Donaco International says it will be focusing on further reducing debt, consider “additional capital management initiatives” and further opportunities to grow its business over the next year, according to chairman Stuart McGregor at an AGM on Thursday.
“We will be focused over the next 12 to 18 months on ensuring that our debt is paid down, in order to ensure that shareholders reap greater benefits from the strength of our cash flows in the future,” he said.
The company recently also purchased $1 million worth of shares on market for its newly established long-term incentive scheme, which it says is a “further sign of the strength of [its] cash flows.”
Commenting on the current financial year, Joey Lim, managing director of Donaco, said that Aristo has been off to a strong start, recording a 75 percent year-on-year increase in casino visitation as well as a strong VIP win rate.
Star Vegas on the other hand, recorded results lower than the previous year, but it has been solid nonetheless.
The operator recorded revenue of A$42 million in the first four months of FY17, around $9.8 million lower than the corresponding period in FY16.
Net profit after tax in the four month period ending October 31 was A$13.5 million.
“We are expecting DNA Star Vegas to improve during the remainder of the 2017 financial year, as we implement further marketing initiatives including additional tournaments for VIP players, and leveraging off our status as the “Official Resort Partner” of Manchester United in Thailand to increase mass market visitation,” said Lim.
Lim also noted a potential foray into the online space.
“Our online strategy relates to maximizing our brand engagement with our customers, in particular attracting a younger demographic. We have plans for an enhanced loyalty program, including an interactive social gaming experience. We are exploring and trialing options for the utilization of our online gaming license and expect to make progress during the current financial year.
In August, Donaco reported net profit of A$78.7 million ($58.1 million) in the fiscal year ended June 30, driven by strong operational results from Star Vegas and Aristo, compared to a loss of A$5.2 million in the fiscal year 2015.
The year past was also the first full year to include revenue for Star Vegas Resort and Club, which the company acquired in early 2015 for a consideration of US$360 million.
Group revenue was A$143.4 million in FY16, up from A$20.4 million in 2015 as a result.
According to Lim, the company put in place a number of strategic initiatives to strengthen and reduce volatility of earnings.
“At Aristo, our stated strategy to deliberately target more mass market players has been showing positive signs in improving the stability of earnings at that venue…. We are aiming to deliver more stable earnings in future periods.”
Lim also said the company was particularly pleased with the performance of Star Vegas, which saw an increase in gaming and non-gaming revenue in the 2016 financial year, leading to earnings growth of 21.1 percent.
The company also has the option to purchase the Star Paradise operation, but will wait and see before making any moves.
“The decision to pursue this option will only be made after we have the opportunity to see how this business develops. At this stage it is too early to exercise that option.”