, Andre, on the rebate play piece, I mean, we've made a very conscious decision in relation to rebate play that we will not reintroduce it until we're very confident with our controls environment.
There is quite a significant piece of work to do around rebate play, both domestic and international. We don't see ourselves reintroducing rebate play for at least probably the next 12 months. It's something we will bring back. This is something that's outside. We're not going back to the junket space. In terms of rebate play generally, it's probably 12 months away. That's reflective of a conscious decision to wait until we're confident with our controls environment, and we'll be talking to our regulators and making sure they're comfortable also with what we've got in place.
Great. Thank you. Just last one from me.
As we're six-ish months out from the opening of Queen's Wharf, what are you observing or learning about just the overall demand environment in Brisbane at your existing property that might influence how you open that property in terms of phasing or the overall economics of it?
Yeah. Look, I mean, the one thing that you can see from the results is that Brisbane has our Brisbane property has underperformed a little bit. And that is a bit reflective of, again, a conscious decision not to be increasing the CapEx in the property. So it is a little bit it has been perhaps underspent for the last 18 months or so. And as I've called, that's sort of been also impacted by a number of the larger pubs and clubs in anticipation of Queen's Wharf having spent a bit of money on their offer.
They've done that in anticipation probably of Queen's Wharf opening a bit earlier than we are. So the thing that I would call out is what we're presenting to the Queensland market and the Brisbane market particularly is something that's never been seen before. The quality of the offer that Queen's Wharf is going to present, both from a F&B point of view, from a retail point of view, and from a gaming point of view, is going to be compelling.
And so we're very confident with that offer coming on in August that we will win back share, which we have lost some share. And we're also confident that the modelling that was performed in terms of how that business would grow share for us in Queensland will come through as well. But it is a phased opening. It's important to stress that.
We're not bringing on 1,000 hotel rooms or 50 F&B offerings all on day one. It will build, and the property will build over a period of two years probably as it hits its full momentum.
Great. Thank you very much.
Thank you. Your next question comes from Matt Ryan at Barrenjoey. Please go ahead.
Oh, thank you. I just had a question on cashless gaming and if you can talk about the sign-up process. And I know it's early days, but sort of what have you learnt so far and just any comments around how you might be able to improve that process?
Yeah. Look, Matt, good question. Look, we've actually only been in market. We've only launched our trial in the last week, so very early days. And as I called out, it's on sort of 51 slot machines at the moment.
The trial's being used both to educate the implementation in New South Wales and Queensland. And we are getting some good qualitative feedback, and we appreciate we're harvesting that and then assessing the views. But look, probably too early to call out any overall learnings. I mean, it's early days, very early days. But look, very happy as we do get a bit more data to provide some insights. But I wouldn't call anything out at the moment.
Fair enough. And the comments around premium table games being down more than 50% at multiple properties. Can you give us any color on whether that was a sort of similar number as the half progressed? Obviously, Christina, I think, has called out some benefits you might have had later in the half. But I'm just trying to get a sense of the impacts that you've seen around self-exclusion and the like.
Have they stabilised in terms of the declines that you saw or just any comments that you could give around that topic?
Well, I might give a little bit of insight to the CEO. I'll probably jump in as well. But look, one of the things I'd call out is, and you're seeing that sort of softness in private that have either a more stable main gaming floor area or a little bit of increase. We know there's a bit of patron shift from private gaming down to the main gaming space. And that's reflecting probably some patrons moving around the property just with the knowledge of some of the time play issues. So some people are moving from private gaming areas where they're carded to the main floor where they're not.
So that will be an element of some of that shift.
I would also say, Matt, that your question, I think, about is have the impacts of the financial crime control measures and harm minimization measures we've seen been sort of regular, let's say, versus volatile or to the extent they continue? And I mean, the short answer to that is the company's been, for the last almost couple of years, been significantly implementing controls in these areas.
And in the beginning of the journey, it was very much looking backwards and picking up customers that needed to have a retrospective review. So we saw quite a big impact in the early stages. But as we've gone along, we've continued to lift our capability in both harm minimization and financial control. But they are sort of I would call them the sort of incremental changes.
For example, harm minimisation, introducing caps on the amount of play per week. So we still continue to see them, but they won't be as big as in the beginning. And they will continue to be there for as long as we make improvements in those areas. But they should moderate in terms of their month-to-month volatility.
Thank you.
Thank you. Once again, if you would like to ask a question, please register by pressing star then one on your phone. Our next question comes from David Fabris at Macquarie. Please go ahead.
Oh, hi, Robbie. Hi, Christina. Look, first question, just on Queen's Wharf Brisbane. Can you make any comments about that debt stack? I think it's about AUD 1.6 billion. It expires in December 2025.
I get it that it's some time away, but how do you go about refinancing this one considering that the Queen's Wharf Brisbane openings being delayed would be one question? And then the second question would be, can you give some form of indicative leverage that Queen's Wharf Brisbane might be able to tolerate once it's fully ramped?
Yeah. Okay. I'll start, and maybe Robbie can jump in. So it's something that we do think about, David, the Queen's Wharf Brisbane debt refinance. Obviously, it is a focus. And it has been when we did the refinance last year and thinking about the debt equity mix of the company at the time. Since that refinancing, our focus has obviously been on some very key milestones to get us open, like the Multiplex matter and settling that and then getting us absolutely ready for opening.
Because the more successful that opening is and that early trading, it'll put the company into a very good position to advance that work on that refinancing, which is a year from when we do open. So the intention is to explore a range of funding options in that JV structure, as you say. And I would just say The Star, when we looked at our own funding last year, we had demand of over AUD 1.5 billion at the time.
And so that's sort of given us a bit of a good indication as we go into that process. In terms of the leverage, look, it's going to be a case of having a high leverage in the beginning as earnings then ramp up and getting to something a little bit more normal in the longer term, let's say, post two or three years.
Can you give an indication of what kind of fully ramped leverage ranges might be appropriate?
No. I can't at this stage, David.
Okay. No worries. Moving on, just thinking about the Gold Coast. In your prepared remarks, you spoke about Gold Coast Tower 2 opening in FY25. My first question is, can you kind of hone that into a quarter or a half for us? And then secondly, can you maybe talk about the earnings benefit at the casino you got from Gold Coast Tower 1? I guess I'm trying to think about the uplift you might receive from the higher visitation or footfall from Gold Coast Tower 2. Thanks. Sure.
So the first question, David, if I could ask you to repeat it, was it the phasing of capex, sorry?
No, just the opening for Gold Coast Tower 2. I know you spoke to FY25, but can you hone it into a quarter or a half?
Yeah. Look, we're looking sort of first quarter calendar 2025.
Okay. And David, the answer to your second question is there was AUD 8 million in the half.
Oh, no. Sorry. I was curious about the earnings benefit that you got from Gold Coast Tower 1 from when that opened and the 12-month increased visitation to the assets.
Yeah. So as I said, so it's ramping. If I remember, it serves me so it was 8 this year. And the first year, I would say, if I can recall, around AUD 5 million as a contribution to The Star in the first year.
Okay. That's helpful. And one last question. Just looking at your balance sheet, just your current provision of AUD 435 million, are you open to giving any indication of how much of that relates to OzTrack?
Look, David, you appreciate that's not something we split out, and we wouldn't intend to do that. It's pretty commercially sensitive.
No. Got it. That's all from me. Thank you very much.
Thank you. Your next question comes from Simon Thackray at Jefferies. Please go ahead.
Oh, thanks, Robbie. Thanks, Christina. David's actually addressed my QWB question. So I'm just going to circle back to Matt's earlier line of inquiry on cashless carded gaming. So there's sort of three quick parts to this. First of all, what are the differences or the similarities between the cashless at Crown Melbourne versus Star that are proposed?
Secondly, if it's a systematic impact for casinos to go cashless, I presume you've communicated with Crown and/or observed the impacts in Melbourne. And what have you learned? And then the final one is sort of coming back to a line from Matt, which is actually, how do you sign up international players and international visitors in that environment? I don't really understand it and comply with the rules.
Yeah. Look, I'm happy to take some note. And Christina, I'm sure I'll jump in as well. Look, starting with your second point first, definitely, we've sort of had a bit of a look at the impact for Crown. We haven't spoken with them directly, but we went down there to look at just how that was implemented. And there's some definite learnings there in the initial phases. Quite a lot of pressure getting people signing up all at once.
So one of the learnings for us is how can you actually make that a less impactful experience and do it perhaps a bit earlier and get people starting to sign up earlier? So that's one thing and trying to make sure that's easy. There are definitely differences between the Victorian implementation at this point in time and what we're required to do.
I mean, theirs was much more just getting people carded. Obviously, we're going carded. And cashless, in the sense, people will still be able to come on property and have AUD 1,000 in cash. That's sort of cash limited. So we've got a more fulsome implementation come August, and we will be market-leading in that sense. The things we're looking at at the moment is in our development process is looking at the ability still to play cash at the device, at the machine.
So you'll have your card in the machine. You'll be able to feed cash to the machine. So that's our preferred implementation. And so this is still part of the dialogue going on at a regulatory level. If you think about the mass, the main gaming floor, most of our foot traffic is less than AUD 1,000 a day.
So if that implementation can be adopted, we think that is the best outcome for patrons while definitely meeting the policy objectives of carded and cashless play. So that's important for us, that implementation. But as I said, that's still a live dialogue. In terms of the process for signing up for international patrons, that is definitely within our scope. We've got an automated sign-up process. It can work off passports. So that's been factored into our design of our solution.
Sorry, Robbie. Just for my clarification, so I get the passport, the identification piece, but there doesn't have to be a verification of bank accounts. I think as implemented in Melbourne, I'm just trying to wrap my head around how it will work from a source of funds verification perspective.
Yeah. Look, we're still working through that. At the moment, our trial, Simon, is in the private gaming room. And so it is heavily locals-focused. So as Robbie said, we're still actually working on some of that solution for the internationals. I guess having the AUD 1,000 limit is going to help some of that if we're unable to do the sort of verification on the international bank accounts. But yeah, the short answer is the team's still looking at it.
No, that's fine. While I've got you there, Christina, just in terms of the JV contributions for QWB in 2025, I admit that was a bit of a surprise to me, the AUD 220. That's my fault, presumably. But just want to talk about the phasing of that. That's first half 2025 predominantly. Is that the way to think about it given the phased opening?
Yeah. That's right. Because our guidance last year had assumed an earlier opening, right? And there was some to come anyway after July. Because how the property will open is, for example, the Dorsett and the Rosewood will not open until at least nine months later. So there was always going to be contributions later after the initial opening date. So that's a way to think about the phasing. That's why there's some there in FY 2025 and some there in FY 2024.
If you just think about the whole number, we started at around AUD 160 million. Last year, the additional Multiplex settlement, the cost to complete, and there's a little bit for amortization is about AUD 200 million. And that's why you're getting such a large increase.
Okay. Okay. But Rosewood and the other, that's Chow Tai Fook and FEC's, isn't it? That's got nothing to do with you guys.
No, that's ours as well. No, that's ours as well. So you're thinking about the residentials, but the hotel tower, it's in the same JV as us.
Sorry. Quite right. Quite right. And then just on that, with the hotel, with the Star Grand topping out, which is great, what's the status on the internal fit-out? I mean, it's obviously important in terms of foot traffic for the gaming floor, for where you want to go.
Are you confident on that timeline for Star Grand to be up and running as well for August 2024?
Yeah. Yeah, Simon. I had a wander. I had a look on site last week. And the rooms are all fitted out. It's looking magnificent. So we're absolutely on track for August for the Star Grand. And they're great rooms. They're really well-configured. They will be the best hotel rooms in Brisbane.
Excellent. Excellent. All right. Thanks, Robbie. Thanks, Christina. Appreciate it.
No worries.
Thank you. Your next question comes from Justin Barratt at CLSA. Please go ahead.
Hi, guys. Thanks very much for your time today. My first question was probably just around Star Sydney. You've appointed a new CEO there who, I believe, Miss Campbell started only recently. But you had, I guess, not had a permanent CEO in there for a while.
So I just wanted to understand, in your view, how important having a permanent CEO is in terms of your remediation plans and, I guess, thereafter, proving out your suitability for the license in New South Wales.
Yep. Look, Janelle Campbell started with us. This is her first week on site. And it's absolutely fantastic to have her on board. She's a very well-experienced casino operator and brings us a wealth of experience to the team. But look, I've got to say, we've been very fortunate. Peter Humphreys, who's COO in the division, has been in the top seat for the last 6-7 months. And he's done a great job.
There's a very strong operational team in Sydney that, having the CEO now in place and being able to really focus the property and make some of the changes that we need to make, Janelle's going to be excellent in that regard. So having Janelle there will absolutely give us a bit more traction in the market and just give that leadership that will be a good thing. And it also does help with the remediation program that we've got in place as well as having her on site. So it's a big positive.
Yeah. Thanks for that. And then I really appreciate the disclosure around the monthly EBITDA run rates. But I was just wondering if you could make any further comment around what kind of run rates we should think about over the remainder of the year.
I mean, appreciate your commentary around higher remediations or remediation costs being a bit more skewed to the second half and your seasonally weaker or lower performance for the remainder of FY24. I mean, what kind of impact can we think about to that sort of monthly EBITDA run rate over the remainder of the year from those sort of two impacts?
Yeah. Justin, I might answer it even more simply, which is our business has always been around a sort of 52/48 split between the halves. And I would say that's still how we're thinking about the second half. The reason that we've put it in there to focus on that seasonality is largely also around cost because we're conscious that the cost did ramp up in December, as it always does for such a heavy peak period. So think about it as a 42/48 split. Oh, sorry, 52/48.
Yeah. Fantastic numbers. No worries. Thank you very much.
Thank you. Your next question comes from David Kingston at K Capital. Please go ahead.
Well, thank you. Good morning, everyone. Look, I just have a question that no one seems to be making much comment on in broker reports. The class actions, my understanding is that they're scheduled for a provisional hearing in early 2025. But that's quite likely to be delayed, I would assume. But look, you may not be able to comment much. But given the extent to which the share price has fallen, it is a little bit of a concern to me. I would also note that given the findings by the inquiries, is there an issue as to whether the insurance company is going to pay?
Or will they potentially say that the disclosure by the company wasn't good enough and therefore the insurer may try to avoid contributing to any liability from the class actions? I appreciate it's a gray area, Robbie, but any insight you could provide would be appreciated. Thank you.
Yeah. No problem, David. Good to take the question. Look, as you pointed out, the class actions have got a way to go. We haven't even got to the stage putting a defense in yet. So the defense is due in March, as I sort of called out earlier on. So yeah, hearing date 2025 could be later. In terms of the insurance coverage, look, we wouldn't comment about insurance coverage. We do have insurance for the action. We haven't disclosed that quantum. We've got every expectation that cover will respond to the claims.
Okay. Thank you.
Thank you. That concludes our question-and-answer session and our conference for today. Thank you, everyone, for participating. You may now disconnect your lines.