DONACO INTERNATIONAL LIMITED 2018 ANNUAL REPORT 76 77 DONACO INTERNATIONAL LIMITED 2018 ANNUAL REPORT 77 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2018 76 NOTE 39. CONTINGENT ASSETS AND LIABILITIES COURT PROCEEDINGS During the year to 30 June 2018, the company commenced proceedings against the vendor for breach of non- competition clauses under the agreements of the sale and purchase of Star Vegas. The company obtained an injunction on 25 December 2017, ordering the closure of the Star Paradise and Star Paramax casinos which were illegally operated by the vendor. A further appeal was submitted to a higher court by the vendor, contesting against the injunction. As at the date of this report, the appeal has not been resolved. The vendor had also attempted to seek security rights over certain assets of Star Vegas in relation to his claim for the unpaid FY2017 management fee, however this was rejected by the court on 6 July 2018. The vendors are also joint owners of a Cambodian company, Lee Hoe Property Co. Ltd, which owns and leases the land occupied by the Star Vegas business. During the reporting period, threats were made by the vendor to terminate the lease, however an injunction against this was granted in favour of the company. The vendor has commenced arbitration proceedings in Cambodia which is likely to take three to six months to resolve. On 20 August 2018, the lessor obtained an order allowing him to develop the land outside the Star Vegas boundary, which was always agreed under the lease, provided that no competing casino or gaming business is built. The vendor has also commenced defamation proceedings in Thailand against Donaco and two of its directors, seeking damages of THB1 million (equivalent to $40,900). No amounts have been recognised as at 30 June 2018 in relation to these proceedings as they are still in the early stages and no damages have been determined. As at 30 June 2018, Donaco was also in the process of enforcing its legal rights via arbitration proceedings in Singapore. Having considered expert legal and financial advice, the company has increased the size of its damages claim from US$120 million (equivalent to $162 million) to US$190 million (equivalent to $257 million). The hearing date is currently set for July 2019. No amount receivable has been recognised as at 30 June 2018 given the delayed hearing date and the uncertainty over the outcome of the proceedings. “As at 30 June 2018, Donaco was also in the process of enforcing its legal rights via arbitration proceedings in Singapore. Having considered expert legal and financial advice, the company has increased the size of its damages claim from US$120 million (equivalent to $162 million) to US$190 million (equivalent to $257 million).” DIRECTOR’S DECLARATION for the year ended 30 June 2018 In the directors’ opinion: • the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements • the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements • the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its performance for the financial year ended on that date • there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors Mr Stuart McGregor Chairman 28 September 2018 Melbourne