Despite its domestic casinos seeing a ten per cent increase in GGR, Crown Resorts saw its overall revenues slide by 22 per cent due to the continued slump in Macau.
Revenues dropped to A$205m in the six months to December with crown’s Macau casinos falling by 30 per cent whilst its Australian casinos rose 9.8 per cent.
Chief Executive Officer of Crown Resorts, Rowen Craigie, said: “The 2016 first half results across Crown’s portfolio of businesses were varied. Main floor gaming revenue at our Australian resorts increased by 9.8 per cent which was a solid performance. VIP program play turnover in Australia of $35.7bn (down 3.8 per cent) was a reasonable outcome given the strong growth in the prior comparable period of 61.4 per cent and the depressed nature of the VIP program play market across Asia.”
Crown has a share of Melco Crown’s casinos in Macau, comprising Altira Macau, City of Dreams, Studio City and Mocha Clubs. Melco Crown’s profit of $37.2m was down $73.2m or 66.3 per cent on last year. After adjusting for an unfavourable variance from theoretical and pre-opening costs, Crown’s share of Melco Crown’s profit was $9.4m, down $75.9m or 89 per cent.
Mr. Craigie said: “While the medium to long-term outlook for Macau remains positive, Macau continues to experience a challenging period which has adversely affected all casino operators. Overall gross gaming revenue across the Macau market in the half year to 31 December 2015 declined 31.1 per cent. However, Melco Crown has further expanded its market share in Macau and increased exposure to the more resilient and profitable mass market segments.”
In the Philippines, City of Dreams Manila continues to grow a more diversified revenue stream, with the continuing ramp up of the rolling chip business complementing its mass market gaming and non-gaming segments. “Melco Crown remains confident in the long term success of the Philippines gaming market given the country’s anticipated economic growth and supportive demographics, together with an expanding and Government-supported inbound tourism market,” Mr. Craigie added. “MCE has announced the payment of a special dividend on or about 16 March 2016. Crown’s share of the special dividend will be US$120m.”
In Australia, normalised EBITDA from Crown Melbourne was $352.5m, up 0.4 per cent on last year. The overall normalised operating margin decreased from 30.2 per cent to 29.3 per cent. The decline in margin is due to the change in the mix of VIP program play in favour of junket play versus direct premium play and the additional costs associated with that change in mix. Normalised EBITDA from Crown Perth was $130.1m, up 2.4 per cent on last year.
The company has also been hit with a A$250m tax bill, described as “amended assessments” from the Australian Tax Office regarding income tax paid for the financial years ending June 30, 2009 to June 30, 2014. The tax relates to Crown’s investment in its US joint-venture, Cannery Casino Resorts, and other investments in the country. Crown said it would contest the tax.
“Crown considers that it has paid the correct amount of tax and intends to pursue all available avenues of objection (including, if necessary, court proceedings) to the amended assessments,” it said.