Crown’s ‘purgatory’ nightmare drags on

The casino giant on Monday reported a $261.6m full-year loss, down from a $79.5m net profit for the previous financial year, which was in itself an 80.2 per cent slump.

Costs for mandatory closures due to lockdowns were an eye-watering $120.6m net, but a bright spot was its Perth venue, which was only hit by short shutterings and traded above expectations as Western Australia enjoyed relatively Covid-free status.

Interim chair Jane Halton – who survived the board purge in the wake of damning findings by the NSW regulator into money laundering at the Perth and Melbourne venues – said it had been a “challenging year … with intense regulatory scrutiny and unprecedented impacts on business operations from the Covid-19 pandemic”.

She is keeping the seat warm while former Telstra supremo Ziggy Switkowski awaits regulatory approvals to take on the daunting role.

“Crown is well placed to continue the momentum of change as we implement the reforms contained within our comprehensive remediation plan,” Ms Halton insisted.

“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.”

Crown would “work hard to earn the continued trust of our regulators and communities”, she said, even as the royal commission in Perth continues and after the commissioner for the separate Melbourne probe, former Federal Court judge Ray Finkelstein, flagged he was well and truly willing to strip Crown of its Victorian gaming licence if deemed necessary.

Ms Halton said the company was “excited about the prospects for Crown Sydney”, where only non-gaming has been allowed since the $2.2bn venue opened in December.

Unsurprisingly, Moody’s Investors Service analyst, Maadhavi Barber, said the results were credit negative, reflecting continued coronavirus containment measures across the gaming sector and costs associated with the various probes.

“We believe that Crown remains willing and able to resolve the identified shortcomings in the various inquiries and investigations,” she said.

“However, we consider the remediation steps required for Crown to be deemed suitable to hold its Sydney gaming licence, and potentially Melbourne and Perth licences, are far-reaching and complex.”

Crown also revealed it was no longer in talks with private equity firm Oaktree Capital Management about buying out major shareholder James Packer, who holds a 37 per cent stake and was found by the NSW inquiry to have had a “disastrous” influence on the company, pushing hard to secure more of the high-roller “junket” market at the centre of the money laundering scandal.

Macquarie Research noted Crown had commenced a review of its Crown Aspinalls business in the ritzy London area Mayfair, including its performance, prospects and gaming tax matters.

“There was no surprise in the pre-announced result and given Covid impacts and the regulatory reviews, we would expect the market to look straight through it,” Macquarie Research said.

“Crown Resorts faces a myriad of risks.

“Whilst we place the loss of a casino licence as a low risk, these outcomes will shape Crown Resorts’ future.”

Again unsurprisingly, Crown did not declare a dividend for its suffering shareholders.

Shares in the company sank to a close of $6.12 in March last year as the health crisis took hold, recovering to above $13 in May this year, but have since fallen back.

Crown shares were down 0.32 per cent at $9.29 towards market close on Monday.

Ord Minnett described the company as being “in purgatory”, but said its share price “implies worse”.

Originally published as No surprises as Crown posts epic loss but reveals Oaktree talks over Packer stake end, London ‘review’