Rough Finish for Donaco Financial Year

Donaco International reports progress in its latest financial statements. While issues like the Cambodia controversy surrounding the Star Vegas and upper management changes presented challenges for Donaco this year, the last quarter shows that changes have led to some progress.

What is Donaco?

First things first, Donaco International was founded in 1990 and headquartered in New South Wales.

The company operates leisure and entertainment businesses in the Asia Pacific region, currently focused primarily on Cambodia and Vietnam. Its flagship business is the Aristo International Hotel in northern Vietnam, build in 2002 but recently expanded to become more of a resort.

However, Donaco’s largest business is currently the Star Vegas Resort & Club in Cambodia, which Donaco acquired in 2015. The casino is a primary attraction with more than 1,000 slot machines and 150 gaming tables, alongside a hotel with 400 rooms.

Star Vegas

Full Year Revenue

At the end of September, Donaco released its full-year financials for the year ending June 30, 2019.

Total revenue for the year was $86,263,580, down significantly from the $92,606,141 revenue in 2018. Other key figures were:

  • Star net gaming revenue was down 9.9%
  • Aristo net gaming revenue was down 15%
  • Net slot machine revenue declined 24.5%
  • EBITDA declined 37.2%
  • Comprehensive loss was $174.4 million, up from $110.6 million in 2018
  • Reported loss after tax was $194 million, up from $24.2 million in 2018

Reasons and Explanations

The full-year report started with a note from Chairman Stuart McGregor. “We have had an extremely challenging year with significant management disruption, and the 2019 financial year results reflect that lack of hands-on management at the casino venues.”

With that, McGregor goes on to say that the new CEO is one of many signs or improvements that should be evident in the first quarter of 2020. Other positives include the newly-strengthened composition of the board of directors, more gaming experience on the board, and potentially expedited proceedings with respect to Star Vegas.

“Looking ahead for the 2020 financial year,” McGregor said, “the board’s main priority will be to resolve and pursue the outstanding litigation issues, and we are now confident that our new CEO Paul Arbuckle will be able to focus on his role of improving the operational performance at our venues.”

Under New Management

As mentioned, new management is in place at Donaco.

The management shuffle happened late in March 2019 when one of the two founding brothers of the company – Joey Lim – was ousted as the CEO of Donaco. Lim had taken a temporary leave in December 2018 to handle medical and personal matters, and three months later, he was terminated from his position as company CEO, though he remained on the board.

The board was able to oust Lim because of a loan he had taken to help purchase Star Vegas. When he missed a payment in late 2018, the board voted him out. The missed payment put the loan in default with the casino listed as collateral.

Several months later, he and brother Ben Lim Keong Hoe were ousted from the entire board of Donaco.

Appointed to the position of CEO was Paul Arbuckle. He came from The Star Entertainment Group and brought 30 years of gaming experience with him. He believed that he could bring established casino practices to Star Vegas and Aristo to improve performance and management at both properties.

“I believe there is significant growth potential achievable at both businesses,” said Arbuckle, “and look forward to delivering improve performance from both properties.”

Star Vegas Explained

The primary point of contention for Donaco has been Star Vegas.

When Donaco acquired Star Vegas in 2015 in Cambodia, it did so at the cost of A$524.1 million. The Lim brothers bought it from Thai politician Somboon Sukjaroenkraisri.

There were stipulations, however. Somboon agreed to manage the casino for two years for $60 million in annual EBITDA and $120 million in shares. When that time was over, Donaco did not extend the deal because it claimed Somboon violated the non-compete clause in the sale contract by building two casinos next to Star Vegas.

The case went to court in several countries. In Australia, Donaco attempted to freeze Somboon’s shares. In Singapore, Donaco sued for A$276.5 million in damages.

Somboon sued Donaco in Thailand for defamation. And in Cambodia, where the casino is located, Somboon sued Donaco to overturn lease for the land upon which Star Vegas is built.

The Cambodia ruling has been the roughest for Donaco thus far, as an arbitrator for the court ruled for Somboon and his Thai company.

However, Donaco is fighting that decision and pushing the case to the appeals court in Phnom Penh. It claimed that the lease can only be terminated if the company didn’t pay rent for three years.

 

Rose Varrelli

Rose Varrelli has always been passionate about online casinos, as she's been a player at a variety of places for years. Rose turned her personal knowledge and insight into a writing career. She aims to provide readers with the most up to date, informative news in the world of online casinos!

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