Uncertainty over Crown Resorts ability to continue as going concern

Auditor KPMG has said the company’s future is uncertain due to regulatory investigations and the impact of the Covid-19 pandemic on revenue.

Australia.- KPMG, Crown Resorts’ auditor, has warned that multiple investigations and the impact of the Covid-19 pandemic have created significant uncertainties over whether the Australian casino operator can continue to operate. 

Since the company faced money-laundering allegations in 2019, it has been involved in legal disputes and is currently facing two Royal Commissions. Crown has also said that the Australian Transaction Reporting and Analysis Centre (Austrac) is “very likely” to bring a civil lawsuit against its casinos in two cities, which could lead to hefty fines.

According to the Strait Times, the auditors’ report said Crown bonds were in danger of being reimbursed if its credit score falls beneath speculation grade. 

Auditors said: “The conditions disclosed… indicate a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern.”

Crown Resorts has made reforms, but Adrian Finanzio, counsel assisting the inquiry, has told Victoria’s Royal Commission that Crown Melbourne should lose its casino licence due to serious misconduct.

Crown shares, which have fallen 26 per cent since its 2019 highs, were 1.5 per cent lower to close at 9.76 on Thursday, somewhat overperforming a more extensive market that fell 1.9 per cent. 

Crown Resorts revenue down 31 per cent for FY21

Crown Resorts’ results for the fiscal year 2021 reported revenue down 31 per cent year-on-year to AU$1.5bn (US$1.1bn). Reported EBITDA was down 77 per cent to AU$114.1m. Crown reported an NPAT loss of AU$261.6m.

The company attributed losses to Covid-19 restrictions and and the temporary closures of Crown Melbourne and Crown Perth.

Jane Halton, Crown’s interim Chairman, said: “2021 has been a challenging year for Crown, with intense regulatory scrutiny and unprecedented impacts on business operations from the Covid-19 pandemic.”