Perth casino keeps Crown Resorts in the game

While much of the attention at Crown Resorts (ASX: CWN) has surrounded the findings of the NSW Bergin Inquiry and two Royal Commissions that are ongoing in VIC and WA, results released today show how dire the impact of lockdowns has been on the embattled casino operator.

The group reported a $261.6 million statutory loss for FY21, and even its theoretical profit estimate before closure costs and significant items is negative at $84.2 million in the red.

Crown has saw a 77.4 per cent decline in EBITDA to $114.1 million, although that result would have been unlikely if it weren't for a 50.4 per cent jump in earnings to $231.8 million at Crown Perth - an operation that received $24.7 million in JobKeeper subsidies, compared to the $54.9 million in wage subsidies received by Crown Melbourne.

The Perth casino recorded a 38.9 per cent lift in main floor gaming revenue to $478.3 million, while non-gaming revenue increased by 20.4 per cent to $264.1 million.

It was a tale of two cities as Crown Melbourne reported an EBITDA loss of $100.6 million, compared to a profit of $381.8 million in FY20. The operation's main floor gaming revenue was down 54.3 per cent at $406.9 million, and non-gaming revenue declined by a similar percentage to $171.2 million.

The group received proceeds of approximately $750 million from apartment sales at Crown Sydney, of which $450 million was used to repay a project finance facility. The site at Barangaroo had its non-gaming sections opened to the public on 28 December, but after four years of construction the company is still awaiting a ruling from the NSW gaming regulator to turn on its pokie machines for the public.

Crown Resorts notched up $62 million in pre-opening costs for Crown Sydney, while other significant items included a $37.4 million underpayment of casino tax, $21.7 million in restructuring costs, and a $12.5 million contribution as part of a deal with NSW regulators.

Crown's chief financial officer Alan McGregor says the group's full-year results reflect the severe impact on operations from the COVID-19 pandemic.

"Crown Melbourne’s gaming operations were closed for a large part of the financial year and, when open, gaming facilities were subject to ongoing operating restrictions," McGregor says.

"Conversely, Crown Perth delivered strong performance during the financial year. Crown Perth re-opened with restrictions towards the end of June 2020 and remained open for the entirety of the first half, trading above expectations.

"Crown Perth faced several short-term closures throughout the second half, and whilst trading performance has rebounded quickly following each shutdown, overall performance moderated throughout the course of the year."

McGregor notes Crown Sydney delivered an overall operating loss for the financial year given the impact of COVID-19 related restrictions, border closures and the limited scale of operations.

"We are continuing to see good momentum in Crown Sydney apartment sales, with over $1 billion in gross sales and pre-sale commitments achieved to date, representing approximately 80 per cent of the apartments by number.

"Settlement of the apartment sales commenced in April 2021, with approximately $650 million in proceeds received during the period allowing Crown to reduce outstanding debt and fully repay the $450 million project finance facility prior to year-end," he says.

He emphasises pandemic-related restrictions continue to affect performance in the current financial year.

"Crown Melbourne has been closed for the majority of this financial year, whilst stay at home orders were imposed in Sydney on 26 June 2021 and remain in place," he says.

"Crown Perth recommenced operations on 6 July 2021 following a short-term closure towards the end of June 2021, and is transitioning gaming and non-gaming activities to pre-lockdown conditions following the staged removal of remaining restrictions.

"I would like to acknowledge the support we have received from our relationship banks, with modifications to our financing arrangements agreed post year-end to provide Crown with additional financial flexibility through this challenging period."

Interim chairman Jane Halton has thanked her predecessor Helen Coonan for stepping up and providing leadership and stability during a period of intense regulatory scrutiny and unprecedented impacts on business operations due to COVID-19.

"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," Halton says.

"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," she says.

"Under the new leadership of our significantly renewed board and senior management team, Crown is well placed to continue the momentum of change as we implement the reforms contained within our comprehensive Remediation Plan."

Halton says the company will work hard to earn the continued trust of regulators and communities as a responsible operator of "outstanding quality integrated resorts".

"We believe successful implementation of this Remediation Plan will position Crown as an industry leader in our approach to governance, compliance, responsible gaming and the management of risk – in particular the risk of financial crime – underpinned by an uplifted organisational culture," she says.

"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 challenges 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."