Boutique Asian casino operator Donaco International Ltd on Wednesday posted a comprehensive net loss of approximately AUD133.8 million (US$104.2 million) in the six months to December 31, 2017. That compares to a net profit of AUD14.8 million in the prior-year period.
In a filing to the Australian Securities Exchange, the casino firm blamed the net loss on an impairment charge related to its casino operations in Cambodia.
Donaco operates the Star Vegas Resort and Club (pictured) in Poipet, Cambodia, and the Aristo International Hotel, a casino hotel property in northern Vietnam, near that country’s border with China.
The net loss for the first half of the financial year 2018 includes a non-cash impairment of AUD143 million on the Star Vegas casino licence “due to the vendor breaching non-compete provisions,” said Donaco in Wednesday’s filing.
Donaco said previously that the impairment of the Star Vegas business was “a direct result of the breaches of agreement” with a Thai former business partner. The Australia-listed firm has claimed that this former business partner was still operating the Star Paradise casino – located near Donaco’s Star Vegas property – even after a deal for Donaco to run Star Paradise expired and was not renewed.
Donaco said in December that a Cambodian court had issued an interim injunction to close the Star Paradise casino, which had been upheld despite an appeal from the other side.
The casino firm said on Wednesday that the litigation continues in Cambodia, as one further appeal is available to the former partner. The company has also commenced arbitration proceedings in Singapore on the issue, claiming damages of US$120 million.
Donaco said group revenue slipped 25.7 percent year-on-year, to AUD43.9 million. The firm said the decline was primarily due to lower VIP turnover at Star Vegas. The company reported gaming revenue of nearly AUD35.7 million for the period, down 30.4 percent from a year earlier.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) contracted by 41.7 percent year-on-year in the first-half fiscal, to AUD19.4 million.
Joey Lim Keong Yew, chief executive of the group, said in commentary accompanying the results: “We are working to actively restore the VIP business, and are making strong inroads by signing new junkets and opening new junket halls, which has accelerated in January and February 2018.”
He added: “We have put in place initiatives to drive main floor revenues, by introducing 900 new gaming machines to replace underperforming machines, upgrading our non-gaming facilities to attract more visitors, and adding a second main floor targeting non-Thai players.”
Net gaming revenue at Star Vegas during the six months to December 31 was down 31.5 percent year-on-year, to approximately THB775.2 million (US$24.6 million). Property EBITDA declined by 39.7 percent to THB484.7 million, said Donaco.
“Star Vegas produced weaker results, due primarily to lower VIP turnover, which was partially offset by a significant reduction in junket commissions and operating costs,” the firm added.
VIP turnover at the property fell by 64.3 percent to approximately THB18.15 billion, compared to THB50.84 billion in the prior-year period. The company said junket commissions decreased by 56 percent year-on-year during the reporting period.
Commenting on Star Vegas performance, Mr Lim said Donaco has begun to “successfully rebuild the junket business”.
“Three Thai junkets were signed up in the December half, operating across 43 VIP tables. An additional three junkets operating across a further 40 VIP tables were added in January and February 2018,” said the CEO.
“Our VIP turnover … has now begun to grow again, reaching more than THB8 billion in February to date,” he added.
Net gaming revenue at Aristo International was down 31 percent year-on-year, to CNY29.7 million (US$4.7 million). VIP turnover at the property nearly doubled to approximately CNY6.9 billion.
Property EBITDA declined by 22 percent to CNY33.1 million, due to a lower win rate of 1.70 percent during the reporting period, said Donaco.
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”We do not believe that reopening the advance notice nomination deadline [for board directors] is appropriate or justified”
Daniel Boone Wayson
Chairman of the Wynn Resorts board of directors