GGRAsia – Donaco fiscal year 2021 EBITDA negative, debt reduced

Donaco fiscal year 2021 EBITDA negative, debt reduced

Aug 31, 2021 Newsdesk Latest News, Rest of Asia, Top of the deck

Donaco International Ltd, an operator of several border casinos in Southeast Asia, reported negative group earnings before interest, taxation, depreciation and amortisation (EBITDA) of AUD70,000 (US$52,274), but positive net revenue of AUD10.3 million for the financial year ended June 30, 2021.

Financial year 2020 EBITDA had been just under AUD10.4 million, and revenue had been AUD53.49 million. Both financial years had been affected by travel restrictions amid the Covid-19 pandemic; in particular, “lockdowns in Thailand and Cambodia”, Donaco said in a Tuesday filing lodged with the Australian Securities Exchange.

Donaco runs two casino properties in Asia: Star Vegas Resort and Club (pictured in a file photo), at Poipet, on Cambodia’s border with Thailand; and Aristo International Hotel in Lao Cai, on Vietnam’s border with China.

Star Vegas had operated for seven months of the 2021 financial year: the property was reopened – after a prior shuttering – on September 25, 2020 at “limited capacity”, until its closure again on April 27 this year when the Cambodian government called for a temporary shutdown of all casinos in the Banteay Meanchay region, in order to curb the spread of Covid-19.

Donaco nonetheless had a statutory net profit after tax, of just under AUD25.2 million in the 2021 financial year, as a result of proceeds from a settlement of a non-competition dispute relating to Star Vegas.

The firm’s Aristo International venue in Vietnam had been allowed to reopen in May 2020 after a period of shutdown during the pandemic, and had since been operating on a “limited basis”. This was because Vietnam’s border with China – the source for many of Aristo’s patrons – was currently closed, Donaco mentioned in the filing.

The first half of financial year 2021, i.e., July 2020 to December 2020, saw a return to positive group EBITDA of AUD200,000, “driven by several strategic initiatives” including attracting local clientele to the Cambodia and Vietnam properties respectively, “combined with the introduction of retail outlets, and reorganising arrangements with junket operators…” Donaco said.

Covid-19 disruption

But the impact on the firm’s operations, of the Covid-19 crisis had “heightened” in the second half of financial year 2021, the firm noted.

“We took all the necessary actions… to minimise the risk of the virus and to keep our staff and visitors safe. We shifted our focus on what we could control, keeping a healthy balance sheet and costs down,” said Donaco’s non-executive chairman Porntat Amatavivadhana in prepared remarks included in the results filing.

The firm said its operating expenses for the financial year 2021 were AUD6.9 million, down from just under AUD37.6 million in the prior financial year.

Donaco also noted that its debt levels with Mega International Commercial Bank Co Ltd had been reduced to US$6.8 million (AUD9.1 million) as at June 30, 2021, from US$12.8 million a year earlier.

In addition, the firm also received support with a new loan repayment plan from its chief executive, executive director, and shareholder Lee Bug Huy, also known as Techatut Sukcharoenkraisri, for up to US$7.8 million. Donaco said it “strongly believes” in its ability to repay fully, remaining debt by the end of calendar-year 2021.

“We made the decision to take a loan option as we didn’t want to dilute our shareholders, as a means to preserve shareholder value,” stated Mr Porntat, as cited by the filing, implying it was an alternative to issuing new shares.

He also commented: “We are confident in Donaco’s ability to bounce back, also highlighted by Aristo turning a positive corner post [2021 financial year] period end, achieving positive EBITDA for the month of July.”

The firm said that outside the reporting period, Aristo recorded positive EBITDA of AUD300,000 for July 2021, compared to negative EBITDA of AUD100,000 in the same month last year.

Donaco had a cash balance of AUD6.3 million as at June 30, 2021, the filing stated.