Management disruption an issue for Donaco International
Donaco International has attributed management disruption as the major issue in business stability following release of its 2018-19 financial statements.
The Asia-Pacific leisure and entertainment business operator, has primarily focused its energies on the Cambodia and Vietnam markets.
However, with issues including the Cambodia controversy with the Star Vegas and changes in upper management, the final quarter of the financial year showed the organisation is making progress with their changes.
Total revenue for the year was $86,263,580, down from $92,606,141 revenue in 2018. Other numbers of note were as follows:
– Net slot machine revenue declined 24.5%
– EBITDA declined 37.2%
– Reported loss after tax was $194 million, up from $24.2 million in 2018
Chairman Stuart McGregor stated in the organisation’s full year report “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.”
He added “looking ahead for the 2020 financial year, 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.”
In late March 2019, one of the two founding brothers of the company, Joey Lim,wwas removed as the CEO of Donaco, according to Casino Aus.
The board were able to oust Lim because of a loan he had taken to help purchase Star Vegas. When he missed a loan payment in late 2018, the board voted him out. The missed payment put him in default of the loan, with the casino listed as collateral.
Several months later, both he and brother Ben Lim Keong Hoe were ousted from the entire board of Donaco.
New CEO brings wealth of experience with him
New CEO Paul Arbuckle comes from The Star Entertainment Group and has 30 years of gaming experience with him.
“I believe there is significant growth potential achievable at both businesses…and look forward to delivering improve performance from both properties” Arnbuckle said.
Donaco International was founded in 1990 and was headquartered in New South Wales, Australia.
Its flagship business is the Aristo International Hotel located in northern Vietnam which was built in 2002.
Donaco’s largest business is currently the Star Vegas Resort & Club in Cambodia, which Donaco acquired in 2015. The casino has over 1,000 slot machines and 150 gaming tables, along with a hotel of 400 rooms.
The major issue for Donaco in recent times has been its Star Vegas acquisition. When Donaco acquired Star Vegas in 2015 in Cambodia, it came at the cost of A$524.1 million. The Lim brothers purchased it from Thai politician Somboon Sukjaroenkraisri.
Somboon agreed to manage the casino for two years for $60 million in annual EBITDA and $120 million in shares. Once that time elapsed, 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 headed to court in several countries. In Australia, Donaco attempted to freeze Somboon’s shares and in Singapore, Donaco sued for A$276.5 million in damages.
Somboon sued Donaco for defamation in Thailand and in Cambodia, Somboon sued Donaco to overturn the lease for the land upon which Star Vegas is built.
The Cambodia ruling has been a tough one for Donaco thus far, as an arbitrator for the court ruled for Somboon and his Thai company.
However, Donaco is fighting against that decision and pushing the case to be heard in the appeals court in Phnom Penh. Donaco claimed that the lease can only be terminated if the company didn’t pay rent for three years.
With its new CEO and promising last quarter, Donaco will hope its operations continue a positive trajectory.