From Bad to Worse: Crown Posts $261 Million Loss
Crown Resorts cannot catch a break and have not done for the past couple of years. Some say deservedly so, but matters are going from bad to worst for Crown with the stricken gambling giant posting a $261 million loss on its latest financial statements.
Crown posted a $261 million loss for the full year ending June 30, 2021. The huge loss comes after posting a $79.5 million profit last year and $402 million profit in 2019. Crown blamed the COVID-19 pandemic for the loss.
Jane Halton, Crown’s interim Chairman, published her thoughts to the Australian Securities Exchange.
“2021 has been a challenging year for Crown, with intense regulatory scrutiny and unprecedented impacts on business operations from the COVID-19 pandemic. I would like to thank Helen Coonan for stepping up and providing leadership and stability during this period. Helen has played an important role at Crown over a long period of time, particularly since her appointment as Executive Chairman where she has made a major contribution to Crown’s reform program.”
Closures and Significant Items Contribute to $261 Million Loss
COVID-19-related lockdowns and closures proved costly for Crown. Group revenue plummeted 31.3 per cent to $1,536.8 million, down from $2.2 billion in 2020 and $2.5 billion the year before. Such a drastic reduction in revenue was always going to result in a financial loss. However, nobody expect a $261 million loss.
Crown revealed it spent $54.6 million relating to Crown Sydney’s pre-opening, expected credit losses, and the underpayment of casino tax by Crown Melbourne. Overall, $120.6 million was how much Crown attributed to the costs of the enforced closures.
Crown’s shareholders learned they are not receiving a final dividend payment. The payment would not have happened even without the $261 million loss. Crown reached an agreement with banks when it modified its financial arrangements. It agreed to pay no dividend if it had a casino licence cancelled or suspended. This clause came into effect with the continued suspension of Crown’s Sydney licence.
New Chairman Unveiled
Ziggy Switkowski is the man tasked with turning around Crown’s flagging fortunes. The current chancellor of RMIT University‘s first job is to stem the bleeding of cash that resulted in the $261 million loss.
Interim Chairman, Jane Halton, announced Switkowski’s appointment.
“Dr. Ziggy Switkowski will join the Board as Chairman following receipt of all necessary regulatory approvals as part of the planned succession process. The Board welcomes Dr. Switkowski to Crown and is confident he has the necessary capability and experience to lead the Board at what is a critical time for the organisation.”
Switkowski offered only a few words.
“I look forward to joining the Crown Board and working with Board colleagues, CEO Steve McCann, and Crown employees to grow value for shareholders by continuing the urgent work to reform the business.”
Crown Purges Local High Rollers
The royal commission into Crown’s affairs turned up clear and damning evidence of money laundering at its Melbourne property. The very real threat of losing its casino licences has Crown spooked. So much so that it pursed more than one in ten of its Australia-based high rollers. While this will not help turn around its $261 million loss, it could help apease the regulators.
A due diligence report on 1,800 local high rollers resulted in the banning of more than 250 people. Crown explained these people could no explain the source of their wealth or they raised other issued.
Allen McGregor, Crown’s Chief Financial Officer, called the reviews into its customers, “by far more significant and comprehensive than we’ve done before.”
Meanwhile, Crown is no longer in discussions with Oaktree about a potential buy-back of James Packer’s share. Neither Crown nor Oaktree gave an explanation to why this is the case. Oaktree is the latest entity to pull out of any potential Crown deal after arch-rivals Star Entertainment pulled the plug on its negotiations.
