The operator noted that earnings have been impacted by operational changes arising from the Bell and Gotterson Reviews, a step-up in remediation costs and increased competition in Sydney. The Star expressed that while its Queensland casinos performed strongly in the period, the operating environment in Sydney has been more challenging.
For 1H FY23, The Star Gold Coast revenue climbed 30% on pre-Covid levels and achieved its highest revenue result ever. Treasury Brisbane revenue climbed 9% on pre-Covid levels and boasted record performance across slots, main gaming floor tables and hospitality.
The Star Sydney, however, posted a 13.5% revenue decline on pre-Covid levels. The company expects to report underlying EBITDA of AU$195m (US$135m) to AU$205m in 1H FY23.
The group added that due to several factors – including the impact of operational changes implemented following the Bell Review, amendments to the NSW Casino Control Act and the potential for an increase in NSW casino duty rates starting in FY24 – it is anticipating a non-cash impairment charge in relation to its NSW business in the range of AU$400m to AU$1.6bn in its 1H FY23 results.
Furthermore, the operator stated that it is in discussions with the NSW Government on the implementation of the proposed changes to NSW casino duty rates, with the former noting that if implemented in their current form, the proposed duty rate increases would have a significant adverse impact on the profitability of The Star Sydney. Such a scenario would lead the group to undertake an urgent review of the venue’s operating model and assets, with a view to maximising value for its 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,” said The Star Entertainment Group CEO and Managing Director Robbie Cooke.
“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.”