Crown Resorts Tells Investors to Expect Financial Loss in 2021 Fiscal Year
Posted on: July 5, 2021, 08:58h.
Last updated on: July 5, 2021, 09:56h.
Crown Resorts is already warning investors that it will report an operating loss in its 2021 fiscal year, which ended June 30, 2021. The Australian casino company plans to release the full-year fiscal results on August 30.
Damaged by COVID-19, as well as regulatory inquiries into its businesses by two states in Australia, Crown says the 2021 fiscal year was a bust. In a release filed with the Australian Stock Exchange, Crown reveals that earnings before interest, taxes, depreciation, and amortization (EBITDA) will be approximately $240 million to $250 million. But that isn’t enough cash flow to offset the company’s liabilities.
Crown said it “expects to record a statutory loss after tax” for the full-year fiscal 2021. The company explained that it paid off $450 million in financing its $1.7 billion Crown Sydney integrated resort, but retains some $900 million of debt on its balance sheet.
Inquiries Cause Uncertainty
Crown Resorts in February was deemed unsuitable to hold a casino license in New South Wales (NSW). A more than year-long inquiry into the company conducted by the NSW Independent Liquor and Gaming Authority found that Crown routinely failed to adhere to anti-money laundering regulations, had alleged links to criminal networks, and did not prevent known problem gamblers from accessing its casino floors in Melbourne and Perth.
The NSW decision led to officials in Victoria opening its own inquiry into Crown Resorts. Since that royal commission was formed in May, Crown stock has plunged 11 percent.
In its securities filing today, Crown highlighted key factors that will impact its 2022 financial year.
Crown says potential operating restrictions and closures related to COVID-19 continues to threaten its business. The company also points to its player review of “its top-end local players” that is resulting in “the exit of a number of customer relationships.”
Finally, Crown says the outcome of the regulatory probe in Victoria has potential serious repercussions.
Crown is the subject of a number of regulatory processes. The outcome of those regulatory processes may potentially impact Crown’s financial performance,” the release stated.
“Crown also expects to incur increased corporate costs throughout the 2022 financial year, including legal, consulting, and associated costs, whilst these regulatory and any resulting processes continue,” the company added.
The casino giant also explained that it’s bringing on 70 full-time employees who will be assigned to the company’s Financial Crime & Compliance and Responsible Gaming departments.
Commissioner Ray Finkelstein is leading the Crown Resorts inquiry in Victoria. The former federal court judge will decide whether Crown qualifies to continue operating its Crown Melbourne casino.
Finkelstein isn’t happy as to what he’s learned so far in the suitability review.
I see evidence of misconduct or unacceptable behavior from people high-up and low down and in-between,” Finkelstein said today, as the inquiry begins its final week of hearings.
“Wherever I look, I see not just bad conduct, but illegal conduct, improper conduct, unacceptable conduct — and it permeates the whole organization,” he concluded.