Crown revenue down in FY20 as Melbourne venue remains closed

Australian land-based operator Crown Resorts made AU$2.24bn (£1.22bn/€1.35bn/$1.60bn) in revenue for the year ending 30 June, 2020, a 23.6% decline, as the novel coronavirus (Covid-19) pandemic had a major impact on business for the latter half of its fiscal year.

Of Crown’s total in revenue before commission, $1.58bn came from its Crown Melbourne venue, down 25.9%. The Crown Perth casino revenue fell 24.9% to $607.5m, while Crown Aspinalls in London contributed $42.7m, down 24.1%. Revenue from sports betting and online operations increased by 4.3%, however, to $134.7m.

Crown made $200,000 in other operating revenue, and after paying out $165.0m in commissions (down 36.8%) total revenue from customers amounted to $2.20bn.

The operator made a further $26.2m in tenancy revenue, for $2.23bn in operating revenue. The business the reported an additional $10.2m in interest and $100,000 in the disposal of assets for overall revenue of $2.24bn.

Crown chief executive and managing director Ken Barton said novel coronavirus (Covid-19) had a serious impact on the business, as early as January 2020.

“2020 has been an extremely challenging year. From late January 2020, Crown began to experience softer trading conditions as a result of travel restrictions and general community uncertainty in response to COVID19, particularly impacting visitation to Crown Melbourne,” Barton exlplained. “In March 2020, Crown was directed to close its gaming activities and a significant part of its non-gaming operations at Crown Melbourne and Crown Perth for an extended period, with our financial results reflecting the impact of these closures.

“These closures have also had a substantial impact on our people, with approximately 95% of our employees stood down following closure. I would like to thank our employees for their continued patience and support during this challenging time.”

Crown Resorts’ expenses, meanwhile, totalled $2.07bn, down 11.8%.

The vast majority of these costs, at $1.80bn (down 15.2%), were due to operating expenses. Cost of sales came to $124.1m, down 21.3%, while pre-opening costs came to $3.5m, impairment expenses came to $74.5m and other costs totalled $71.0m.

After accounting for $300,000 in profit from associates, this resulted in a profit of $163.4m before tax and financial costs, down 73.5%. Crown paid $10.2m in financial costs for a pre-tax profit of $153.2m, down 73.6%.

After paying $71.3m in income tax, the operator’s net profit came to $81.9m, down 79.7% year-on-year. Of this total, $79.5m (down 80.2%) was attributable to Crown’s owners.

Although Crown Perth has since reopened, Crown Melbourne remains closed due to restrictions in the state of Victoria.

“Crown Perth re-commenced operations before year end,” Barton said. “We are pleased to have been able to welcome back both customers and employees, which is a great step forward for us all and a great boost to the Western Australian economy. Initial trading has been encouraging, albeit under restricted operating conditions and for a relatively short period of time.

“Unfortunately, Victoria remains in Stage 4 restrictions and, as a result, Crown Melbourne remains closed. Our main focus continues to be on the health and wellbeing of ouremployees and guests, as well as the community more broadly. We will continue to work with the Government and health authorities on how we can safely re-open when it is appropriate to do so.

Barton added the business has been taking steps to ensure it has the liquidity to manage the ongoing closure of its flagship property.

“Given this backdrop, Crown has been focussed on liquidity management to ensure it is well placed to withstand this extended period of closure,” Barton said. “I would once again like to acknowledge the support we have received from our relationship lenders, with new bilateral facilities implemented during the year and the execution of the Crown Sydney financing facility following year end.

In June, the New South Wales Independent Liquor & Gaming Authority announced that it had resumed its inquiry into Crown Resorts, despite Melco Resorts selling its stake in the operator in April.

The inquiry was initially launched after Asian gaming giant Melco agreed to purchase a 19.99% stake for $1.76bn, which prompted allegations in the Australian press related to Melco's background, ownership and activities in Asia.

This ultimately led to Melco pulling out of the deal, selling its holding to private equity giant Blackstone Group.