Success Dragon International Holdings has terminated agreements with three Vietnamese race track owners and operators to provide software, hardware and management services for their greyhound racing businesses, citing reduced revenue as a result of recent regulatory changes in Vietnam.
The related track operators are Sports and Entertainment Serviced Joint Stock Company (SES), Xuan Thanh Greyhound Racing Joint Stock Company (XT) and Thien Ma – Madagui Racing Joint Stock Company.
In a filing to the Hong Kong Stock Exchange overnight, Success Dragon said it had reached a mutual agreement with the three companies “in response to the recent adverse changes in the regulatory environment in Vietnam which make the operating environment for provision of services for racing business as contemplated under the Agreements unattainable.”
The termination agreement refers to Decree No.6 issued by the Vietnamese Government earlier this year limiting the maximum bet allowed by each player to VND1 million (around HK$340), the banning of international races into Vietnam and restrictions on new off-track betting outlets being opened.
“Owing to the aforementioned adverse regulatory climate, the prospect of ramping up business volume and revenue will not be able to reach a satisfactory level to recover operating cost and repay start-up cost and expenses borne by the Group for the transactions contemplated by the Agreement,” it said.
“As a result, the Board considers the termination of the Agreements as appropriate to enable the Group to focus and channel its resources on developing other existing business and new potential business.”
Success Dragon has estimated potential operating losses from the new Vietnamese regulations at approximately HK$40 million along with a one-off impairment loss on the property, plant and equipment of approximately HK$70 million.
