Donaco 1Q revenue down 59pct, casinos still closed
Australia-listed casino operator Donaco International Ltd says its first-quarter 2020 revenue fell 58.7 percent year-on-year, due to those three months being “significantly impacted” by Covid-19 and by a number of travel restrictions in the region as part of efforts to stem the further spread of the pandemic.
Revenue for the quarter ending March 31 was AUD10.53 million (US$6.79 million), compared to AUD25.50 million in first-quarter 2019, said Donaco in a Thursday filing. The company recorded negative earnings before interest, taxation, depreciation and amortisation (EBITDA) of AUD1.13 million for the March quarter, compared to positive EBITDA of AUD10.82 million a year earlier.
Donaco’s flagship venue, Star Vegas Resort and Club, is in Cambodia near that nation’s border with Thailand. Its Aristo International Hotel and associated casino (pictured) are in Vietnam near the latter’s border with China. The firm’a operations in both properties have been suspended since April 1 due to the coronavirus crisis.
In its latest filing, Donaco said the Star Vegas property recorded revenue of AUD8.37 million and EBITDA of AUD500,000, down respectively 60.4 percent and 93.5 percent from the prior-year period. The Aristo complex had revenue of AUD2.6 million and EBITDA of AUD500,000, a year-on-year decline of 60.0 percent and 87.0 percent, respectively.
The company said it had a negative cash flow from operations of AUD5.1 million and that the group’s net debt increased from AUD50.9 million to AUD60.8 million in year-on-year terms.
Donaco said additionally that the closure its casino operations was having a “material impact” on the group’s business, with the company introducing “measures to reduce costs, including headcount,” in order to preserve liquidity. The casino operator said that the Aristo property might “reopen in May 2020, depending on a decision from the government of Vietnam”.
In prepared remarks, Donaco’s chairman Mel Ashton said: “This was a tough quarter for Donaco with both of our casinos impacted by Covid-19 with considerably less gaming activity” occurring. He added: “Now that our casinos are temporarily closed, the preservation of liquidity is a key priority. We will continue to make sure we have adequate measures in place and remain in a healthy financial position for when operations will restart.”
As at March 31, 2020, the company’s cash balance was AUD18.87 million, according to its latest filing. The company said previously that it expected a “cash burn run rate” of between US$800,000 and US$900,000 per month during the temporary closure of its two casinos.
In the latest filing, Donaco confirmed that it was still in discussions with the firm’s key lender, Taiwan’s Mega International Commercial Bank Co Ltd, seeking consent for payments linked to settlement of a long-running dispute with people that sold the Star Vegas complex.
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