Crown Resorts pandemic closures result in $120m loss

Crown Resorts pandemic closures result in $120m loss

With Crown Resorts' (ASX: CWN) Melbourne casino closed for most of the first half, the company's profits have taken a turn with a loss of $120.9 million.

The news comes as the company reports a raft of executive changes, including the stepping down of Crown's general counsel and company secretary Mary Manos.

In addition, Crown's executive chairman Helen Coonan has been given a hefty pay raise as she steps into a new role in the wake of Crown being found "unsuitable" to hold a casino licence in New South Wales.

Were it not for significant closure costs totalling $58.1 million and costs of $42 million relating to the opening of Crown's embattled hotel and sidetracked casino in Sydney, CWN's NPAT loss would've been $17.9 million for the half.

The resort and casino operator also saw its revenue dive, down 62.1 per cent to $581 million.

"Crown's first half results reflect the severe impact on operations from the COVID-19 pandemic. In particular, Crown Melbourne was closed for most of the half," says CWN CFO Alan McGregor.

"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."

The company's casinos were also impacted in Perth when the state was placed into lockdown, however this closure was at the beginning of 2021 outside of the 1H21 reporting period.

Overall hotel occupancy at Crown's three hotels was approximately 29 per cent in the half, with these rates including hotel rooms made available to the Victorian Government for the purpose of quarantining international arrivals.

EBITDA before closure costs and other significant items was a loss of $5.8 million, down 97.8 per cent on the prior corresponding period. The earnings figure includes $15.7 million in JobKeeper payments.

At 31 December 2020, Crown's net debt position was $1.2 billion, consisting of $1.7 billion in total debt and $479 million in cash.

Because of the impact of COVID-19 on the company, CWN's board has not declared an interim dividend for the half.

Coonan gets a hefty raise

In conjunction with its first half results, CWN today announced interim executive chairman Helen Coonan will get a major raise in remuneration.

The board has resolved that Coonan will be paid an additional $1.8 million per annum, bringing her total remuneration to $2.5 million per annum while in the role.

In addition, Mary Manos has stepped down from her role as general counsel and company secretary of Crown with immediate effect.

CFO Alan McGregor has been appointed as interim company secretary of Crown and will be the person responsible for communication with the ASX.

"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."

The changes come after Crown was deemed "unsuitable" to hold a gaming licence in NSW by the Independent Liquor & Gaming Authority (ILGA), in line with advice from the scathing Bergin Report.

The report triggered the resignations of three directors and CEO Ken Barton, following the report's call for a board overhaul and cultural change at the Packer family-backed group.

In the interim Barton has been replaced by chairman Helen Coonan - who advocates "branch and root change" at Crown - in the position of executive chairman.

Shares in CWN are up 0.41 per cent to $9.73 per share at 10.58am AEDT.

Crown is also facing the prospect of a fresh inquiry into its business dealings, with the Gaming and Wagering Commission Western Australia formally recommending an independent probe.

The WA State Solicitor Office has been asked to prepare terms of reference for the inquiry to determining Crown's suitability to hold the licence to operate the Crown Perth casino.

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