Aug 28, 2019 Newsdesk Latest News, Rest of Asia, Top of the deck, World
Donaco International Ltd, an Australian operator of casinos in Indochina, says its loss attributable to shareholders widened by 55.8 percent year-on-year to nearly AUD194.0 million (US$130.9 million) in the fiscal year ended June 30.
The company told the Australian Securities Exchange on Wednesday that the loss was due to an aggregate AUD200.1 million non-cash impairment charge for the period, including an impairment of AUD186.6 million in the value of the casino licence of its Star Vegas Resort and Club (pictured) in Cambodia. The firm had previously said that the impairment in the value of the casino licence was due to alleged breaches of contract by the seller of that venue.
Donaco said that – excluding the impairment charge – it would have reported an underlying net profit after tax of AUD9.2 million, which would nonetheless have been a decline of 49.7 percent compared with AUD18.3 million in the prior year. Earnings before interest, taxation, depreciation and amortisation (EBITDA) were AUD29.6 million in the reporting period, down 30.2 percent from the previous year.
Revenue for the 12 months to June 30 fell by 6.8 percent year-on-year, to AUD86.3 million, according to Wednesday’s filing.
Revenue at the Star Vegas complex fell to AUD64.7 million, from AUD66.6 million in the previous fiscal year, due to increased competition in the Cambodian gaming market, said Donaco.
The firm stated that the increased VIP turnover and higher visitor numbers at Star Vegas during the period were offset by “unfavourable” junket deals signed by the company’s former management. It added that such deals were “being renegotiated”.
Donaco said VIP turnover at Star Vegas rose by 76 percent year-on-year, “due to full-year impact of junkets brought in to replace those poached by the Thai vendor in fiscal year 2018”. Junket commissions and profit sharing increased by 62 percent in the period.
The property’s net gaming revenue however declined by 9.9 percent, due to a number of factors, including lower VIP gross win rate during the period and increased competition in the market, stated the company.
Revenue at the Aristo International Hotel casino in Vietnam fell by 16.6 percent year-on-year, to AUD21.6 million. Gaming revenue declined 15 percent in the period, and non-gaming revenue was down 25 percent.
VIP turnover at that property fell by 54 percent, “due to [a] weak start to the year”. Although the business “recovered in [the] second half”, the VIP win rate for the full year was 2.09 percent, above the previous year’s rate of 1.91 percent but below the 2.85 percent theoretical win rate.
New management, ops changes
In a separate presentation on Wednesday, Donaco said the appointment of a new chief executive and changes to its board would provide a “fresh start” for the company.
Paul Arbuckle was appointed Donaco’s CEO with effect from June 12. The company also announced earlier this month that it had completed its board renewal process, following the appointment of four new non-executive directors. The latest appointment was of Yugo Kinoshita, the global chief executive of gaming manufacturer Aruze Gaming America Inc.
In July the shareholders of Donaco voted at an extraordinary general meeting called by three shareholders to remove from the board Joey Lim Keong Yew and Ben Lim Keong Hoe, brothers belonging to the family that founded Malaysian gaming company Genting Bhd. Mr Joey Lim is the founder of Donaco, and was its managing director and chief executive until March 19.
In Wednesday’s presentation, Donaco said the results for the fiscal year ended June 30 reflected a “lack of effective management and leadership under [the] former executive team”. The firm added that the new management “had an immediate positive impact” on the firm’s operations, with both of its properties recording “significantly improved results” in July.
The casino operator said additionally that it had completed in June the refinancing of a loan with Taiwan’s Mega International Commercial Bank Co Ltd, resulting in “improved repayment terms and covenants relaxed”.
Donaco stated also that it was continuing the litigation against the Thai vendors of the Star Vegas casino resort complex.
Legal wrangling between Donaco and a trio of Thai shareholders in the company has been a constant for the past year. The three sold the Star Vegas in Poipet to Donaco for US$360 million in 2015. The agreement between the parties included a non-complete clause, which Donaco says has been breached. The parties have attempted a number of resolution methods, including arbitration proceedings in Singapore.
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