From Melbourne today Crown Limited has announced its results for the half year ended 31 December 2010. As one of Australia’s largest entertainment groups, Crown wholly owns and operates two of the country’s leading integrated resorts, Crown Entertainment Complex in Melbourne and Burswood Entertainment Complex in Perth. The company also holds a significant interest in Melco Crown Entertainment Limited, a NASDAQ listed company operating casino/hotel properties in Macau which include City of Dreams, Altira Macau and Mocha Clubs.

Crown reported main floor gaming as having generated growth of 6.6% and non-gaming revenue growth of 14.1%. However, VIP program play turnover of A$21.5 billion was down 8%. Normalised revenue was up 4.3% to A$1,253.5 million and normalised EBITDA up 2.4% to A$439.2 million. Normalised profit rose 14% to A$165.8 million.

Crown CEO Rowen Craigie, said: “Overall, the results for Crown’s wholly-owned Australian casinos, Crown Melbourne and Burswood, reflected a solid performance in the non VIP businesses while the VIP results reflected the competitive impact of the two new integrated resorts in Singapore. Crown Melbourne benefited from the completion of some capital refurbishments at the property. Burswood’s results were affected by the impact of the complex-wide renovations, particularly the disruption to the InterContinental hotel, the Atrium Restaurant & Lobby Lounge and the completion of the main gaming floor refurbishment.”

Current trading at the Australian casinos is said to be pleasing. The first seven weeks of 2011 is not comparable to the same period of 2010 because of the different timing of the Chinese New Year. In Macau, where Crown holds a 33.4% interest in Melco Crown Entertainment, trading is also said to be pleasing. The Macau gaming market as a whole exhibited strong growth throughout 2010 and reached a record in December.

Operating cash flow for the period was A$175.9 million. After net capital expenditure of A$188.2 million and dividend payments of A$143 million, total group debt was A$965 million as at 31 December 2010. Total cash and cash equivalents at 31 December 2010 was A$144.6 million, which consisted of cash maintained for working capital purposes of A$138.3 million, with the balance of A$6.2 million available for general purposes. Net debt, excluding working capital cash, at 31 December 2010 stood at A$958.8 million with no major debt refinancing requirements until June 2013.

Other Crown investments include:

Betfair – Crown’s equity accounted share of Betfair’s loss was $1.5 million. The loss is primarily due to an increase in legal fees and product fees. Betfair has lodged an application for leave to appeal to the High Court against the judgement of the Full Federal Court in its case against Racing NSW and Harness Racing NSW. It is expected that the High Court will hear the application for special leave in March 2011.

Cannery – Crown holds a preferred instrument in Cannery. Crown has now received the necessary regulatory approvals in Nevada and Pennsylvania and expects to be in a position to convert this preferred instrument to equity shortly. Upon conversion, Crown will hold a 24.5% share in Cannery.

Aspinalls – During the period, Crown provided additional funding of £6.0 million to reduce existing bank debt. Crown also provided an £11.8 million short-term loan to Aspinalls as a consequence of an unusually low hold rate at the Aspinalls Club during the period. This has resulted in a total debt owed to Crown of £35.4 million.

Gateway – Crown’s equity and debt investments in Gateway had previously been written down to nil. Gateway has now finalised a restructure of its equity and debt so that Crown and its joint venture partner, Macquarie Group, now each own 1% of the restructured entity. Crown was not required to contribute any further capital and has been released from all obligations. The restructure has no material impact on Crown’s financial results.

After the Crown results announcement, the company’s stock fell as earnings missed analyst estimates. (E-02.25.11)

© Copyright 2011 CasinoCompendium



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