Crown posts mammoth loss as pandemic’s impact bites
The full extent of the coronavirus pandemic on Australia’s biggest casino operator has been revealed.
The Sydney Morning Herald reports that Crown Resorts has fallen to a $261 million full-year statutory net loss after the pandemic forced the beleaguered casino giant to close or restrict operations at its Melbourne and Perth properties for much of the past 12 months.
The heavy loss at the James Packer-backed group compares to a $79.5 million profit last year anda a $402 million profit in its pre-pandemic result in 2019.
Revenue collapsed to $1.5 billion in the year to June 30, down from $2.2 billion in 2020 and $2.9 billion in 2019.
Crown will not pay a dividend.
Theoretical earnings, a measure used in the casino industry to adjust for lucky and unlucky streaks, before pandemic closure costs and significant items was $242 million.
That is towards the bottom of $240 million to $250 million guidance Crown gave on June 5.
The group is currently awaiting the outcome of Victoria’s royal commission into its Melbourne casino licence, while a separate royal commission into its Perth licence is ongoing.
The licence for Crown’s new Sydney casino, which was set to open in December 2020, is suspended after an independent inquiry in NSW ruled Crown was unfit to operate a casino.
Crown won’t pay dividend and flagged financial strife with government
Crown said it had agreed with its banks not to pay a dividend for the first half of this year, or if a review event is triggered because one of its casino licences is suspended or cancelled, in return for extending $560 million of near-term debt maturities out of October 2023.
Crown wrote to the Victorian government in July warning it could default on its loans if its Melbourne casino licence was suspended as a result of Victoria’s royal commission.
Crown revealed that during the year it received $79.6 million in JobKeeper payments to subsidise the wages of employees who were working either full-time or part-time, bringing the financial boost to its bottom line since the pandemic started to $123 million.
Another $100 million was paid directly to employees who were stood down from work, it said.
The three public inquiries have examined how Crown was infiltrated by organised crime and facilitated money laundering; how it broke Victorian gambling laws and underpaid state taxes and its cavalier responsible gambling practices.
Crown has become a takeover target amid the rolling crisis.
Private equity group Blackstone made an $8.4 billion bid earlier this year, which Crown rejected in May, while its Sydney rival The Star lobbed a $12 billion merger proposal that month.
The Star withdrew its merger offer in July, citing uncertainty over the future of its Melbourne and Perth casino licences.
Crown interim chairman Jane Halton said 2021 has been a “challenging year for Crown, with intense regulatory scrutiny and unprecedented impacts on business operations from the COVID-19 pandemic.”
“Looking ahead, COVID-19 continues to create uncertainty, with variable operating restrictions remaining a feature of everyday life and likely to continue to materially influence business performance.
“Notwithstanding the current changes facing the business, we remain optimistic and believe that Crown has a truly special portfolio of assets.
“Crown Melbourne and Crown Perth are world-class entertainment precincts and we are excited about the prospects for Crown Sydney.”