Crown revenue down 62.1% in H1 as operator plans “complete reset”

| By Daniel O'Boyle
Australian land-based operator Crown Resorts’ revenue fell 62.1% to AUS$581.0m for the six months ended 31 December, as a tumultuous period saw the business swing to a $120.9m loss.
Victorian Government announces Crown extension

The steep drop in revenue was mostly due to the closure of Crown’s venues as a result of the novel coronavirus (Covid-19) pandemic. This included the operator’s flagship Crown Melbourne venue, which was closed for much of the six months.

Crown Perth, meanwhile, reopened in late-June 2020. Chief financial officer Alan McGregor said the property had performed “ahead of expectations” since reopening.

“The main gaming floor started strongly, with performance moderating across the half,” McGregor said. “Non-gaming revenues were adversely impacted by capacity constraints and reduced foot traffic to the property, but have shown improvement through the half, particularly over the summer holiday season, despite the restrictions which remain in place,”

“Crown Melbourne has progressively recommenced operations from November, albeit with only limited initial access to the property. Since the easing of restrictions on 9 December, results had shown improvement but continued to be impacted by ongoing limitations on capacity.”

Crown Sydney opened for the first time in December 2020, but gaming operations could not yet open because of the inquiry into the operator’s licence.

Last week, the inquiry published its full report, which found that it was unsuitable to operate the casino. It may still do so if it makes certain changes, including ending its ties with junket operators and conducting financial and compliance audits.

Following the release of the report, chief executive Ken Barton stepped down with executive chairman Helen Coonan taking over on an interim basis.

“Despite the uncomfortable reading at times, Crown has welcomed the Commissioner’s report,” Coonan said. “We see it as an opportunity for a complete and comprehensive corporate reset.

“We recognise the need for immediate and swift action and I would like to reiterate my commitment to driving the necessary ‘root and branch’ change that is required,” she explained. “Crown has committed to working constructively with ILGA to advance reforms necessary to allow it to give effect to the Restricted Gaming Licence in Sydney.”

Coonan added that she was determined to lead a turnaround for the operator.

“As interim executive chairman, I am determined to provide the leadership required to drive change,” she said. “My job is to lead Crown to become a stronger company, a more transparent company and a more respected company. A better company.”

Because of the closures of Crown Melbourne, Crown Perth became the operator’s leading property in terms of revenue, bringing in $409.0m, down 5.3%.

Gaming machine revenue was the largest portion of this total, at $171.6m, up 19.0%, while main floor table games brought in $103.5m, up 5.7%. Hold-adjusted VIP revenue was just $400,000, down 99.0%, and non-gaming revenue $133.5m.

Crown noted that VIP revenue across all of its resorts dropped especially significantly because of restrictions on international travel.

The operator said that Crown Melbourne’s revenue – adjusted for hold percentages – came to $97.1m for the quarter, down 90.5%. This was made up of main floor table revenue of $30.3m, machine revenue of $23.4m, adjusted VIP revenue of $3.7m and non-gaming revenue of $39.7m.

While Crown did not reveal its revenue from digital operations, it said earnings before interest, tax, depreciation and amortisation (EBITDA) was $23.2m.

Crown’s overall EBITDA for the half was $4.4m, down 99.0%.

After accounting for closure costs, pre-opening costs and other one-off items, Crown’s net loss after tax was $120.9m, compared to a $218.2m profit a year before.

Crown also announced that Mary Manos has stepped down from her roles as general counsel and company secretary with immediate effect. McGregor will take over as interim secretary.

“In consultation with Mary, the Board has determined that, with the regulatory challenges facing Crown, the role of General Counsel and Company Secretary will be split into two separate roles,” Coonan said. “This represents a further significant governance improvement for Crown and demonstrates Crown’s commitment to a well resourced governance, legal and compliance function.”

Directors Guy Jalland, Michael Johnston and Andrew Demetriou also resigned this week, with Nigel Morrison being appointed to Demetriou’s spot.