Quarterly Activities Report
The September quarter continued to be significantly impacted by COVID-19 and the resultant restrictions on casino operations and border closures. The closure of both DNA Star Vegas and Aristo International Hotel for an extended period of time has had a material impact on Donaco's operations.
DNA Star Vegas was reopened on a limited basis during the quarter for patrons located in Cambodia. The Cambodian border with Thailand, the country from which the vast majority of Star Vegas' patrons originate from, remains closed as part of COVID-19 restrictions.
The limited reopening will allow the Company to test its operational systems whilst ensuring the health and wellbeing of staff and visitors. Management will maintain the discretion to tailor up or down the pace of operations to local conditions.
Aristo had previously reopened in the June quarter and is also operating on a limited basis. The two casinos are set to fully reopen as and when conditions ameliorate, which is likely to occur once cross-border travel flow recommences.
During the period, Donaco also successfully completed its Board and CEO search process, with the appointments of a CEO, a Non-Executive Chairman, and two Independent Non-Executive Directors.
The renewed Board and Management team remains focused on controlling costs and capital expenses to ensure the Company's sustainability into the future.
In the June 2020 quarter trading update (see ASX announcement dated 31 July 2020) Donaco set a monthly target cash burn rate from maintaining the casino assets and associated corporate costs of approx. USD$800,000 to USD$900,000. The target remained in line in the September 2020 quarter, with a cash burn of approx. USD$700,000 per month.
Non-Executive Chairman Porntat Amatavivadhana said: "COVID-19 continued to impact Donaco's operational performance during the September quarter, but the Company has responded with pragmatic initiatives to maintain a healthy financial position once our casino operations fully reopen."
"The limited reopening of Star Vegas is a positive development for the business, and the renewed Board and Management team continues to emphasise preserving shareholder value by controlling the Company's corporate and operational costs.
"We successfully completed a capital raising in the quarter, which has strengthened our balance sheet and gives us headroom to weather the COVID-19 impacts and look towards long-term growth."
As at 30 September 2020 Appendix 4C, cash holdings was A$15.6 million.
An amount of A$203,000 was paid to related parties during the quarter, which related to salaries and fees to executive and non-executive directors.
The following update compares in USD the three months to the end of September 2020 to the three months to the end of September 2019, and is based on unaudited management accounts.
DNA Star Vegas
The Star Vegas property was reopened on 25 September 2020, but on a limited basis as the Cambodia-Thailand border remains closed due to travel restrictions imposed for Covid-19 prevention measure.
Following the reopening, the rolling Chip VIP turnover of USD0.9m and the net revenue of USD0.1m was recorded for the 6 days operation.
Management has implemented tight control measures, with an average monthly cash burn rate of approximately USD$210,000 for the September quarter 2020, mainly for payroll and utilities expenses.
Aristo International Hotel
The Aristo casino operations in Vietnam also continue to experience impacts from COVID-19.
Aristo officially reopened on 8 May 2020 but has operated on a limited basis for patrons located in Vietnam, as the border with China, the country from where the vast majority of Aristo's patrons originate from, remains closed as part of COVID-19 restrictions.
Subsequently, the business recorded a lower rolling chips VIP turnover of USD$18.8m over the September 2020 quarter, compared to USD$247.2m in the September 2019 quarter.
Net revenue fell 97% to USD$0.14m during the September 2020 quarter. However, the Company has proactively implemented several cost-control initiatives to reduce operating and corporate expenses to USD$0.53m for the period, versus USD$1.99m in the September 2019 quarter.
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About Donaco International Ltd
Donaco's largest business is the Star Vegas Resort & Club, a successful casino and hotel complex in Poipet, Cambodia, on the border with Thailand. Star Vegas was established in 1999, and is the largest and highest quality of the Poipet casino hotels. The property has more than 100 gaming tables, more than 1400 slot machines, and 385 hotel rooms.
Donaco's flagship business is the Aristo International Hotel, a successful boutique casino in northern Vietnam, located on the border with Yunnan Province, China. Established in 2002, the property has recently been expanded to a brand new five star resort complex with 400 hotel rooms. Donaco is a pioneer casino operator in Vietnam, and owns a 95% interest in the business, in a joint venture with the Government of Vietnam.
Donaco International Ltd