On Thursday, the Australian-listed Donaco issued its annual results for the 12 months ending June 30, during which the company booked a statutory loss of AU$124.5m (US$90.4m). However, Donaco notes that the loss was due to the AU$144m non-cash impairment charge the company announced last December.
That write-down resulted from the company’s ongoing legal fight with the Thai vendor that Donaco hired to manage gaming operations at its Star Paradise Hotel, which lies next door to Donaco’s flagship Star Vegas casino in Poipet, Cambodia.
It’s a long story, but the Thai vendor refused to stop operating gaming at Star Paradise (since rechristened as Winsor) following the expiration of its contract with Donaco, then opened up a rival casino (Star Paramax) nearby while also poaching Donaco’s Thai junket operators. Donaco obtained an injunction ordering both rogue casinos to close but the case continues to wind its way through Cambodia’s legal system.
With all that going on, it’s hardly surprising that Donaco’s FY18 group revenue was down nearly one-third to AU$92.6m, while earnings fell 35% to AU$42.4m. Ignoring the aforementioned write-off, net profit after tax fell two-thirds to AU$18.3m.
Star Vegas bore the brunt of the decline, with revenue down 42% and earnings down 54%. The loss of its Thai junkets caused VIP turnover to fall by half, which was compounded by VIP win falling half a point to 3%. On the plus side, visitation was essentially flat.
To buck up Star Vegas, Donaco signed up five new junket partners, and August 2018 enjoyed the property’s strongest monthly turnover since October 2015. The property has also refreshed its slots offering and signed up a new Chinese tour group operator.
In Vietnam, Donaco’s Aristo International Hotel reported revenue down 1.2% to RMB132m (US$19.3m), thanks mainly to a 12.7% sure in non-gaming revenue, which now makes up 46% of the property’s total revenue. VIP turnover was also up 46% thanks to new junket deals.
ONLINE LAUNCH A LONG TIME COMING
Donaco CEO Joey Lim announced Thursday that Star Vegas’ long-delayed online gambling operations have officially taken flight at Dnalive666.com and Dnacasino.com. The operation offers live casino and sports betting products through multi-language and multi-currency services via both desktop and mobile.
The online operations are being overseen by Vivo Tower Ltd, with which Donaco inked a junket deal in June 2017. Donaco says this original deal has been scrapped and replaced with a new pact under which Vivo will oversee Star Vegas’ online operations.
Essentially, Vivo will market and manage the Donaco online platform in return for a revenue share. Vivo will also rent space at Star Vegas to third-party online gaming operators who can use the platform to market to their own customer bases.
Donaco expects the online business will provide “medium-term growth in revenue and profits” and will eventually become a “significant revenue contributor as the business grows.”