Crown Resorts’ shareholders hit back at management: 10 Key developments

Highlights

  • Crown Resorts’ shareholders have gone against the management for the second time for paying a hefty paycheque to departed executives.
  • In FY21 AGM, almost 30.73% of the votes (approximately 173.09 million votes) were cast against this decision.
  • Crown Resorts turned into a loss-making casino in FY21 from a profitable one in FY20.

Crown Resorts Limited’s (ASX:CWN) shareholders have again stood against the company’s decision to pay millions of dollars in remuneration to the executives who had left the casino operator. Almost 30.73% of the votes (approximately 173.09 million votes) were cast against the Crown Resort’s remuneration report in the AGM held today. It’s the second consecutive time that shareholders have disagreed with the company’s remuneration policy with over 25% votes.

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The management said it continued to develop its remuneration framework to align it with regulatory authorities, shareholders’ expectations and other stakeholders of the company. Let us have a look at top 10 developments regarding the crisis at Crown Resorts

  1. In FY21, the company paid more than AU$20 million to the employees at the top management who have left the company, which also included a massive AU$9.6 million one-time termination payment.
  2. From a net profit of AU$79.5 million in FY20, the company’s operations turned into a net loss of AU$261.6 million in FY21.
  3. There had been a massive jump of 151.7% in corporate costs to AU$111.6 million during FY21 as compared to FY20.
  4. Crown Melbourne has been closed for the majority of the start of FY22, which was the most profitable casino for Crown Resorts in FY20, clocking an EBITDA of AU$447.6 million, which dropped to AU$90.7 million in FY21, a massive 79.8% fall.
  5. Crown Sydney was closed during initial months of FY22, however, non-gaming operations recommenced to cater to only fully vaccinated guests and staff from 11 October 2021.
  6. Although Crown Perth was opened in July 2021, restrictions had a noticeable impact on the company’s operations. Revenue from 1 July to 17 October 2021 was down by 10% compared to the previous period. However, non-gaming revenue is up over 34% during the same period.
  7. It has been proactively engaged with the lenders to provide additional financial flexibility. Lenders have agreed to extend near-term maturities along with a waiver of financial covenants in relation to the 31 December 2021 testing date.
  8. In FY21, the company also secured a debt facility worth AU$250 million, which will partly be used to fund any required redemption of Crown’s Euro Medium-Term Notes. In certain circumstances, it will also be used for general corporate purposes.
  9. The company has created the role of Chief Risk Officer and has increased the allocation of resources towards Risk and internal audit teams.
  10. The company has also permanently ceased all junk operators and restructured its VIP business, with the closure of all remaining offshore offices.

Bottom Line

Crown Resorts has had a tough time in FY21, turning into a loss-making casino from a profitable one in FY20. Investors also revolted for the second consecutive time against the management for paying a hefty paycheque to the executives who have left the company.

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