A $4 million loss on international commission business in the first three months of the 2003 financial year has cast a cloud over Perth casino group Burswood’s continued involvement in the high-roller market without tax concessions from the West Australian Government.
Burswood’s announcement of the surprise ICB loss came as the board confirmed it was considering raising fresh equity as the September 30 deadline approaches for the $67 million settlement of a 1997 agreement to buy the five-star Burswood Hotel from Japanese businessman Tiebu Ogino.
Burswood reported a 6.9 per cent slide in earnings to $20.6 million for the 2002 financial year, a result chairman David Young said was affected by construction disruptions at the casino and resort complex, the impact of September 11 and the collapse of Ansett.
Mr Young said the 56.2 per cent rise in turnover to $85.2 million in ICB, along with an improved win percentage of 1.42 per cent, was a positive feature of the 2002 result. He said that represented the first ICB increase since the 1996 financial year, boosted by Burswood’s penetration into new international markets.
However, Mr Young said that since the June 30 balance date, a deteriorating win rate of just 0.5 per cent had flowed through to produce a $4 million loss on ICB.
Burswood wants a reduction in its 15 per cent high-roller tax rate as part of a suite of concessions sought from the State Government, which remain the subject of sensitive negotiations.
“It [the $4 million ICB loss] underscores certain points we’ve made about our tax regime,” Mr Young said.
“The casino tax that applies to our ICB business is a cost that we have to bear in mind when we carry out a strategic review as to whether you’re in the business or whether you’re out of it. At the moment, we’re in the business but we do have the highest tax rate on ICB in Australia. Other casinos have rates as low as 9-10 per cent.”
Mr Young confirmed that the future of Burswood’s loss-making Dome concert and exhibition venue formed part of the discussions with the Government. However, he would not be drawn on speculation the Government was encouraging Burswood to help fund the development of a new $50 million multipurpose stadium as a trade-off for permission to demolish the Dome.
Burswood’s recent expansion and refurbishment of its UFABet casino and resort facilities saw borrowings increase $38 million to almost $245 million during the reporting period.
“Although our operating environment in the short term will continue to be difficult, the company’s investment in new and improved facilities has positioned Burswood strongly to grow and deliver long-term value for shareholders,” Mr Young said.