Donaco International Ltd, an operator of border casinos in Southeast Asia, said in a Friday filing that the six months ending December 31 had seen the company return to positive earnings before interest, taxation, depreciation and amortisation (EBITDA). The firm added that it had achieved positive EBITDA “in each of the final three months of the half year, driven by proactive cost control strategy to navigate through Covid-19.”
Donaco posted a positive group EBITDA of AUD0.2 million (US$0.2 million) for the July to December period, compared to AUD13.8 million a year earlier. The firm confirmed it recorded group EBITDA of AUD2.7 million for the October to December 2020 period.
Donaco’s management stated in a separate presentation on the firm’s latest results that it remained “vigilant on Covid-19 impact, as DNA Star Vegas and Aristo International Hotel continue to operate on a limited basis.”
Donaco operates two casino properties in Asia: Star Vegas Resort and Club (pictured), a casino resort on Cambodia’s border with Thailand; and Aristo International in Lao Cai, on Vietnam’s border with China. According to the company, the Vietnam-China and Cambodia-Thailand borders remain closed, impacting the performance of its two casinos.
Donaco added that, despite the emergence in January of a Covid-19 outbreak around the broader regional area in which Star Vegas operates, the property remained “open at limited capacity, with additional protocols in place to minimise the risk of the virus.” The firm however acknowledged the situation had reduced visitor numbers to Star Vegas.
“Donaco anticipates this will be a temporary and short-term impact, with a positive long- term outlook for the business, as the proliferation of Covid-19 vaccines rapidly grows globally.”
Revenue, costs down
“Disciplined cost control management” led to a reduction in operating expenses to AUD4.1 million for the six months ended December 31, compared to AUD24.6 million for the same period of 2019, the company said in Friday’s announcement.
The casino operator posted statutory net profit after tax of AUD42.5 million for the July-December period, as a result of a non-competition settlement in relation to the Star Vegas property. The figure compared to an AUD1.5 million loss in the prior-year period.
The Star Vegas settlement completion resulted in Donaco recording non-cash income of AUD52.6 million.
In late December, Donaco announced to the Australian Securities Exchange that it had gained approval from key lender Mega International Commercial Bank Co Ltd, known as Mega Bank, on the casino firm’s “settlement of all legal cases” with third parties – referred to previously as “the Thai vendor” – relating to the Cambodia property located at Poipet, on that country’s border with Thailand.
The Thai party became last year a significant shareholder in Donaco, following a series of changes in the firm’s ownership structure, linked to a fundraising exercise by the company.
In its Friday results announcement, Donaco said it had achieved positive EBITDA for the half year ended December 31 despite revenue for the period declining to AUD6.3 million from AUD40.9 million a year earlier.
“Covid-19-related border closures and restrictions on casino operations impacted visitation numbers, which cascaded through to revenue,” the firm said.
Star Vegas was closed for part of the reporting period as a countermeasure against Covid-19. The property reopened on September 25, although at “a limited scale,” according to Donaco.
“Covid-19 continued to present significant challenges for our business during the half year,” non-executive chairman Porntat Amatavivadhana said in commentary featured in the results announcement. “But the implementation of pragmatic strategic initiatives by the renewed board and executive team, including our cost control strategy, underpinned a resurgence of our operational performance.”
Donaco noted in its update that as of December 31, the group’s loan debt owed to Mega Bank had decreased to US$7.8 million. The firm said it planned to fully repay the loan by June this year.
May 20, 2022A number of minority political parties in Thailand has submitted a draft amendment to the country’s Gambling Act, with the aim of legalising land-based casinos and online gambling, reported on...
Interim normalised profit after tax and amortisation reported by slot machine maker and online gaming content provider Aristocrat Leisure