The Chief Executive Officer of Crown Resorts – Mr. Rowen Craigie – shared that an agreement with the Victorian government, which reduced the VIP gambling tax rates, will provide his company with the opportunity to be more persistent when seeking more high rollers.
The Australia-based gaming and entertainment group has been currently focused on neutralizing the negative effect of declining earnings in Macau.
A revival of the company’s VIP revenue generated at its flagship property Crown Melbourne was considered as the main beneficial factor for its half year result. The latter managed to surpass initial analysts’ projections and boosted the company’s shares by 36% in comparison to the 12-month low of AU$11.74 reached in January 2015.
Crown’s statutory net profit tumbled by 47.2% and reached AU$201.8 million due to the difficulties faced by Macau, where two casinos are controlled by the company’s subsidiary Melco Crown. The results were also dragged down by a one-off write-down estimated to AU$61.3 million.
Still, over the six months ended on December 31st, the company generated a 2.3% increase of its net profit excluding the impact of volatility usually associated with high rollers to AU$322.39 million in comparison to the same period a year earlier. The normalized half-year revenue rose by 17.2% and reached AU$1.7 billion. The result beat initial analysts’ forecasts of AU$1.49 billion.
According to Mr. Craigie’s statement, the agreement that took effect in November last year was not the reason for the 61.4% increase in bets made by VIP players, who generated a total of AU$37.1 billion of the six months in question. The deal, however, was one of the factors that had a beneficial impact on the company’s overall performance and helped it reduce the tax rate on VIP revenue to 10%.
Chief Executive Officer Craigie shared his belief that the deal would provide Crown with the opportunity to increase its expenditures on sales and marketing over the upcoming months.
The agreement with the previous Napthine government was reached after eight months of negotiations. New taxes on poker machines were imposed in December 2013, but the company avoided paying them at the end. Crown’s license expiry was also prolonged by 17 years to 2050. It also got more than 200 new pokies and table allotments.
In addition, Crown revealed that it intends to pay a half-franked interim dividend that amounts to 18c to its investors, who are registered until March 27th, on April 10th. The so-called franked dividend eliminates the double taxation of dividends received in Australia.
