The Star sees its shares tumble after an A$1.6 billion upside warning.

Star Entertainment saw its shares tumble 22% after hinting it could suffer an A$1.6 billion write-down.

By releasing its earnings outlook for the first half of 2023 and full year 2023, this charge, which converts to $1.11 billion, will be tied to its first-half earnings from an increase in duties casino in New South Wales, proposed by the NSW Government on December 17, 2022.

Star’s CEO and Managing Director, Robbie Cookesaid: “While the outcome of recent regulatory and legislative developments remains uncertain, we have taken a conservative approach to assessing the carrying value of our assets, which has resulted in a non-cash impairment charge which will be recorded in our results for first half of fiscal year 23.

“We are engaged in constructive discussions with the New South Wales government regarding proposed changes to casino fees.

“We are focused on working with our regulators, the New South Wales Director and the Queensland Special Director to clean up our business and make it appropriate again.

“Our main priority is to regain the trust of our community and demonstrate to our regulators that we are fit to hold our casino licenses. With this in mind, we continue to support the Premier of New South Wales’ initiatives on cashless gaming and improving risk reduction across the industry. »

The company also said in the report that its business performance was “negatively affected” by several factors, in addition to the aforementioned customs tax, pointing to mid-September operating restrictions following Bell’s review.

According to Star, this has led to an increase in the number of excluded customers and a reduction in free services and benefits in private game areas. He also pointed to increased competition for his revenue results since the Crown Sydney opened in August last year.

The Star noted that, if implemented, it intends to undertake an urgent review of the property’s operating model and assets, with the aim of maximizing the group’s shareholder value. Additionally, the company’s Sydney operations saw a 13.5% decline in domestic revenue from pre-COVID levels.

With regard to the other operations of the company, the team of the Star Gold Coast recorded a 30% increase in domestic revenue compared to pre-COVID levels, achieving its best ever revenue result.

Passing to his Brisbane Treasury This property has seen domestic revenue increase 9% from pre-COVID levels, with the company noting record performance for slots, main gaming tables and hospitality.

Cooke added: “We have been pleased with the continued strength of trading at our Queensland-based properties, while trading at Star Sydney has been affected by operational changes associated with the results of the Bell review as well as competition. of Crown Sydney”.

As a result of ongoing corrective actions, The Star incurred costs of $20 million in the first half of FY23, which included an increase in staff, including the use of third-party consultants to improve compliance processes as the company is seeking to regain its ability to obtain a license.

The Star is also expected to report underlying EBITDA of between A$195 million and A$205 million in the first half of 2023.