Coonan to get $2.5m while Crown seeks new CEO

Crown launches a global CEO search as Helen Coonan says she won’t stay boss for long and James Packer takes a dividend hit.

The new Crown building in Sydney. Picture: Jane Dempster

Crown Resorts has already kicked off a search for a new CEO following the resignation of Ken Barton last week after he was admonished in the Bergin report, as the under-pressure casino major swung to a first half loss of $120.9m.

While interim executive chairman Helen Coonan will earn a jump in annual salary to $2.5m, major shareholder James Packer will be hurt by the company’s decision to suspend its dividend for the second consecutive half.

The under-pressure company, of which Mr Packer owns 36.7 per cent, traditionally pays a yearly dividend of 60 cents a share – but COVID-19 lockdowns of its Melbourne, London and Perth casinos has crunched cashflow as it was helped by more than $140m in JobKeeper benefits.

The result came as Crown is facing a probe in Western Australian, while Victorian authorities are finalising their review of the business. In NSW where it has been forced to delay the opening of its $2bn Barangaroo casino Crown is fighting to retain its gaming licence following this month’s recommendations of the damning Bergin review.

The market shrugged off the latest loss, with shares in Crown gaining 0.4 per cent to close at $9.73 a share. Crown shares have fallen more than 5 per cent in the past month.

Ms Coonan on Thursday said she did not plan to remain in the top job for an extended amount of time, with the board already appointing an external firm to conduct a “comprehensive global search” for a new CEO.

“I did not take this position lightly but the board concluded the approach would provide leadership, stability and certainty at an important time,” Ms Coonan said at a results briefing.

“Let me be clear: I do not see myself as executive chairman for an extended tenure.”

Helen Coonan will get $2.5m a year while she serves as Crown’s executive chair. Picture: Adam Yip

But she would not be drawn on whether she will resign from the board when a new CEO is found, having already spent almost a decade as a director of the company.

“During the Bergin inquiry I gave an assurance to the commissioner that I would stay the course for as long as is necessary,” Ms Coonan said.

“What happens when we get to that point...Currently, I am totally focused with where we’ve got to go with implementing these reforms.”

Ms Coonan was also forced to defend her own pay packet.

“What my remuneration is was something that was arrived at by an independent remuneration consultant. It had nothing to do with me.”

Ms Coonan reaffirmed her commitment to a “complete and comprehensive” reset of the company after the NSW gambling regulator determined the company is not suitable to operate its Sydney casino, and vowed to work with Victorian and West Australian regulators as they conduct their own investigations into Crown’s suitability.

She said this could include further board departures if necessary. Earlier in the day the NSW Independent Liquor and Gaming Authority chairman Philip Crawford said both he and Ms Coonan were pushing for Harold Mitchell to step down, but Ms Coonan would not confirm whether Mr Mitchell would leave the board.

“As we have previously stated, we are working cooperatively with ILGA to clearly define the remediation actions and measures of suitability,” she said.

“And that includes in relation to the board – and we will also work of course with the VCGLR and the WA authority in regards to any matters they raise regarding board members.”

She also said she had only spoken to Mr Packer once since the report was released last week, and that his holding company CPH would deal with the ILGA separately on issues that impacted it, like a proposed 10 per cent cap on shareholdings.

“It was necessarily important and entirely proper to gain some indication from him about what CPH may do about findings that the inquiry made in relation to CPH,” Ms Coonan explained.

“It was in that context that I had a very brief conversation – it didn’t come to any views, and I understand that CPH may be making separate representations to the authority in relation to how they will deal with the report.”

One new initiative unveiled on Thursday is an internal review of how Crown treated Jenny Jiang, one of the 19 staff in China arrested in 2016.

Crown publicly questioned her objectivity in an ASX statement and advertisement in 2019.

Earnings slump

Statutory revenue for the December half fell 62.1 per cent to $581m while EBITDA fell 99 per cent to $4.4m.

The costs incurred during the mandated closures amount to $82.6m, but the company received $146.3m in JobKeeper payments and other wage subsidies in the UK.

“Crown Melbourne recorded $27.1 million in JobKeeper subsidies for employees who worked in either a full or partial capacity and $82.9 million in JobKeeper amounts that were paid in their entirety to Crown’s employees who were stood down,” the company said.

“During the half, Crown Perth recorded $24.7 million in JobKeeper subsidies for employees who worked in either a full or partial capacity and $9.0 million in JobKeeper amounts that were paid in their entirety to Crown’s employees who were stood down.”

Crown Melbourne, which was closed for most of the half, will receive the final round of JobKeeper payments up to March while Crown Perth will not qualify with earnings growing at the Burswood casino during the period.

EBITDA dived 99.8 per cent to $0.7m at Crown Melbourne, grew 35.4 per cent to $162.9m at Crown Perth while Crown Aspinalls in London booked an EBITDA loss of $4.7m.

Overall hotel occupancy across Crown Perth’s three hotels was approximately 63 per cent, while overall hotel occupancy across Crown Melbourne’s three hotels was approximately 29 per cent, including rooms that were used in the COVID-19 quarantine scheme.

Crown Sydney has seen more than 11,000 guests since it opened last December and has booked $900,000 in revenue over the four days it was open within the period, against $25.3m in pre-opening costs.

Other bright spots included apartment sales at Crown Sydney at Barangaroo, which have reached $870m, and Crown’s digital wagering division, which saw EBITDA grow 64.8 per cent to $23.2m due to improvements in the Betfair business.

Crown now expects a net project cost for Crown Sydney of approximately $1.1 billion – around half the actual cost of the project – as a result of higher expected apartment sales.

But the closures of its venues have also seen Crown’s debt quadruple to $1.24bn in the year to December 30 – although chief financial officer Alan McGregor said apartment sales would service the debt.

Moody’s Investors Service Analyst Maadhavi Barber said ongoing regulatory challenges could prove “onerous” for the company’s debt levels.

“Crown’s credit profile continues to be supported a solid liquidity profile and upcoming receipts of Crown Sydney’s apartment sales,” she said.

Still, Crown’s gaming operations remain exposed to risks from ongoing investigations by regulators in Sydney, Melbourne and Perth, as well as Austrac.

The company also confirmed that company and general secretary Mary Manos would step down, with the role to be split and CFO Alan McGregor to serve as company secretary on an interim basis.

“In consultation with Mary, the Board has determined that, with the regulatory challenges facing Crown, the role of general counsel and company secretary will be split into two separate roles,” Ms Coonan said.

This represents a further significant governance improvement for Crown and demonstrates Crown’s commitment to a well- resourced, governance, legal and compliance function.”