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Vietnam – Donaco starts road to recovery after months of disruption

By - 2 November 2020

With income minimal for the three months to September 30, Donaco International has said it has the long road to its recovery starts from its loss of AU$2.7m (US$1.9m).

Gaming revenue at Star Vegas fell 45 per cent due to the closure of the casino on April 1 2020 in adherence with the Cambodian government mandating the temporary closure of all casinos. VIP turnover decreased by 45 per cent due to increased competition in Poipet and the emergence of unregulated gambling affecting the entire market. Improved junket and slot profit sharing arrangements were implemented by new management however these were offset by lower visitation and turnover.

Aristo was also closed from April 1 2020 in adherence to the Vietnamese Government mandating the temporary closure of all casinos, and was allowed to reopen on May 8 2020. However the casino operated through the rest of FY20 on a limited basis as the border with China remains closed. The COVID-19 impact on the FY20 result was mitigated by some extent as Aristo delivered a strong result for the first half of FY20, with net gaming revenue up by 42 per cent and EBITDA up 71 per cent compared to the prior corresponding period.

Paul Porntat Amatavivadhana Chairman said: “Encouragingly, we are seeing the early signs of improved operational and financial performance as both the Cambodian and Vietnamese governments allowed the reopening of casino operations. Whilst we are disappointed to present another significant loss at the statutory level as we seek to resolve the litigation issues with the vendor of Star Vegas, nonetheless, we are encouraged that despite the disruption, both our venues continued to produce positive cash flows. Our financial position continues to remain solid with further debt reduction, and improved terms and covenants were secured for our Mega Bank debt. The board’s main priority will be to set the course for the Company to pursue its operations under COVID19 and the new business norms successfully.”

Lee Bug Huy, Group Chief Executive Officer, said: “Despite difficulties during the year under the COVID-19 pandemic, the business still had a profitable baseline performance before the closing of the borders between Cambodia and Thailand. I am optimistic about the improvements that can be made in the coming years. We now have the opportunity to rework our gaming machine arrangements, utilise our ample space to introduce retail outlets, and to restructure our arrangements with junket operators for improved outcomes. In Vietnam, Aristo’s operation was also affected by the border closure between China and Vietnam under the COVID-19 pandemic. Whilst the full year results reflect the impact of the COVID-19 pandemic, the Aristo operations had been resumed on a limited level and we are expecting a better performance after the reopening of the borders which is expected to occur in the second half of CY2020. The Group is optimistic that the COVID-19 situation will continue to improve in the region in which the casinos operate and the reopening of the casino is a positive step towards the resumption of normal operations.”

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