Crown expects full-year statutory loss amid Covid-19 impact
Australian land-based casino operator Crown Resorts expects a sharp drop in profits for its 2021 fiscal year, due to the impact of the novel coronavirus (Covid-19) on business.
For the 12 months to June 30, 2021, Crown said theoretical earnings before interest, taxes, depreciation and amortization (EBITDA) before closing costs but before significant items is expected to be AU $ 240 million (AU $ 130.4 million). pounds sterling / 152.2 million euros / US $ 180.4 million) and $ 250 million. That means it is expected to halve, down from $ 503.8 million the year before.
Theoretical EBITDA after closing costs, but before significant items, is expected to be between $ 90 million and $ 100 million for the year.
Crown noted that the theoretical results have been adjusted to exclude the impact of the theoretical win rate variance on VIP program play at its Melbourne, Perth and Crown Aspinalls casinos. The theoretical win rate is the expected percentage of hold back on the VIP program game over time.
The additional costs incurred during the year relate to expenses while Crown’s gaming facilities have been closed due to government-enforced Covid-19 rules, such as paying staff salaries while they are not. were not working.
Crown properties have been closed for intermittent periods over the past 18 months as Australian states seek to slow the spread of Covid-19. While the facilities were able to open, they faced strict operational measures such as capacity limits and social distancing protocols.
In addition to lower EBITDA, Crown also said it plans to report an after-tax statutory loss for the full year, although this result remains subject to review by the Board of Directors and the management, as well as external auditors as part of normal year-end processes.
Net debt for the year, excluding working capital cash, is expected to be $ 900 million by year-end, with a $ 450 million project finance facility in place. last year to support the construction of Crown Sydney having been reimbursed by the regulations. to date sales of apartments on the site.
Crown intends to release full results for its 2021 fiscal year on August 30.
Meanwhile, Crown also provided a brief outlook for its 2022 fiscal year, noting that a number of factors are expected to impact its financial performance.
These include the continued impact of closures and operating restrictions related to Covid-19, as well as travel restrictions such as the closure of Australia’s international borders. Crown also said its ongoing review of high-end local players is leading to the exit of a number of customer relationships, which could impact performance as well.
Additionally, Crown noted the potential impact of ongoing regulatory processes, saying the outcome of these could adversely affect its financial performance. Higher business expenses related to these matters, including legal, advisory and associated fees, could also impact financial results.
In May, Crown Melbourne was ordered to pay a total of $ 22.5 million under measures set out by the New South Wales Independent Liquor and Gaming Authority (IGLA).
Crown to pay $ 12.5 million for the investigation, as well as an annual casino surveillance tax of $ 5.0 million for fiscal years 2021 and 2022, after regulator ruled Crown “unfit” to operate a casino in the Barangaroo district of Sydney in February.
The operator can pay an additional direct debit during fiscal year 2023, but this is “subject to further consultations”.
Crown is also currently the subject of several take-over bids from several parties.
Private equity giant Blackstone Group in March presented an offer of $ 8.02 billion to acquire the remaining shares of Crown, having already acquired 9.99% of the company in April 2020 with the purchase of a participation of Melco.
Blackstone then increased its offer to $ 12.35 in cash for each Crown share, up 4% from the previous offer of $ 11.85 per share submitted, but Crown rejected the proposal, saying the The offer undervalued its activity.
Australian land-based operator Star Entertainment Group has also put forward a proposal to merge with Crown and create a combined transaction worth around $ 12.00 billion. The Crown asked for more information on the offer before making a decision.
In addition, alternative investment management firm Oaktree Capital Management submitted a financing proposal worth $ 3.1 billion last month. Crown’s board of directors has yet to form an opinion on the proposal.