The Star Entertainment Group Sees Revenue Down for 1H FY23
The Star Entertainment Group, the Australian casino operator, has reported a 1% fall in group revenue on pre-Covid levels for 1H FY 23.
According to the Group, earnings have been affected by changes that arose from the Bell and Gotterson Reviews, an increase in remediation costs, and greater competition in Sydney. The Star said that its Queensland casinos have been performing well but that things have been more challenging in Sydney.
The Star Gold Coast saw revenue climb 30% in 1H FY23 compared to pre-Covid levels. Revenue at Treasure Brisbane was up 9%, and the venue saw record performance on slots, gaming floor tables, and hospitality.
However, there was a 13.5% revenue fall at The Star Sydney. The Group has said that it expects underlying EBITDA of AU$195 million (US$135 million) to AU$205 million in 1H FY23.
Furthermore, The Star has said due to a number of factors, it is expecting a non-cash impairment charge for its NSW business in the range of AU$400 million to AU$1.6 billion in its 1H FY23 results.
The operator said that it is holding discussions with the NSW Government regarding the implementation of the proposed changes to NSW casino duty rates. The Group explained that if the changes were implemented as proposed, then the duty rate increases would have an adverse effect on the profitability of The Star Sydney. It would lead to the Group reviewing the venue’s operating model and assets in order to maximize value for shareholders.
We have been pleased with the ongoing strength of trading across our Queensland-based properties, while trading at The Star Sydney has been impacted by operational changes associated with the outcome of the Bell Review as well as competition from Crown Sydney. 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 recognized in our 1H FY23 results.
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