b'F R OM T H EC H AI R MAN >.we are encouragedDear fellow shareholdersWe have had an extremely challenging year with significant that despite themanagement disruption, and the 2019 financial year results reflect that lack of hands-on management at the casino venues. As we disruption, both ourenter the 2020 financial year, we have completed our renewal of the Board, and have in place a highly experienced executive for the role of Chief Executive Officer. Encouragingly, we are seeing the early venues continued tosigns of improved operational and financial performance over the first quarter of the 2020 financial year. operate profitably,We have strengthened the composition of the Board, with the appointment of directors with experience in gaming, regulation and and producedmanagement. David Green, who is very experienced in gaming in Cambodia and Vietnam, and advised the Macau SAR Government positive cash flows. on gaming liberalisation and regulation, joined as an independent director. Yugo Kinoshita, the Global Chief Executive Officer of Aruze Gaming America, a global slot machine gaming and device business, also joined the Board as an independent director. Additionally, we recently welcomed Leo Chan and Kurkye Wong of Argyle Street Management as non-executive directors, and they bring a wealthof experience in Asian investments and consulting advice.We were also very pleased to be able to secure the services ofPaul Arbuckle as the Group Chief Executive Officer. He has 30 years of gaming experience across Australia and Asia, including holding the Chief Operating Officer role at The Star Entertainment Group, and senior roles at Resorts World Sentosa, among a number of other major gaming businesses where he held senior positions. Although he only commenced on 12 June we are already seeing the benefits of changes he is implementing across the group, and his vision for the future of our venues.While the progress of our litigation against the vendor of Star Vegas has been slow, we have been pursuing all avenues to expedite these proceedings. In August 2019, we were frustrated with the Cambodian lease arbitration decision; however, I wish to assure investors that we have taken swift action in appealing that decision with the Phnom Penh Appeals Court, and we still fully expect that our position will be vindicated in due course. We are also progressing with the Singapore arbitration claim for USD240 million, which is scheduled to continue in late November 2019.The 2019 financial year produced a disappointing result, with Donaco International Limited (Donaco) reporting a statutory net loss after tax of AUD194 million for the 12 months ending 30 June 2019. This loss can be attributed to AUD203.2 million of non-recurring items. This primarily compriseda non-cash impairment on the carrying value of the Star Vegas casino license of AUD186.6 million, partly due to an increased risk premium applied in the valuation, and partly due to a more conservative approach applied by the new Board. In addition, the Board took the opportunity to clear the decks with a write-down of AUD3.7 million with respect to the interactive casino gaming platform, a write-off of AUD9.8 million for trade and other receivables associated with junket programs that are being realigned, and an additional AUD2.5 million of legal costs associated with the ongoing litigation. There was also a net foreign exchange loss of AUD0.6 million.2 DONACO INTERNATIONAL LIMITED 2019 ANNUAL REPORT'