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Vietnam – Donaco hopes proliferation of vaccines will see business levels bounce back

By - 1 March 2022

Despite its six month results ended December 31 being severely restricted by COVID, Donaco International Limited has said it has a ‘positive long-term business outlook with proliferation of vaccines globally, and across South-East Asia,
as well as increased tourism infrastructure spend emerging in the region.’

In Cambodia Star Vegas remained temporarily closed during the half year period (from April 27 2021) and Aristo was open on a limited basis, due to restrictions related to the pandemic. The outbreak, and subsequent border closures,
affected revenue and EBITDA resulting in 1H FY22 revenue of A$1.13m (1H FY21: A$6.3m) and negative EBITDA
of A$2.24m (1H FY21: A$0.2m).

In Vietnam Aristo was affected by the drop in foreign visitors as the border with China remains closed. Nonetheless,
Donaco’s pragmatic initiative to shift its focus towards attracting clientele from the local region enabled Aristo
to achieve positive EBITDA of A$0.30m for the first three months of FY22, demonstrating the strength of the

The Board and Management team continued to execute disciplined cost control which led to a reduction in
operating expenses to A$2.07m (1H FY21: A$4.1m) and corporate costs to A$1.31m (1H FY21: A$2m). The company also reached a monthly cash burn target of approx. A$322k, well in line with the targeted range. In relation to this, Donaco has also strengthened its balance sheet by successfully paying off the remaining US$6.8m debt (approx.. A$9.4m) with principal lender Mega Bank during the period, resulting in the Company fully

Donaco has also repaid the initially borrowed amount of A$131.54m (equivalent to USD$100m). Despite swiftly paying down the loan facility, Donaco maintained a healthy cash position of A$4.4m as at 31 December 2021.
The ability for Donaco to achieve long-term growth is strong, as the COVID-19 situation in the regions where
Donaco operates improves in line with the ramp up in vaccinations. 99 per cent of Vietnam’s population is fully
vaccinated, while Thailand has reached more than 70 per cent of vaccination rates1

Quarantine-free travel vaccinated arrivals have commenced from 1 February in Thailand with the government of Vietnam planning to resume international tourism flows into Vietnam from March 152

Donaco’s Non-Executive Chairman, Mr Paul Porntat, commented: “In the First Half of the Financial Year, we continued to focus on preserving our balance sheet and operational capabilities, taking all the necessary actions to minimise the impact of the virus on our casino operations.

“In light of the challenges resulting from the pandemic, we’ve taken rigorous measures to protect the business
by keeping our costs down and preserving cash – whilst paying off the outstanding debt with our largest lender,
Mega Bank.

“The pragmatic initiative to shift our focus towards attracting clientele from the local region, resulted in Aristo
achieving positive EBITDA in the first three months of FY22, which demonstrates the strength of Donaco’s assets
in the long-term.

“Looking ahead I am optimistic about Donaco’s future. Strong vaccination rates in the region where we operate
have led the governments of both Thailand and Cambodia to target the easing of border and travel restrictions.
Additionally, towards the end of 2021 the government of Vietnam approved the construction of Sapa airport,
which presents a significant opportunity for our Aristo casino to attract new customers.

“These increasingly positive macroeconomic factors, combined with our strengthened balance sheet and cost
efficient operations, have placed us in a good position to achieve sustainable long-term growth as life and travel
patterns gradually return to normal.”

The strategy for the remainder of FY22 will build on Donaco’s pragmatic initiatives, including the shift towards
clientele from the local regions. Increasing vaccination rates in Thailand and Cambodia have led both countries’ Governments to target the easing of travel restrictions during 2H FY22.

In late October 2021 the Vietnamese Government approved the construction of Sapa airport, as the economy
seeks to rebound from COVID-19. The airport will be built over the next 3-4 years in Lao Cai, the region where
Aristo is located, with capacity of 1.5 million passengers a year. This presents a major opportunity for Donaco’s
Aristo casino to attract a significant number of new customers. With the settlement of the loan facility with major lender Mega Bank, increasing operational efficiency due to the prudent cost control strategy, and an improving COVID-19 outlook in the region; Donaco is positioned for long term growth

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