By Savyata Mishra
(Reuters) – Australia’s Star Entertainment Group on Monday said it expects to incur a non-cash impairment charge of up to A$1.6 billion ($1.11 billion) in the first half of its fiscal year if a proposed hike in the casino duty rate in New South Wales is implemented in its current form.
Star Entertainment said it would incur remediation costs of about A$20 million during the six months ended Dec. 31, 2022, as it attempts to “improve compliance processes as the group seeks to return to licence suitability”.
The company has been embroiled in a slew of government probes over possible breaches of anti-money laundering and counter-terrorism laws at its casinos in the past two years, swinging to an annual net loss in August. Its share price has been more than halved.
Star Entertainment shares slumped almost 11% to A$1.67 in early trading.
The casino operator on Monday also announced a number of initiatives, including loyalty benefits and pricing actions, to respond to competition in Sydney, where its bigger rival Crown Resorts operates. The initiatives would likely contribute about A$40 million on an annualised basis to the operating performance, Star Entertainment said.
It expects underlying earnings before interest, taxes, depreciation and amortisation within A$195 million to A$205 million in its first-half results.
Additionally, a potential gaming tax change in NSW announced in December and likely to come into effect in July 2023 threatens to significantly damage the profitability of Star Entertainment’s Sydney operations – which made up half its revenue in fiscal 2022.
The company said it intends to undertake an urgent review of the operating model and assets of its Sydney business if the state government’s proposal goes ahead.
The casino operator forecast underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of A$330 million to A$360 million for the year ending June 30, 2023, compared to the A$237 million reported last year.
($1 = 1.4457 Australian dollars)
#Australias #Star #Entertainment #sees #billion #hit #tax #change #shares #plunge #Reuters