Donaco International Ltd, an Australian operator of casinos in Indochina, says the group’s overall results in the three months to September 30 “show a very strong improvement” from the prior-year period.
Group-wide earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by nearly 167 percent year-on-year in the third quarter, to AUD8.91 million (US$6.09 million).
“The strong increase in EBITDA was driven by higher revenues and tighter cost control across the group,” said the company in a Friday filing to the Australian Securities Exchange.
The firm stated: “The increase in revenues is pleasing given that the September quarter is traditionally not a particularly busy quarter for either of the company’s casino properties.”
Donaco – which runs a casino hotel in Vietnam and one in Poipet, Cambodia – said the timing of public holidays in both countries “tends to skew the results towards the June half year”.
Net revenue for the period grew by 42.4 percent year-on-year to AUD24.25 million, while corporate costs decreased by 19.3 percent. Donaco reported a net profit of AUD3.81 million in the three months to September 30, compared to a AUD1.76-million loss a year earlier.
“The net profit performance reflects a slight increase in depreciation and amortisation costs (up from AUD2.48 million to AUD2.58 million),” said the firm. “However, this was more than outweighed by a significant decrease in finance charges, reflecting the board’s commitment to an ongoing debt reduction programme.”
The company said the third-quarter results include all non-recurring items, including legal fees incurred in the dispute with the Thai vendors of the Star Vegas casino resort complex (pictured) in Cambodia. The costs of those legal fees are currently reflected in the Star Vegas results, according to Friday’s filing.
Overall revenue at Star Vegas increased by 3 percent year-on-year in the third quarter, and property EBITDA rose by 7 percent.
During the September 2019 quarter, a new management team at Star Vegas “began rationalising the VIP junket arrangements, with a focus on eliminating poor quality business practices, and improving margins,” stated Donaco.
It added: “Accordingly, while VIP turnover declined due to the departure of unprofitable junkets, net revenue increased. This was partially due to an improved win rate, which in turn is partially attributable to better operating procedures.”
At the Aristo International, in Vietnam, the overall revenue grew by 164 percent compared to the third quarter 2018, while property EBITDA was US$3.0 million, compared to US$0.19 million in the prior-year period.
Donaco said in August that its loss attributable to shareholders widened by 55.8 percent year-on-year to nearly AUD194.0 million in the fiscal year ended June 30.
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”There are likely to be cancellations of some Chinese New Year casino and junket parties and events [in Macau]”
Vitaly Umansky, Eunice Lee and Kelsey Zhu
Sanford Bernstein analysts