Border Casino Operations Donaco Records Positive Quarterly EBITDA

Southeast Asian border casino operator Donaco International confirmed in a report on Friday that its earnings before interest, taxation, depreciation and amortisation (EBITDA) turned positive in the quarter ending Dec. 31.

Donaco told the Australian Stock Exchange that its Star Vegas Resort and Club (file photo) in Poipet, near the border between Cambodia and Thailand, a country where casino gambling is banned, generated positive EBITDA of A$3.7 million ($2.83 million) in the period.

The figure was offset by a negative EBITDA of A$0.13 million for the group's Aristo International Hotel and related casinos in Lao Kai, the border between Vietnam and China.

This represented a positive EBITDA of A$3.57 million for the group in the quarter on a net basis.

Star Vegas temporarily closed from April 1 as part of Cambodia's COVID-19 measures, and reopened on September 25.

Aristo International has been closed since April 1 following Vietnam's efforts related to the pandemic. The property reopened in mid-May.

"We are very encouraged that since the casino's limited reopening, Starvegas is no longer losing money and the prospects for Aristotle are becoming more and more positive," Fornath Amatavidana, who was appointed as a non-executive director in August, said after an agreement between the company and the original Thai Starvegas supplier. The agreement was declared "official" earlier this month.

The company said in an update on Friday that due to the "Star Vegas settlement," Donaco had "other income" of A$52.6 million and $38 million in non-cash terms, which will be reflected in the group's accounts for the half-year ending Dec. 31.

Nonetheless, Donaco said revenue for the quarter to Dec. 31 was down 64.2% year-over-year, or AUD 6.0 million, "as a result of COVID-19."

Cost savings, new markets

Several "strategic initiatives" have been implemented by "new boards and executives" to "overcome the impact of the pandemic," the company said in other comments in the filing.

These include "a shift in customer targeting to refocus on attracting customers locally to Star Vegas and reduce international employee costs," the company said, without providing details.

Star Vegas has been known for serving Thai customers, and previous filings show it offered customers Thai baht bets. Several restrictions on cross-border trade and travel between Cambodia and Thailand have periodically been applied during the pandemic.

Donaco said in an update on Friday that it was also applying "continued cost controls" including adjusting service provider contracts, restructuring with game console and junket operators, and introducing retail stores.

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