Crown Resorts announces share buyback, shelves spin off plans after revenues drop
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Crown Resorts has shelved plans to spin off a property trust holding most of its Australian assets and announced a A$500m share buy back amid a plunge in revenues linked to the arrests of 18 employees by Chinese authorities.
The casino operator, which is owned by Australian billionaire James Packer, also announced Rowen Craigie was stepping down from the chief executive’s post at the end of February. His duties will be picked up by John Alexander, who was elevated to chairman after Robert Rankin announced he was stepping down from that position in January.
Crown said on Thursday revenues at its Australian operations fell 12.5 per cent to A$1.48bn in the six months to end December. Group underlying profits dropped 9.1 per cent to A$191.3m in the same period.
“Crown’s Australian operations’ first half result reflected difficult trading conditions,” said Mr Alexander. “The year on year decline was due primarily to the reduction in VIP program play revenue in Australia, which was down 45.3 per cent during this period.”
VIPs, high rollers who can spend tens of thousands of dollars on single hands, generated A$19.6bn in turnover over the six months, said Crown.
The company said it would buy back A$500m shares based on its closing share price of A$11.39 per share on 22 February, which would amount to about 43.9 m shares or six per cent of the company’s issued share capital.
Crown also revealed it would not now proceed with a proposed IPO of a 49 per cent interest in some of its Australian hotels and casinos. The company said it did not need to pursue the option, as it had already raised funds to pay down debt through the recent sale of its stake in Melco Crown Entertainment, a Macau-based casino operator.
Crown reported an overall net profit after tax of A$359.1m, an increase of 75 per cent on the previous period. This was due to the sale of its shares in MCE.
Crown is restructuring its operations to focus its interest mainly on Australia following the arrest of 18 employees in October by Chinese authorities on gambling-related charges. It is part of a legal blitz launched by China against foreign casinos that contravene its laws by seeking to lure its citizens overseas to gamble. The campaign, part of Beijing’s wider move to clamp down on corruption, led to the arrest of more than a dozen South Korean casino managers in 2015.
Crown shares were up 8.4 per cent by lunchtime in Sydney, close to their high of the day.