Thank you for standing by, and welcome to the Star Entertainment Group Limited Investor 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'll need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Neale O’Connell, Acting CEO and Interim CFO. Please go ahead.
Good morning, and thank you for joining me today. You'll have seen we've made two announcements on the ASX today. One relating to a change in leadership, and the other providing a trading update for the 2024 Financial Year. As mentioned in our leadership announcement, David Foster has ceased all responsibilities effective on Friday, and Anne Ward and I have taken on additional duties pending the appointment of a new CEO. The search for our new group CEO is well progressed, and we expect an announcement regarding the appointment is expected in the near term. Secondly, we've provided a trading update and earnings guidance for FY 2024. Given the subdued macroeconomic environment, trading conditions have remained challenging since the group's last update in April 2024.
As a result, we expect group revenue for FY 2024 to be between AUD 1,675 million and AUD 1,685 million. Operating expenses in the third and fourth quarters of the financial year are elevated compared to the first half due to ongoing remediation and transformation activities. Therefore, we expect FY 2024 underlying group EBITDA to be in the range of AUD 165 million-AUD 180 million. I just want to note as well on the leadership changes, that it's worth noting that we recently announced the appointment of Jeannie Mok as our new Chief Operating Officer. Jeannie has extensive experience in transformation programs, so that's worth noting in terms of our leadership changes. At this time, I'll open the floor to any questions you may have on our trading update.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. In the interest of time, we ask that you please limit to two questions per person. If you would like to ask further questions, you may press star one again to rejoin the queue. The first question comes from Justin Barratt from CLSA. Please go ahead.
Hi, Neil. Thank you very much for your time today. Just one more broader, overarching question to really kick off. I just wanted to sort of check back in and see how you see the balance sheet positioned for the upcoming sort of broader known outgoings. And I guess I'm just also asking, given the deterioration in earnings that we've seen more recently.
Yeah, thanks, Justin, for the call. Yeah, look, there's a number of challenges there. And, you know, in terms of the overall looking to the medium and long term, in regards to balance sheet, and from our perspective, at this point, we're working through those issues, and, provide further updates at the ASX results. And I think it's worth noting, you know, look, as we said, we've indicated that we have a new CEO coming on board in, hopefully in the short and medium term, so that will assist in some of that too.
Yeah. Okay, no worries. And then, just noting that you're saying that you're going to, or you're reviewing the potential sale of other non-core assets. I just wanted to see if you can highlight any or list those other non-core assets that might be available to you to sell?
Yeah, Justin, we're looking at all the possibilities. We're probably not at this point able to give you, you know, a list or an update in specifics of those assets. But we are looking at, you know, with me being on board, we are looking at all the opportunities that we have to make changes to them.
Thank you. Your next question comes from Kai Ehrmann, from Jefferies. Please go ahead.
Thank you for taking my question. Just one relating to QWB. Is there any update in terms of the planned opening as well as the various stages for that project, or is that happening in line with previous updates?
Yeah. Thanks, Kai. The update on QWB remains the same, so at this stage, the opening towards the end of August and at an early stage, I think. So, it'll be progressively, but the main gaming floors will have been handed over already, as provided in the April update. And everything else is as it is at this point.
Okay, thank you.
Thank you. Your next question comes from Matt Ryan, from Morgans. Please go ahead.
Hi, Neale.
Hi, Matt.
G'day. So just to dive into the numbers around private gaming rooms declining and main floor-
... growing from what we can see, the main floor performance is pretty strong, really, even against, you know, the coast market seems to be pretty solid at the moment. Can you talk about what you're seeing there? Are the players sort of shifting to the main floor? Where, where do you see sort of visitation in both areas? Can you just provide some color on why you're seeing such a, I guess, a drastic difference between those two areas, please?
Yeah. Thanks, Matt, and it's been a consistent trend since our last update in April. We saw a very similar sort of trend of those two, and yeah, you can see from the numbers that there's been an improvement or an increase on the main gaming floor compared to premium gaming. So that's. That trend has continued. So that's where we're at, yeah.
Okay. Would you say that the visitation has held up pretty well in the main game for the summers, or you think it's more in relation to the vendor player?
No, no, the visitation has held up. It's held up pretty well.
Okay, thank you. And second question was just on your operating cost, initiatives, which you're highlighting. I assume there's a bunch of those that are going on. How quickly can you roll those out?
Yeah, look, there's a couple of things too, Matt, in the context as well, I think, and we mentioned Jeannie Mok coming on board, from a transformation, you know, her experience in transformation as well. And the very essential costs we're incurring in terms of remediation and transformation, you know, there's always opportunities to look at some efficiencies in regards to those costs, and then more broadly, what our cost base looks like. So, we'll have opportunities over the short to medium term to make some improvements there. I mean, there's. I mean, to put it in, Jeannie's been on board a week or two. We've had a very, you know, difficult and disrupted period over the last several months.
But, we'll be able to focus more clearly on our costs moving forward.
Okay. Thanks, Neale
Thanks, Matt.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from David Fabris from Macquarie. Please go ahead.
Well, good morning, Neale. Look, the first question, just with the remediation and transformation activities, can you just remind us of the annual cost run rate there and maybe how quickly you might be able to reduce this over time?
I won't give a specific number, but there's, you know, they are obviously significant over the last few months in terms of with a reset plan and a reset of the remediation plan, which is ongoing. Certainly, I mean, there's the costs associated with the remediation plan will be in place for some time, but it's again, looking at making sure we're spending, you know, the right amount of money in the right places to get the right outcome for us as a company and complete the program and return to stability.
Got it. Understood. And the second question, can you just remind us of the annual maintenance happens across the properties? And then maybe talk whether there's any opportunities to reduce these. I mean, you've seen a significant degradation in the performance, and if we're looking at cash flow, right, there's a significant amount of maintenance CapEx being applied to these properties. So any color across, you know, the annual cost and opportunity to reduce would be helpful.
Yeah, look, I think, you know, certainly it's the maintenance CapEx, we, we obviously have to do, and, and there's always a core element to that, and we won't, we won't be affecting that because that's clearly, clearly necessary for any business to responsibly manage the assets that we have. You know, broadly speaking, that, that, CapEx or maintenance CapEx would be around the order of AUD 60 million.
So AUD 60 million is a number we can kind of plug into our models as the underlying maintenance CapEx on the go forward? Is that how we should think about that comment?
Yeah, in terms of the essential component, there's always other, you know, there's some other elements that you'd look at in terms of particularly from a... Whether it makes sense to build the business.
Yeah, but I mean, in this environment, would you be kind of reverting back to that AUD 60 million, or would you still be spending initially?
Yeah. Yeah, look, no, not we'd be looking at that as that AUD 60 million, but, you know, there might—like I said, there might be some opportunities to, to, you know, spend on other areas, but that AUD 60 million is a reasonable measure to use.
Appreciate it. Thank you very much.
Thank you. Once again, if you wish to ask a question, please press Star one on your telephone. The next question comes from Rohan Sundram from MST Financial. Please go ahead.
Hi, Neale. The question on the transition to cashless gaming in Sydney, how is the start progressing towards that? And how are you thinking about how that could potentially impact the business, either way, I guess, from a visitation perspective, but also from a just from a regulatory perspective as well. Thanks.
Yeah. Thanks, Rohan. I mean, we're obviously very supportive of these regulatory changes. We're working well with the regulators in regards to, you know, bringing these changes in. You know, this is looking at coming in in August. As I said, we're working towards that with the regulators.
Thanks, Neale.
Thank you. There are no further questions at this time. I'll now hand back to Mr. O’Connell.
Thanks, everyone, for taking the time, and we'll no doubt providing more information in due course and obviously our August results. Thanks again.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.