Crown Casino is one of the biggest casino operators in the world, and certainly the biggest one in Australia, hands down. As their success has been undoubtedly one of the stories of the last years, they have been continuously hit with humongous tax bills, like the latest $270m that they just challenged in court. The formerly owned Packer family casino is now facing an uphill battle while challenging the tax bill.
The tax bill is a hefty 5% of all of the Crown’s normalized net profit in 2017, but the reason this one stings a lot harder is that it comes combined with the back taxes and penalties that were ensued after the company’s expansion that just took place. In 2017, the Casino tried to take Las Vegas over by storm, but it appears that it came off as more than the company could chew, at least at that time.
The assessment amended is in relation to the treatment of the tax matter of some of the money that came in from financing for the Crown investment in a number of investments in North American and Cannery Casino Resorts. The period in question is 2009-2014.
The Crown’s expansion plans met a lot of hiccups down the road, the main and most mediatized one being the 2016 scandal, where the company has been accused and a dozen staff members even jailed for promotiin gambling in mainland China.
The bill has been fought continuously by Crown and its shareholders since way back in 2016, the problem and allegations being later resolved after the tax office dismissed the objections of the operators in May. Crown reiterates that it considers 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.
Crown Resorts full-year strong performance
The year has been more than kind to Crown Resorts, who had an unprecedented year of huge winnings and all-around solid performances, reporting net profit of A$326.7m. Although the casino was widely known as being the best destination for both VIP players and complete beginners that just want to test their luck, the net profit is truly unprecedented.
Normalized EBITDA across Crown Resorts reached A$878.3m ($651m), up 6.1%, boosted by strong performances from the company’s Australian properties which recorded normalized revenue growth of 10.6% to A$3.12bn. The normalized EBITDA across the casino also reached incredible and unprecedented amounts of almost A$900 million.
John Alexzander, the Executive Chairman of Crown, has publicly stated the following: “Main floor gaming revenue increased by 1.5%, with modest growth in Melbourne offset by softness in Perth.
“VIP program play turnover in Australia of A$51.5bn (up 54.5%) was a pleasing outcome, particularly at Crown Melbourne (up 73.9%), given the difficult trading conditions in the PCP.”
Despite subdued trading in Perth which only saw normalized revenue grow by 1% year-over-year to A$844.5m, Melbourne operations increased their revenue by 14.2% to A$1.21bn, helping the company’s revenue to grow by 5.8% before significant items.
The net profit after tax was actually down no less than 70% for Melco Crown Entertainment for $1.16bn last year, after significant changes.
In truth, Crown did com already complete the sale of Alon Las Vegas for no less than $300m, a 62% interest in CrownBet along with advanced loans for A$150m, around 4.2 million shares in Caesars for A$53.3m, and a 50% interest in Ellerston for A$62.5m.
Crowns digital division is growing rapidly, up 81.8% as online social gaming operations generated A$26.9m.
The company is now also intending to buy-back around A$400m of shares, around 4.4% of issued capital or 30 million shares, which should begin on 30 August.
One key non-financial development to emerge from the company’s update to investors was the commencing of proceedings against the Barangaroo Delivery Authority in New South Wales.
Crown Resorts are looking for “injunctive relief and declarations against the BDA that, in substance, require the BDA to comply with a number of its contractual obligations under the Crown Development Agreement (CDA).