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Feb 13 (Reuters) – Australia’s Star Entertainment Group (SGR.AX) It said on Monday it expected to incur a non-cash impairment charge of up to A$1.6 billion ($1.11 billion) in the first half of its financial year if the proposed increase in NSW casino tax rates were implemented in its current form.
Star Entertainment said it would incur remediation costs of about A$20 million in the six months to December 31, 2022, as it sought to “improve compliance processes as the group seeks to restore license applicability”.
The company has been embroiled in a string of government investigations over the past two years over possible violations of anti-money laundering and counterterrorism laws at its casinos, an annual net loss in august. Its shares have more than halved.
Star Entertainment shares fell nearly 11 per cent to A$1.67 in early trade.
The casino operator also announced a series of moves on Monday, including loyalty offers and pricing action, in response to competition in Sydney, where its larger rival Crown Resorts operates. Star Entertainment said the initiatives could contribute about A$40 million per annum to operating performance.
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It expects underlying earnings before interest, tax, depreciation and amortization to be in the range of A$195 million to A$205 million for its first-half results.
Also, NSW could change gaming tax announced in december And could come into effect in July 2023, which could seriously damage the profitability of Star Entertainment’s Sydney business – which accounts for half of its revenue in the 2022 financial year.
The company said it intended to undertake an urgent review of the operating model and assets of its Sydney business if the state government’s proposals were passed.
The casino operator forecast earnings before interest, taxes, depreciation and amortization (EBITDA) of A$330 million to A$360 million for the year ending June 30, 2023, compared with the A$237 million reported last year.
($1 = 1.4457 Australian dollars)
Reporting by Savyata Mishra in Bengaluru; Editing by Paul Simao
Our standards: Thomson Reuters Trust Principles.
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