Running cold: Casino giant Star flags up to $1.6b writedown
Star Entertainment Group has posted a revenue drop at its flagship Sydney casino and warned of a substantial impairment charge in its upcoming half year results.
A recent aerial view of the Queens Wharf project under construction. (Image: Queens Wharf)
The embattled casino operator which is behind Brisbane’s $3.6 billion Queen’s Wharf project on Monday said it anticipated a non-cash impairment charge of between $400 million to $1.6 billion against its first-half results in relation to its NSW business.
It attributed the writedown to operational changes following a regulatory inquiry that saw its casino licence in the state suspended, as well as the potential for an increase in NSW casino duty rates starting in the 2023/24 financial year.
“Whilst the outcome of recent regulatory and legislative developments remains uncertain, we have taken a prudent approach to assessing the carrying value of our assets, which has resulted in a non-cash impairment charge which will be recognised in our 1H FY23 results,” Group CEO Robbie Cooke said in a statement.
By 1430 AEDT, Star Entertainment shares had slumped more than 20 per cent to $1.50 – after the stock hit its lowest level since March 2020 earlier in the session. Shares have lost nearly 50 per cent of their value during the past 12 months.
Ominously for Queensland retirees, the share slump follows superannuation fund Australian Retirement Trust taking a $100 million stake in the company earlier this month.
NSW’s gaming regulator suspended Star’s Sydney licence in October and slapped a record $100 million fine on the company after an inquiry found the casino had allowed money laundering to take place inside private rooms, and identified numerous compliance failures.
A similar review in Queensland also fined Star $100 million after finding it unfit to hold its two casino licences with the company neglecting anti-money laundering and responsible gaming duties in the state.
The regulatory troubles have had an impact on Star’s performance with the company incurring compliance and remediation costs of $20 million including to increase headcount.
On Monday, Star said revenue at its main Sydney casino for the six months to December was down 13.5 per cent on pre-Covid levels.
But overall group revenue was down just 1 per cent on pre-COVID-19 levels, buoyed by 30 per cent jump at Star Gold Coast, and a 9 per cent lift at the Brisbane Treasury.
Star now expects to report underlying earnings between $195 million and $205 million in the first half, when official results are released on February 23.
-AAP
