Crown results show VIP revenue crash after China arrests
23 February 2017
With a potential shareholder revolt looming via a class action, today’s half year results from Crown Resorts Limited (CWN) show a 45 per cent dive in VIP revenue – following the company’s VIP strategy in China coming unstuck after the arrests of several staff.
The potential shareholder class action, run by Australia’s leading class action law firm Maurice Blackburn Lawyers, focusses on the risk Crown’s VIP gambling marketing strategy in China posed to revenue – and therefore shareholders and the share price.
Principal Julian Schimmel said that the revelation of the arrests of Crown staff in China on suspicion of gambling and crimes led to the Crown share price falling 14 per cent in a day.
“There is a compelling set of events suggesting that shareholders should have been told about the risks the Chinese environment posed to the company’s revenue streams, and therefore should have been factored in to the share price, but it wasn’t,” Mr Schimmel said.
“Despite repeatedly making statements over a period of several years as to the significance of the Chinese VIP gaming market to the company’s strategy and earnings, Crown then tried to downplay the significance of the staff arrests claiming that the Chinese VIP market only comprises a small proportion of the company’s revenue.
“Today’s half year results demonstrate that Crown’s China strategy was crucial to the VIP revenue stream and the effect of the arrests was to almost single-handedly cripple VIP revenue, which in turn has impacted overall revenue.”
Shareholders that want to recover compensation as a result of unfairly paying an inflated price for their Crown shares between 17 June 2015 and 14 October 2016 can now register their details online at www.mauriceblackburn.com.au/Crown cost and risk free.