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YUNNAN
GUIZHOU
ARISTO
INTERNATIONAL HOTEL
GUANGXI
VIETNAM
LAOS
THAILAND
STAR VEGAS
RESORT & CLUB
annual report
FULL YEAR STATUTORY ACCOUNTS – 30 JUNE 2015
contents
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From the Chairman
From the Managing Director
Board of Directors
Directors’ Report
CAMBODIA
Auditor’s Independence Declaration
Statement of Profit or Loss
and other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the
Members of Donaco International Limited
Shareholder Information
Corporate Directory
ANNUAL GENERAL MEETING
The Annual General Meeting of Donaco International Limited will
be held at Boardroom Pty Limited, Level 12, 225 George Street,
Sydney NSW 2000 on 26 November 2015 at 2.30pm.
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from the chairman
Following the
substantial
transformation
of your Company,
we are confident
that the coming
financial year will
generate positive
results for our
shareholders.
Dear Fellow Shareholder
The 2015 financial year has seen
a dramatic increase in the size and
scale of your Company.
The Board and management team
focused on two key goals during the
year: driving the growth of the Aristo
International Hotel in Vietnam, and
adding value to shareholders through
corporate activity.
We took a strong step towards the
first goal in November 2014, when
the construction of the Aristo was
completed, and the property received
its five star certification. After enduring
some headwinds in the soft opening
phase, the subsequent marketing
of the property has shown promising
signs of growth. We consider the
Aristo to be our flagship property,
and it is extremely important to us,
but it is no longer our major business,
as noted below.
The second goal was also achieved
during the year, with the signing in
January 2015 of a deal to acquire the
Star Vegas Resort & Club in Cambodia.
The deal was successfully completed
on 1 July 2015. The Star Vegas is now
our largest property, and the deal has
increased the pro forma revenues
of your Company by a factor of more
than five times. It has also provided
substantial diversification benefits,
with the Star Vegas serving primarily
Thai customers, while the Aristo serves
primarily Chinese customers.
In order to complete the deal, the
Company successfully raised $132
million via a pro rata rights issue. We
would like to thank shareholders for
their support of the Company’s strategy.
As a means of clearing the decks prior
to completing the Star Vegas deal,
we completed the spin-off of the
mobile technology business, iSentric,
into a separate ASX-listed company
in September 2014. This was followed
by the sale of our wagering marketing
business, Way2Bet, in October
2014. Accordingly the Company no
longer operates its former Gaming
Technology businesses.
With the completion of the Star Vegas
deal on 1 July 2015, the Board was
expanded through the addition
of Ham Techatut Sukjaroenkraisri as an
Executive Director, and Paul Porntat
Amatavivadhana as a Non-Executive
Director. These gentlemen have
substantial experience in
Thai-facing businesses, and the
gaming industry in particular, and have
already added significant value to the
Board’s deliberations.
Your Board is one of the most
ethnically and culturally diverse
boards in the ASX300, with 57% of its
members having been born, educated
and now residing in Asia. This
provides deep and direct experience
and knowledge of the regions in which
we operate. According to the 2015
Watermark Board Diversity Index,
only 17% of directors on the boards
of ASX100 companies have similar
overseas experience and heritage.
For companies in the ASX100-200,
the figure is less than 10%.
Further, we have two directors originally
from Malaysia, and two from Thailand.
These two countries are amongst
Australia’s top 10 trading partners,
but they have minimal representation
among the ASX200 boards.
Following the substantial
transformation of your Company, we
are confident that the coming financial
year will generate positive results for
our shareholders.
Stuart McGregor
Chairman
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donaco international limited 2015 annual reportdonaco international limited 2015 annual report from the managing director
Dear Fellow Shareholder
In last year’s Annual Report, I stated
that “we expect to transform and
expand our business in the year
ahead”. I am pleased to confirm that
we have delivered on this promise.
The successful acquisition of the Star
Vegas Resort & Club has ensured that
the new financial year has begun very
brightly for Donaco. The Star Vegas
has demonstrated the power of its
diversified revenue streams, with rapid
growth in turnover and revenue over
the past 12 months.
The Star Vegas is a large and high
quality property, with 385 hotel rooms,
109 gaming tables,1500 slot machines
and 57,000 square metres of usable
building space. It has an enviable
position in the Poipet gaming market,
which is the closest legal gaming
destination to the greater Bangkok
area and its population of some
15 million people.
Our marketing strategies for the
Star Vegas property, and the ongoing
improvements in the highway linking
the Star Vegas to Bangkok, will drive
continuing growth in this business
in FY16.
In addition, our recent deal with Heng
Sheng Group, one of Macau’s leading
junket operators, will bring substantial
numbers of VIP players from outside
Thailand to the Star Vegas Resort
& Club. This deal is expected to
generate significant additional
revenues for Donaco in FY16.
The fitout for the new Heng Sheng
gaming room at the Star Vegas was
completed very quickly and efficiently,
which is a testament to the high
quality and capacity of the Star Vegas
property, and the professionalism
of the management team. Our
relationship with the Heng Sheng
Group was successfully launched
in September 2015, with a large
number of new VIP players visiting
the property for the first time and
enjoying the entertainment at 30
new gaming tables.
The Heng Sheng relationship will
help us to capture some of the strong
demand from Chinese tourists visiting
Cambodia. In the first six months
of calendar 2015, Chinese tourist
numbers to Cambodia grew by 22%.
Many of these visitors are keen to
enter via the international airport
at Siem Reap, which provides access
to the world-famous Angkor Wat
Archaeological Park. Siem Reap
is also an easy two-hour drive to
our Star Vegas property.
The Aristo International Hotel in
Vietnam is also back on track in recent
months, after a difficult first year.
Record levels of visitation and strong
turnover figures give us confidence
in the performance of this flagship
business for the coming year.
Further, we recently signed
a ground-breaking sponsorship deal
with Manchester United, which is also
expected to drive further growth in
the year ahead, at both the Star Vegas
and the Aristo. Our appointment as
the Official Casino Resort Partner of
Manchester United will drive increased
positive awareness of both properties
in the Company’s key target markets,
and is expected to generate
significant value for the Company.
With the expansion of our business,
we have also expanded the
capabilities of our senior management
team. I am pleased that Mr Chong
Kwong Yang has joined us in the
role of Chief Financial Officer, after
consulting to us for 12 months while
working on the Star Vegas acquisition.
Mr Richard Na remains as a key
member of the management team, in
his capacity as Deputy Chief Executive
Officer, thus ensuring continuity and
ongoing depth of management talent.
Our Company now employs some
1800 people across two major leisure
and entertainment properties in
Asia. The capability of this diverse
workforce gives us a strong base to
pursue success in these businesses,
and any others that meet our
investment criteria.
While a strong pipeline of investment
opportunities continues to present
itself to us, I wish to emphasise that
we are highly disciplined in our
approach, and will not pursue any
deal unless it provides good returns
to shareholders. We are confident that
the Star Vegas deal will be proven to
meet these criteria.
Joey Lim
Managing Director and
Chief Executive Officer
We recently
signed a
ground-breaking
sponsorship deal
with Manchester
United, which is
expected to drive
further growth in
the year ahead.
OFFICIAL CASINO
RESORT PARTNER
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donaco international limited 2015 annual reportdonaco international limited 2015 annual report stuart james mcgregor
B. Com, LLB, MBA
joey lim keong yew
B. Computer Science
Non-Executive Chairman
Over the past 30 years, Mr McGregor
has had a wide-ranging business
career with active involvement across
the Australasian and Asian Region.
In business, he has been Company
Secretary of Carlton United Breweries,
Managing Director of Cascade
Brewery Company Ltd in Tasmania
and Managing Director of San Miguel
Brewery Hong Kong Ltd, a publicly
listed Hong Kong-based company
with subsidiary businesses in China.
In the public sector, he served as
Chief of Staff to a Minister for Industry
and Commerce in the Federal
Government, and as Chief Executive
of the Tasmanian Government’s
economic development agency.
Other current directorships:
EBOS Group Limited (ASX: EBO)
Former directorships (last three years):
None
Special responsibilities:
Member of the Audit and Risk
Management Committee and the
Nominations, Remuneration and
Corporate Governance Committee
Interests in shares:
347,235 ordinary shares
Interests in options: None
Managing Director and
Chief Executive Officer
Mr J Lim is the Managing Director
and Chief Executive Officer of
Donaco International Limited. He is
also a director of Malahon Securities
Limited, a stock brokerage company
founded in 1984, and is a member
and participant of the Hong Kong
Exchange. He is also the principal of
the Slingshot Group of Companies,
which are investment companies
based in Hong Kong. Relevant
experience includes: working as an
executive director to M3 Technologies
(Asia) Bhd where he was responsible
for strategic investments and
corporate affairs; working at VXL
Capital, China, a company whose
business was focused on investing
in and restructuring companies in
Malaysia, Beijing, Shanghai and Hong
Kong; and working as Project Manager
for Glaxo Wellcome, London, UK.
Other current directorships: None
Former directorships (last three years):
None
Special responsibilities: None
Interests in shares:
264,358,496 ordinary shares
Interests in options:
913,843 unlisted employee options
benedict paul reichel
BA, LLB (Hons), LLM (Hons)
benjamin lim keong hoe
B. International Business
Executive Director, Group General
Counsel, Company Secretary
Mr Reichel is an executive and
company director in the gaming,
media and technology sectors, with
more than 20 years’ experience
in major Australian listed public
companies and law firms. Mr Reichel
held the position of Chief Executive
Officer and Managing Director of
the Company (then called Two Way
Limited) from July 2007 to January
2012, and has remained on the Board
since then. Previously, Mr Reichel was
General Counsel of Tab Limited,
a $2 billion ASX listed company with
operations in wagering, gaming and
media. Prior to that, he was General
Counsel of racing broadcaster
Sky Channel Pty Limited, and held
a number of executive positions at
Publishing and Broadcasting Limited.
Non-Executive Director
Mr B Lim is a director of Donaco
Singapore Pte Ltd, and a major
shareholder of Genting Development
Sdn Bhd, a substantial property
development business in Malaysia.
He has a Bachelors Degree in
International Business with Design
Management from Regent Business
School, United Kingdom.
Other current directorships: None
Former directorships (last three years):
None
Special responsibilities:
Member of the Audit and Risk
Management Committee and the
Nominations, Remuneration and
Corporate Governance Committee
Interests in shares:
144,791,200 ordinary shares
Other current directorships: None
Interests in options: None
Former directorships (last three years):
None
Special responsibilities: None
Interests in shares:
321,150 ordinary shares
Interests in options:
660,608 unlisted employee options
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donaco international limited 2015 annual reportdonaco international limited 2015 annual reportboard of directors robert andrew hines
(appointed 1 November 2013)
Non-Executive Director
Mr Hines is one of Australia’s leading
gaming and wagering executives.
As CEO of Racing Victoria Limited from
2008 to 2012, he led and managed
the Victorian racing industry through a
period of substantial change. Mr Hines
also held CEO roles at Jupiters Limited
(2000 to 2004), which was acquired by
Tabcorp; and AWA Limited (1997 to
2000), which was acquired by Jupiters.
From 2005 to 2008, he was CEO UK
and Europe for Vecommerce Limited,
a natural language speech recognition
company providing services to
wagering operators. Mr Hines currently
holds the positions of Non-Executive
Director with Sportsbet Australia Pty
Ltd; Group Chairman CEO Circle;
and Non-executive Director of the
Sporting Chance Cancer Foundation.
Other current directorships: None
Former directorships (last three years):
None
Special responsibilities:
Chair of the Audit and Risk
Management Committee and Chair
of the Nominations, Remuneration
and Corporate Governance Committee
Interests in shares:
110,714 ordinary shares
Interests in options: None
ham techatut
sukjaroenkraisri
(appointed 1 July 2015)
BSc Chemical Engineering
Executive Director
Mr Sukjaroenkraisri is Vice President,
Casino at Star Vegas Casino & Resorts
Co, Ltd. He has more than eight
years’ experience in gaming and
casino management. In his role at
Star Vegas, one of Cambodia’s largest
and most successful casino resorts,
Mr Sukjaroenkraisri has been
responsible for developing the model
for the slot machine business. This has
become one of the most successful
and profitable businesses for Star Vegas,
and has helped to put Star Vegas into
its current leadership position in the
Cambodian gaming market.
Other current directorships: None
Former directorships (last three years):
None
Special responsibilities: None
Interests in shares: 73,599,764
ordinary shares
Interests in options: None
paul porntat
amatavivadhana
(appointed 1 July 2015)
MSc Management Science,
BA Finance and Banking
Non-Executive Director
Mr Amatavivadhana is a founding
principal and the CEO of Infinite
Capital, a successful boutique corporate
advisory firm based in Bangkok.
He has considerable experience in
mergers and acquisitions, corporate
restructuring and capital raisings.
Mr Amatavivadhana is currently an
independent director at Sansiri
Plc, one of the largest real estate
developers in Thailand, which is listed on
the Stock Exchange of Thailand. His
previous roles include senior positions
at Ayudhya Securities Plc (Managing
Director); Ploenchit Advisory Co Ltd
(Assistant Managing Director); UOB
KayHian Securities (Thailand) Ltd; BNP
Paribas Peregrine Securities (Thailand)
Ltd and Securities One Plc.
Other current directorships:
Sansiri Plc (SET: SIRI)
Former directorships (last three years):
None
Special responsibilities: None.
Interests in shares: None
Interests in options: None
‘Other current directorships’ and ‘Former directorships (last three years)’ quoted above
are directorships for listed entities only, and exclude directorships of all other types of entities, unless otherwise stated.
10
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donaco international limited 2015 annual reportdonaco international limited 2015 annual reportboard of directors
directors’ report
The directors present their report,
together with the financial statements,
on the consolidated entity (referred to
hereafter as the ‘consolidated entity’)
consisting of Donaco International
Limited (referred to hereafter as the
‘Company’ or ‘parent entity’) and the
entities it controlled at the end of, or
during, the year ended 30 June 2015.
directors
The following persons were directors
of Donaco International Limited
during the whole of the financial year
and up to the date of this report,
unless otherwise stated:
Stuart James McGregor – Chairman
Joey Lim Keong Yew
Benedict Paul Reichel
Benjamin Lim Keong Hoe
Robert Andrew Hines
Ham Techatut Sukjaroenkraisri
(appointed 1 July 2015)
Paul Porntat Amatavivadhana
(appointed 1 July 2015)
principal activities
During the financial year the
principal continuing activities of the
consolidated entity consisted of:
• operation of a hotel and casino
in northern Vietnam;
• operation and development
of gaming technology, including
mobile payment gateways; and
• acquisition and disposal
of businesses.
dividends
There were no dividends to
shareholders paid, recommended or
declared during the current or previous
financial year. A dividend was paid by
the Lao Cai International Hotel Joint
Venture Company to non-controlling
interests (the Vietnamese Government)
in the previous financial year. The
consolidated entity’s dividend policy
is unchanged from that set out in the
prospectus dated 13 December 2012,
which stated: The Company intends
to pay dividends to Shareholders in
the future subject to the availability of
sufficient profits and franking credits
and subject to the Company’s then
current working capital requirements
and growth plans. Shareholders should
note that the payment of dividends
is not guaranteed.
review of operations and
financial results
The loss for the consolidated entity
after providing for income tax and
non-controlling interest amounted
to $2,928,075 (30 June 2014: profit
of $6,793,403).
The primary focus of the Board and
management team during FY15 was
to complete the successful acquisition
of the Star Vegas Resort & Club in
Cambodia, which took place on
1 July 2015. Accordingly the FY15
statutory results include only the
Aristo International Hotel, which as
at the date of this report represents
approximately 15% of the Company’s
overall business, in terms of net
(reported) revenue.
Aristo International Hotel –
performance summary
The performance of the Aristo
International Hotel was affected by
a number of specific factors during
the year. The property was in soft
opening mode until November 2014,
with not all facilities available. Further,
the performance of the property in the
December half was adversely affected
by China’s travel warning for Vietnam,
the Soccer World Cup, and an
earthquake in the Aristo’s main target
market of Yunnan Province.
Despite these factors, the Aristo saw
steady increases in casino visitation,
which grew by 28% over the year,
and in gaming turnover. Table game
turnover grew by 17% in Australian
dollar terms, while slot machine
turnover grew by 294%. Normalised
results show operating revenue grew
by 51%, while earnings before interest,
tax, depreciation and amortisation
(EBITDA) grew by 67%.
Normalised results adjust the revenue
received from the VIP table games
business, by applying a theoretical
win rate of 2.85% to VIP rolling
chip turnover. This provides a more
accurate guide to the underlying
operating performance of the VIP
table games business, which can
experience significant volatility over
shorter periods. The theoretical
win rate for VIP baccarat in Asia is
generally accepted to range between
2.7% and 3.0% of rolling chip turnover.
The Company normalises its revenue
from VIP table games in the middle of
this range, at 2.85%, in line with other
Asian casino operators.
Actual results at the Aristo were
affected by a below theoretical win
rate of 1.93% on VIP table games.
The VIP win rate at the Aristo has
been closely monitored by the
Board and management team. This
process of scrutiny has included the
engagement of external consultants,
who have confirmed that while some
processes could be tightened (and
this has been addressed), the low win
rate simply comes down to the luck
factor. With the Aristo having a heavy
concentration of VIP players, the
business in FY15 lacked the spread
of smaller players required to counter
the effects of a significant win by
a VIP player. Management is working
to address this issue via marketing
plans to attract more main hall players.
Increases in operating expenses at
the Aristo International Hotel primarily
relate to the increased scale of
operations at the new property, which
opened in May 2014. The workforce
was scaled up from 420 staff at the
start of FY14, to 850 staff at the start
of FY15. Staff numbers were scaled
down to 800 during the year, but
due to recent increases in business
activity and visitation, have again been
increased to 850.
The increase in cost of sales relates
to food and beverage consumables,
driven by the 149% increase in food
and beverage revenues during the
year. Property costs (housekeeping
items etc.) also increased, due to the
994% increase in accommodation
revenues during the year.
Other developments
The Gaming Technology businesses
were successfully sold during the year.
The primary business was iSentric Sdn
Bhd, a successful mobile commerce
business based in Kuala Lumpur. The
spin-off of iSentric was completed on
23 September 2014, when iSentric
Limited listed on the ASX under the
code ‘ICU’. The other main Gaming
Technology business was Way2Bet Pty
Limited, which operated the Company’s
wagering marketing portal in Australia.
This business was sold on 31 October
2014. As a result of these disposals,
both iSentric and Way2Bet have been
treated as discontinuing operations
in the FY15 statutory accounts.
significant changes in the
state of affairs
On 26 February 2014, the Company
announced that it planned to spin
off its mobile technology business,
iSentric Sdn Bhd, into a new company
separately listed on the ASX. A binding
Share Sale Agreement to implement
the transaction was signed with OMI
Holdings Limited on 9 May 2014.
The agreed value for the sale was
$12,000,000 in ordinary fully paid
shares in OMI, which were distributed
to Donaco shareholders in specie.
The transaction was completed
on 23 September 2014, when OMI
Holdings Limited changed its name to
iSentric Limited and iSentric Limited
was requoted on the ASX under
the code ‘ICU’. Donaco distributed
its shares in the newly listed entity
to Donaco shareholders in specie
on 16 September 2014. Donaco
shareholders with a minimum of
19,206 shares on the record date
of 12 September 2014 received
approximately 0.13 iSentric shares
for each Donaco share. Holders
of fewer Donaco shares had their
entitlements sold, and received the
proceeds of sale (less costs) in cash.
No impairment loss was recognised
on the reclassification of iSentric
to a discontinued operation.
On 31 October 2014, Way2Bet Pty
Ltd, a subsidiary of the Company
that managed the Company’s online
wagering marketing business, was
sold to Punters Paradise Pty Limited.
The net proceeds of sale to the
Company were $450,000.
There were no other significant
changes in the state of affairs of
the consolidated entity during the
financial year.
matters subsequent to the
end of the financial year
The ultimate parent company, Donaco
International Limited (DNA), entered
into a share sale agreement on 23
January 2015, supplemental share
sale agreement on 22 May 2015, and
amending and restating deed on 18
June 2015 (the ‘Sale and Purchase
Agreements’) with independent third
parties for the acquisition of the 100%
equity interests in DNA Star Vegas Co.,
Ltd (‘DNA Star’) for a consideration
of USD360 million. DNA Star is
principally engaged in operation of
a casino business in Cambodia. The
consideration to be paid by DNA to
the vendor was made by:
1. Deposit of USD5 million within 14
days of execution of the share sale
agreement, which occurred in FY15.
2. USD135 million to be paid on
completion date of acquisition.
3. USD120 million by issuing
consideration shares in DNA on the
completion date of acquisition.
4. USD100 million to be paid to an
account or held in escrow in favour
of the vendor.
According to the nomination
letter signed on 22 June 2015,
DNA nominated its wholly-owned
subsidiary, Donaco Hong Kong
Limited (‘DHK’), to be the registered
owner of DNA Star and vested unto
DHK all of the rights, titles and interest
in DNA Star under and/or pursuant
to the Sale and Purchase Agreement.
The acquisition was completed on 1 July
2015. Consequent on the completion
of the acquisition, applicable legal
and consultancy fees of $10,444,225
were expensed and paid in the month
of July 2015. As part payment for the
acquisition, a term loan of USD100
million from Mega International
Commercial Bank Co, Ltd of Taiwan
was drawn down on 1 July 2015, and
the proceeds paid to the vendor.
Pursuant to a detailed valuation report
and purchase price allocation report
dated 22 January 2015 prepared by
Colliers International Hong Kong
Limited and its related party, Colliers
International Thailand, the fair value
of the business acquired by DNA was
USD411.2 million. Since the price paid
was USD360 million, this valuation
would require the acquisition to be
treated as a bargain purchase, which
would require the excess of USD51.2
million to be recorded as a positive
income amount in the Company’s
income statement.
However the directors have decided
to take a more conservative approach
to the valuation, and will continue to
evaluate the business and the assets
acquired in more detail over the next 12
months, before deciding whether to treat
the acquisition as a bargain purchase.
As a result of the successful acquisition
of the Star Vegas Resort & Club
on 1 July 2015, the FY15 statutory
results relate only to the Company’s
pre-existing business, the Aristo
International Hotel in Vietnam. Based
on unaudited Star Vegas management
accounts for FY15, the Aristo now
represents approximately 15% of the
Company’s overall business, in terms
of net (reported) revenue.
Unaudited management accounts
for FY15 show that the Star Vegas
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donaco international limited 2015 annual reportdonaco international limited 2015 annual report achieved actual net revenue of $92.66
million, and earnings before interest,
tax, depreciation and amortisation
(EBITDA) of $70.22 million, with net
profit after tax (NPAT) of $65.4 million.
Normalised results show revenue
of $100.82 million, EBITDA of $78.39
million, and NPAT of $73.56 million.
In order to provide working capital for
the consolidated entity, a term loan
facility in the amount of USD20 million
from OL Master Limited was drawn
down on 7 July 2015.
No other matter or circumstance
has arisen since 30 June 2015 that
has significantly affected, or may
significantly affect, the consolidated
entity’s operations, the results of
those operations, or the consolidated
entity’s state of affairs in future
financial years.
likely developments, business
strategies and prospects
The Company operates leisure and
entertainment businesses across the
Asia Pacific region.
Our 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.
Our 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.
The operation and marketing
of both of these properties will
underpin our growth during the
next 12 months. Our strategy is to
take advantage of the demand for
leisure and entertainment in the
Asia Pacific region, and to leverage
the experience of the Board and
management in the gaming sector.
This will complement the growth
at the expanded casinos in both
Cambodia and Vietnam, and provide
for diversification.
Material risks to this strategy include
those affecting listed entities
generally, and companies operating
in Thailand, Cambodia and Vietnam
generally. These risks include the
possibility of adverse macroeconomic
developments, such as exchange
rate declines; cross-border disputes;
or terrorist attacks affecting the
Company’s key target markets. Other
material risks include the possibility of
adverse regulatory change affecting
casino operators, such as changes in
tax rates, and the possibility of breach
of licences or legislation. These risks
are carefully monitored by the Board
and management team. These key
risks should not be taken as the only
risks that may affect the Company’s
operations, and many risks are
outside the control of the Board and
management team.
Except as noted above, information
on likely developments in the
operations of the consolidated entity
and the expected results of operations
have not been included in this report
because the directors believe it would
be likely to result in unreasonable
prejudice to the consolidated entity.
environmental regulation
The consolidated entity is not subject
to any significant environmental
regulation under Australian
Commonwealth or State law.
company secretary
Benedict Paul Reichel is an Executive
Director and the Company Secretary.
His qualifications and experience are
set out above under ‘Board of Directors’.
meetings of directors
The number of meetings of the
Company’s Board of Directors (‘the
Board’) and of each Board committee
held during the year ended 30 June
2015, and the number of meetings
attended by each director were:
Full Board
Audit and Risk
Management Committee
Nominations,
Remuneration and Corporate
Governance Committee
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
HELD
Stuart James McGregor
Joey Lim Keong Yew
Benedict Paul Reichel
Benjamin Lim Keong Hoe
Robert Andrew Hines
12
12
12
9
12
12
12
12
12
12
2
–
–
2
2
2
–
–
2
2
2
–
–
2
2
2
–
–
2
2
‘Held’: represents the number of meetings held during the time the director held office or was a member of the
relevant committee.
renumeration report (audited)
remuneration report
(audited)
The remuneration report details
the key management personnel
remuneration arrangements for
the consolidated entity, in accordance
with the requirements of the
Corporations Act 2001 and
its Regulations.
Key management personnel are
those persons having authority and
responsibility for planning, directing
and controlling the activities of the
entity, directly or indirectly, including
all directors.
The remuneration report is set out
under the following main headings:
• Principles used to determine the
nature and amount of remuneration
• Details of remuneration
• Share-based compensation
• Additional information
• Additional disclosures relating
to key management personnel.
Principles used to determine
the nature and amount
of remuneration
The objective of the consolidated
entity’s executive reward framework
is to ensure reward for performance
is competitive and appropriate for
the results delivered. The framework
aligns executive reward with the
achievement of strategic objectives
and the creation of value for
shareholders, and conforms to the
market best practice for the delivery
of reward. The Board of Directors (‘the
Board’) ensures that executive reward
satisfies the following key criteria for
good reward governance practices:
• competitiveness and
reasonableness
• acceptability to shareholders
• performance linkage/alignment
of executive compensation
• transparency.
The performance of the consolidated
entity depends on the quality
of its directors and executives.
The remuneration philosophy is
to attract and retain high quality
personnel, and motivate them
to achieve high performance.
The Board has an established
Nominations, Remuneration and
Corporate Governance Committee,
consisting only of non-executive
directors, with a majority of
independent directors. It is primarily
responsible for setting the overall
remuneration policy and guidelines for
the Company, and its functions include:
• reviewing and recommending to the
Board for approval, the Company’s
general approach towards
remuneration, and to oversee the
development and implementation
of remuneration programs;
• reviewing and recommending to
the Board for approval, corporate
goals and objectives relevant to
the remuneration of the Managing
Director/Chief Executive Officer,
and evaluating the performance
of the Managing Director/Chief
Executive Officer in light of those
goals and objectives;
• reviewing and recommending to the
Board for approval, remuneration
programs applicable to the
Company executives, and ensuring
that these programs differ from the
structure of remuneration for non-
executive directors; and
• reviewing the remuneration of
non-executive directors, and
ensuring that the structure of non-
executive directors’ remuneration
is clearly distinguished from
that of executives by ensuring
that non-executive directors are
remunerated by way of fees, do not
participate in schemes designed
for the remuneration of executives,
do not receive options or bonus
payments, and are not provided
with retirement benefits other than
statutory superannuation.
In consultation with external
remuneration consultants when
necessary (refer to the section ‘Use of
Remuneration Consultants’ below),
the Nominations, Remuneration
and Corporate Governance
Committee has structured an
executive remuneration framework
that is market competitive and
complementary to the reward strategy
of the consolidated entity.
The remuneration framework is
aligned to shareholders’ interests:
• has economic profit as a core
component of plan design
• focuses on sustained growth
in shareholder wealth, consisting
of growth in share price, and
delivering constant or increasing
return on assets as well as focusing
the executive on key non-financial
drivers of value
• attracts and retains high
calibre executives.
The remuneration framework
is also aligned to program
participants’ interests:
• rewards capability and experience
• reflects competitive reward
for contribution to growth in
shareholder wealth
• provides a clear structure for
earning rewards.
All remuneration paid to directors
and executives is valued at cost to the
Company and expensed.
In accordance with best practice
corporate governance, the structures of
remuneration for non-executive directors
and for executives are separate.
14
15
donaco international limited 2015 annual reportdonaco international limited 2015 annual report Non-executive directors’
remuneration
Fees and payments to non-
executive directors reflect the
demands that are made on, and
the responsibilities of, the directors.
Non-executive directors’ fees and
payments are reviewed annually by
the Nominations, Remuneration and
Corporate Governance Committee.
The Nominations, Remuneration and
Corporate Governance Committee
may, from time to time, receive advice
from independent remuneration
consultants to ensure non-executive
directors’ fees and payments are
appropriate and in line with the market.
There are no bonuses payable to non-
executive directors, and there are no
termination payments for non-executive
directors on retirement from office,
other than statutory superannuation
entitlements. Non-executive directors
are not granted options.
ASX Listing Rules require that the
aggregate of non-executive directors’
remuneration be determined
periodically by a general meeting. The
most recent determination was at the
2013 Annual General Meeting, where
the shareholders approved a maximum
aggregate remuneration of $750,000
per annum, including statutory
superannuation contributions.
Executive remuneration
The consolidated entity’s
remuneration policy is to ensure that
executive remuneration packages
properly reflect a person’s duties
and responsibilities, and that
remuneration is competitive in
attracting, retaining and motivating
executives of the highest calibre.
As a result, remuneration packages
for the Managing Director/Chief
Executive Officer and senior
executives include both fixed and
performance-based remuneration.
Base salary is determined by
considering the scope of the
executive’s responsibility, importance
to the business, competitiveness in
the market, and assessed potential.
The total remuneration package for
executives includes superannuation
and other non-cash benefits to reflect
the total employment cost to the
Company, inclusive of any fringe
benefits tax.
The executive remuneration and reward
framework has four components:
• base pay and non-monetary
benefits
• short-term performance incentives
• long-term incentives, currently
consisting of the grant of options
• other remuneration such as super-
annuation and long service leave.
The combination of these
components comprises the executive’s
total remuneration.
Fixed remuneration, consisting
of base salary, superannuation
and non-monetary benefits (if
any), is reviewed annually by the
Nominations, Remuneration and
Corporate Governance Committee,
based on individual and business unit
performance, the overall performance
of the consolidated entity and
comparable market remuneration.
Executives may receive their fixed
remuneration in the form of cash or
other fringe benefits (for example
motor vehicle benefits) where it does
not create any additional costs to
the consolidated entity and provides
additional value to the executive.
The short-term incentive (‘STI’)
program is designed to align the
targets of executives with the targets
of the consolidated entity. STI
payments are granted to executives
based on the achievement of
specific annual targets and key
performance indicators (‘KPIs’). During
FY15, applicable KPIs related to
achievement of corporate objectives,
specifically the successful acquisition
of the Star Vegas Resort & Club, and
the successful raising of $132 million
to enable the consolidated entity to
achieve its objectives.
The long-term incentive (‘LTI’)
program currently consists of
participation in the Company’s option
plan. Options are awarded on an
annual basis, ensuring that at any
given time, the executives have at
risk a number of plans, with different
vesting periods and amounts. This
also helps to smooth out both the risk
and the cash flow for the Company
and for executives. The option
plan was established pursuant to
shareholder approval given at the
Annual General Meeting held on
21 November 2013.
Consolidated entity performance
and link to remuneration
Remuneration for certain executives
is directly linked to performance of
the consolidated entity. Bonus and
incentive payments are dependent
on defined KPIs being met and are
at the discretion of the Nominations,
Remuneration and Corporate
Governance Committee.
The section headed ‘Additional
Information’ below provides information
on the improvement in revenue,
earnings, share price and market
capitalisation for the Consolidated
Entity over the past three years.
The increase of 50% in the
consolidated entity’s market
capitalisation is directly attributable to
the successful acquisition of the Star
Vegas Resort & Club on 1 July 2015.
This has increased the Company’s
revenues by a factor of 5.4 times,
based on unaudited management
accounts for the Star Vegas in FY15.
This has transformed the size and
scale of the consolidated entity.
The Nominations, Remuneration and
Corporate Governance Committee is
of the opinion that the expansion of
the size and scale of the consolidated
entity’s business during the year can
be attributed in part to the adoption
of performance-based compensation,
and is satisfied with the upwards trend
in shareholder wealth. The Committee
also considers that the remuneration
framework in place will continue
to increase shareholder wealth if
maintained over the coming years,
subject to any adjustments that are
necessary or desirable to reflect the
Company’s growth.
Use of remuneration consultants
The consolidated entity did not
engage remuneration consultants
during the financial year ended
30 June 2015. Recommendations
received from remuneration
consultants in prior years were
implemented during the year.
An agreed set of protocols is put
in place at the time of engaging
remuneration consultants, to
ensure that any remuneration
recommendations are free from undue
influence from key management
personnel. The Board is satisfied that
there was no undue influence.
Voting and comments made at the
Company’s 2014 Annual General
Meeting (‘AGM’)
At the AGM held on 25 November
2014, 78.85% of the eligible votes
received supported the adoption of
the remuneration report for the year
ended 30 June 2014. Eligible votes
received represented approximately
23% of the total voting power in
the Company at that time. The
company did not receive any specific
feedback at the AGM regarding its
remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key
management personnel of the
consolidated entity are set out in the
following tables.
The key management personnel
of the consolidated entity consisted
of the following directors of Donaco
International Limited:
• Stuart James McGregor –
Non-Executive Director and Chairman
• Joey Lim Keong Yew – Managing
Director and Chief Executive Officer
• Benedict Paul Reichel –
Executive Director, Group General
Counsel and Company Secretary
• Benjamin Lim Keong Hoe –
Non-Executive Director
• Robert Andrew Hines
(appointed 1 November 2013) –
Non-Executive Director
• Ham Techatut Sukjaroenkraisri
(appointed 1 July 2015) –
Executive Director
• Paul Porntat Amatavivadhana
(appointed 1 July 2015) –
Non-Executive Director
And the following persons:
• Richard Na Chun Wee –
Deputy Group CEO
and Chief Financial Officer
• Kenny Goh Kwey Biaw –
Deputy Chief Financial Officer
and CEO of Donaco Singapore
16
17
donaco international limited 2015 annual reportdonaco international limited 2015 annual report
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
CASH SALARY
AND FEES
BONUS
NON-
MONETARY
SUPER-
ANNUATION
LEAVE
ENTITLEMENTS
EQUITY-
SETTLED
2015
$
Non-Executive Directors
S J McGregor
155,606
Lim K H
R A Hines
144,792
137,300
$
–
–
–
Executive Directors
Lim K Y
B P Reichel
514,088
219,716
163,293
50,000
Other key management personnel
Na C W
342,075
Goh K B
154,746
108,796
46,152
1,668,243
368,241
2014
$
Non-Executive Directors
S J McGregor
139,737
Lim K H
R A Hines
G N Tan (resigned
6 September 2013)
Mak S W (resigned
23 December 2013)
131,172
91,533
13,500
61,636
Executive Directors
Lim K Y
B P Reichel
432,868
190,000
Other key management personnel
Na C W
288,578
Goh K B
118,055
$
–
–
–
–
–
72,145
33,334
48,096
19,676
648,931
81,931
$
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
$
14,783
–
13,044
–
25,623
–
–
$
–
–
–
–
7,600
–
–
TOTAL
$
170,389
144,792
150,344
$
–
–
–
160,187
112,301
837,488
415,240
327,131
224,561
778,002
425,459
53,450
7,600
824,180
2,921,714
$
12,926
–
8,467
–
–
–
$
–
–
–
–
–
–
21,014
3,846
–
–
–
–
42,407
3,846
$
–
–
–
–
–
–
–
–
–
–
$
152,663
131,172
100,000
13,500
61,636
505,013
248,194
336,674
137,731
1,686,583
The proportion of remuneration linked to performance and the fixed proportion are as follows:
NAME
2015
2014
2015
2014
2015
2014
Fixed remuneration
At risk – STI
At risk – LTI
Non-Executive Directors
S J McGregor
Lim K H
R A Hines
G N Tan
Mak S W
Executive Directors
Lim K Y
B P Reichel
100%
100%
100%
-%
-%
61%
53%
Other key management personnel
Na C W
44%
Goh K B
36%
100%
100%
100%
100%
100%
86%
87%
86%
86%
-%
-%
-%
-%
-%
19%
12%
14%
11%
-%
-%
-%
-%
-%
14%
13%
14%
14%
-%
-%
-%
-%
-%
20%
35%
42%
53%
-%
-%
-%
-%
-%
-%
-%
-%
-%
The proportion of the cash bonus paid/payable or forfeited is as follows:
Cash bonus paid/payable
Cash bonus forfeited
NAME
Executive Directors
Lim K Y
B P Reichel
Other key management personnel
Na C W
Goh K B
2015
100%
100%
100%
100%
2014
100%
100%
100%
100%
2015
2014
-%
-%
-%
-%
-%
-%
-%
-%
Criteria for performance-based
remuneration
The short-term incentive (‘STI’)
program is designed to align the
targets of executives with the targets
of the consolidated entity. STI
payments are granted to executives
based on specific annual targets and
key performance indicators (‘KPIs’)
being achieved. The Board, advised by
the Nominations, Remuneration and
Corporate Governance Committee,
applied these criteria in determining
the award of performance-based
remuneration during the year.
Performance-based bonuses were
paid on 1 October 2014, with the total
amounts set out in the tables above.
These bonuses related to performance
during FY14. The relevant criteria for
award of these bonuses included the
fact that during FY14, the Company’s
share price increased by a multiple of
2.65 times (an increase of 165%), and
the Company’s market capitalisation
increased by a multiple of 3.28 times
(an increase of 228%), as well as the
successful raising of $100 million
to enable the Company to pursue
its objectives.
During FY15, applicable KPIs related
to the achievement of corporate
objectives, specifically the successful
acquisition of the Star Vegas Resort
& Club, and the successful raising
of $132 million to enable the
consolidated entity to pursue
its objectives.
Service agreements
Remuneration and other terms
of employment for the Managing
Director, Chief Financial Officer
and the other key management
personnel are formalised in contracts
of employment. The service
agreements specify the components
of remuneration, benefits and notice
periods. The specified executives
are employed under contracts with
no fixed term. The Company may
terminate the contracts immediately
if the executive is guilty of serious
misconduct or wilful neglect of
18
19
donaco international limited 2015 annual reportdonaco international limited 2015 annual report duties. Otherwise, the Company may
terminate the contracts by giving
three months’ notice or paying three
months’ salary (in the case of Mr Lim,
Mr Na and Mr Goh), or six months (in
the case of Mr Reichel). In the case
of Mr Lim and Mr Na, termination for
any reason other than just cause will
result in a termination payment of 24
months’ base salary.
Share-based compensation
Issue of shares
Details of shares issued to directors and
other key management personnel as
part of compensation during the year
ended 30 June 2015 are set out below:
Name
Date
Lim K Y
B P Reichel
Na C W
Goh K B
1 October 2014
1 October 2014
1 October 2014
1 October 2014
Shares
115,116
50,556
76,744
31,395
Issue price
$0.989
$0.989
$0.989
$0.989
$
113,849
50,000
75,899
31,050
Approval for the issue of these shares was obtained pursuant to ASX Listing Rule 10.14.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Grant date
1 July 2014
1 July 2014
1 July 2014
Vesting date and
exercisable date
1 July 2014
1 July 2015
1 July 2016
Expiry date
Exercise price
Fair value per option
at grant date
1 July 2016
1 July 2017
1 July 2018
$0.590
$0.590
$0.590
$0.491
$0.560
$0.616
Options granted carry no dividend or voting rights.
Approval for the issue of these options was obtained pursuant to ASX Listing Rule 10.14.
The number of options over ordinary shares granted to and vested by directors and other key management personnel
as part of compensation during the year ended 30 June 2015 are set out below:
Name
Lim K Y
B P Reichel
Na C W
Goh K B
Number of options
granted during the
year 2015
Number of options
granted during the
year 2014
Number of options
vested during the
year 2015
Number of options
vested during the
year 2014
407,371
407,372
1,585,594
1,210,174
–
–
–
–
152,466
152,468
550,766
410,258
–
–
–
–
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel
as part of compensation during the year ended 30 June 2015 are set out below:
Name
Value of options granted
during the year
Value of options exercised
during the year
Value of options lapsed
during the year
Lim K Y
B P Reichel
Na C W
Goh K B
$
224,400
224,400
878,445
671,645
$
–
–
–
–
#
–
–
–
–
Details of options over ordinary shares granted, vested and lapsed for directors and other key management personnel
as part of compensation during the year ended 30 June 2015 are set out below:
Name
Grant date
Vesting date
Number
of options
granted
Value
of options
granted
Value
of options
vested
Number
of options
lapsed
Value
of options
lapsed
Lim K Y
1 July 2014
1 July 2014
407,371
B P Reichel
1 July 2014
1 July 2014
407,372
Na C W
Goh K B
1 July 2014
1 July 2014
1,585,594
1 July 2014
1 July 2014
1,210,174
224,400
224,400
878,445
671,645
74,800
74,801
270,206
201,273
–
–
–
–
$
$
$
–
–
–
–
Additional information
The earnings of the consolidated entity for the three years to 30 June 2015 are summarised below:
Revenue from continuing operations
EBITDA
Profit/(loss) after income tax
2015
$
19,108,431
550,295
(2,928,075)
2014
$
21,111,819
8,861,216
6,793,403
2013
$
16,076,337
6,888,780
7,026,196
Information relating to previous years is not directly comparable, as the consolidated entity listed on the ASX part way
through 2013.
The factors that are considered to affect total shareholder return are summarised below:
Share price at financial year end ($)
2015
0.75
2014
0.90
2013
0.34
Market capitalisation at year end ($)
623,042,723
414,254,367
126,372,057
Basic earnings per share (cents per share)
(0.54)
2.22
2.53
The increase of 50% in the consolidated entity’s market capitalisation is directly attributable to the successful acquisition
of the Star Vegas Resort & Club on 1 July 2015. This has increased the Company’s revenues by a factor of 5.4 times, based
on unaudited management accounts for the Star Vegas in FY15. This has transformed the size and scale of the consolidated
entity for FY16 onwards.
20
21
donaco international limited 2015 annual reportdonaco international limited 2015 annual report Additional disclosures relating to key management personnel
shares under option
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at the
start of the year
Received as part
of remuneration
Additions
Disposals/other
Balance at the
end of the year
ORDINARY SHARES
S J McGregor
235,224
Lim K Y
B P Reichel
Lim K H
R A Hines
Na C W
Goh K B
207,281,355
183,306
174,291,200
75,000
5,455,000
700,000
–
115,116
50,556
–
–
76,744
31,395
112,011
56,962,025
87,288
–
35,714
–
–
–
–
–
347,235
264,358,496
321,150
(29,500,000)
144,791,200
–
(535,000)
–
110,714
4,996,744
731,395
Unissued ordinary shares of Donaco International Limited under option at the date of this report are as follows:
Grant date
1 July 2014
1 July 2014
1 July 2014
1 July 2015
1 July 2015
1 July 2015
Expiry date
1 July 2016
1 July 2017
1 July 2018
1 July 2017
1 July 2018
1 July 2019
Exercise price
Number under option
$0.590
$0.590
$0.590
$0.890
$0.890
$0.890
1,365,959
1,294,836
1,249,716
457,047
395,208
349,376
5,112,142
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
388,221,085
273,811
57,197,038
(30,035,000)
415,656,934
shares issued on the exercise of options
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at the
start of the year
Granted
Exercised
Expired/forfeited
/other
Balance at the
end of the year
OPTIONS OVER ORDINARY SHARES
Lim K Y
B P Reichel
Na C W
Goh K B
–
–
–
–
–
407,371
407,372
1,585,594
1,210,174
3,610,511
–
–
–
–
–
–
–
–
–
–
407,371
407,372
1,585,594
1,210,174
3,610,511
This concludes the remuneration report, which has been audited.
Our marketing strategies for the Star Vegas property,
and the ongoing improvements in the highway linking
the Star Vegas to Bangkok, will drive continuing growth
in this business in FY16.
The following ordinary shares of Donaco International Limited were issued during the year ended 30 June 2015 and up
to the date of this report on the exercise of options granted:
Date options granted
Exercise price
Number of shares issued
29 January 2013
17 January 2012
1 March 2012
17 May 2012
$0.280
$0.540
$0.540
$0.540
2,721,367
324,400
125,000
125,000
3,295,767
indemnity and insurance
of officers
indemnity and insurance
of auditor
The Company has indemnified the
directors and executives of the
Company for costs incurred, in their
capacity as a director or executive,
for which they may be held personally
liable, except where there is a lack of
good faith.
During the financial year, the Company
paid a premium in respect of a
contract to insure the directors and
executives of the Company against a
liability to the extent permitted by the
Corporations Act 2001. The contract
of insurance prohibits disclosure of the
nature of the liability and the amount
of the premium.
The Company has not, during or
since the end of the financial year,
indemnified or agreed to indemnify
the auditor of the Company or any
related entity against a liability
incurred by the auditor.
During the financial year, the Company
has not paid a premium in respect of
a contract to insure the auditor of the
Company or any related entity.
proceedings on behalf
of the company
No person has applied to the Court
under section 237 of the Corporations
Act 2001 for leave to bring proceedings
on behalf of the Company, or to
intervene in any proceedings to
which the Company is a party for the
purpose of taking responsibility on
behalf of the Company for all or part
of those proceedings.
non-audit services
Details of the amounts paid or
payable to the auditor for non-audit
services provided during the financial
year by the auditor are outlined in
note 31 to the financial statements.
The directors are satisfied that the
provision of non-audit services during
the financial year, by the auditor
(or by another person or firm on the
auditor’s behalf), is compatible with
the general standard of independence
for auditors imposed by the
Corporations Act 2001.
22
23
donaco international limited 2015 annual reportdonaco international limited 2015 annual report The directors are of the opinion that
the services as disclosed in note 31
to the financial statements do not
compromise the external auditor’s
independence requirements of
the Corporations Act 2001 for the
following reasons:
• all non-audit services have been
reviewed and approved to ensure
that they do not impact the integrity
and objectivity of the auditor; and
• none of the services undermine
the general principles relating to
auditor independence as set out
in APES 110 Code of Ethics for
Professional Accountants issued by
the Accounting Professional and
Ethical Standards Board, including
reviewing or auditing the auditor’s
own work, acting in a management
or decision-making capacity for
the Company, acting as advocate
for the Company or jointly sharing
economic risks and rewards.
officers of the company
who are former partners
of william buck
There are no officers of the Company
who are former partners of
William Buck.
auditor’s independence
declaration
A copy of the auditor’s independence
declaration as required under section
307C of the Corporations Act 2001
is set out on the following page.
auditor
William Buck continues in office in
accordance with section 327 of the
Corporations Act 2001.
This report is made in accordance with
a resolution of directors, pursuant to
section 298(2)(a) of the Corporations
Act 2001.
On behalf of the directors
Mr Stuart McGregor
Chairman
25 September 2015
Sydney
auditor’s independence declaration
FOR THE YEAR ENDED 30 JUNE 2015
AUDITORʼS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF DONACO INTERNATIONAL
LIMITED
I declare that, to the best of my knowledge and belief during the year ended 30 June 2015
there have been:
— no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the
audit.
William Buck
Chartered Accountants
ABN 16 021 300 521
M Nevill
Partner
Dated this 25th day of September, 2015
CHARTERED ACCOUNTANTS
& ADVISORS
Sydney Ofice
Level 29, 66 Goulburn Street
Sydney NSW 2000
Telephone: +61 2 8263 4000
Parramatta Ofice
Level 7, 3 Horwood Place
Parramatta NSW 2150
PO Box 19
Parramatta NSW 2124
Telephone: +61 2 8836 1500
williambuck.com
24
William Buck is an association of independent firms, each trading under the name of William Buck across
Australia and New Zealand with affiliated offices worldwide. Liability limited by a scheme approved under
Professional Standards Legislation other than for acts or omissions of financial services licensees.
19
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donaco international limited 2015 annual report
board of directors
2015 financials d
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Statement of Profit or Loss
and other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Note 1. Significant accounting policies
Note 2. Critical accounting judgments,
estimates and assumptions
Note 3. Operating segments
Note 4. Revenue
Note 5. Other income
Note 6. Expenses
Note 7. Income tax expense/(benefits)
Note 8. Discontinued operations
Note 9. Current assets –
cash and cash equivalents
Note 10. Current assets –
trade and other receivables
Note 11. Current assets – inventories
Note 12. Current assets –
prepaid construction costs
Note 13. Current assets – other
Note 14. Non-current assets –
26
28
29
30
32
40
41
44
44
45
45
46
48
48
48
49
49
property, plant and equipment
49
contents
Note 20. Current liabilities – income tax
54
Note 21. Current liabilities –
employee benefits
Note 22. Non-current liabilities –
borrowings
Note 23. Non-current liabilities –
employee benefits
Note 24. Equity – issued capital
Note 25. Equity – reserves
Note 26. Equity – retained profits
54
54
55
55
56
57
Note 27. Equity – non-controlling interest 57
Note 28. Equity – dividends
Note 29. Financial instruments
Note 30. Key management
personnel disclosures
Note 31. Remuneration of auditors
Note 32. Commitments
Note 33. Related party transactions
Note 34. Parent entity information
Note 35. Interests in subsidiaries
58
58
62
63
63
64
65
66
Note 36. Events after the reporting period 68
Note 37. Reconciliation of profit/(loss)
after income tax to net cash
from operating activities
Note 39. Share-based payments
Directors’ Declaration
Independent Auditor’s Report to the
Members of Donaco International Limited 73
Shareholder Information
Corporate Directory
75
77
69
69
71
72
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Note 16. Non-current assets –
construction in progress
Note 17. Non-current assets – other
Note 18. Current liabilities –
trade and other payables
52
52
53
Note 19. Current liabilities – borrowings
53
26
Note 15. Non-current assets – intangibles 50
Note 38. Earnings per share
donaco international limited 2015 annual reportdonaco international limited 2015 annual report
statement of profit or loss and other comprehensive income
FOR THE YEAR ENDED 30 JUNE 2015
statement of profit or loss and other comprehensive income
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
Consolidated
Earnings per share for profit/(loss) from continuing operations
attributable to the owners of Donaco International Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for profit from discontinued operations
attributable to the owners of Donaco International Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for profit/(loss) attributable to the owners
of Donaco International Limited
Basic earnings per share
Diluted earnings per share
Note
38
38
38
38
38
38
2015
$
CENTS
(0.95)
(0.91)
0.41
0.39
(0.54)
(0.52)
2014
$
CENTS
1.70
1.66
0.51
0.50
2.22
2.16
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
Revenue from continuing operations
Other income
Expenses
Cost of sales
Employee benefits expense
Depreciation and amortisation expense
Legal and compliance
Marketing and promotions
Professional and consulting fees
Property costs
Telecommunications and hosting
Other expenses
Finance costs
Profit/(loss) before income tax (expense)/benefit from continuing operations
Income tax (expense)/benefit
Profit/(loss) after income tax (expense)/benefit from continuing operations
Note
2015
$
2014
$
4
5
6
6
19,108,431
21,111,819
(427,602)
121,674
(2,208,639)
(1,270,995)
9,902,974)
(5,882,036)
(4,857,120)
(605,044)
(269,058)
(1,058,511)
(1,202,828)
(171,965)
(270,153)
(452,412)
(510,722)
(300,346)
(545,837)
(176,299)
(1,924,054)
(2,231,618)
(1,683,159)
(920)
(5,202,523)
9,592,155
361
(2,892,203)
(5,202,162)
6,699,952
Profit after income tax expense from discontinued operations
8
2,201,761
1,570,130
Profit/(loss) after income tax expense for the year
(3,000,401)
8,270,082
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit/(loss) for the year is attributable to:
Non-controlling interest
Owners of Donaco International Limited
Total comprehensive income for the year is attributable to:
Continuing operations
Discontinued operations
Non-controlling interest
Continuing operations
Discontinued operations
Owners of Donaco International Limited
12,412,538
(1,316,108)
12,412,538
(1,316,108)
9,412,137
6,953,974
(72,326)
1,476,679
26
2,928,075)
6,793,403
(3,000,401)
8,270,082
(72,326)
1,603,297
–
–
(72,326)
1,603,297
7,203,984
3,780,547
2,280,479
1,570,130
9,484,463
5,350,677
9,412,137
6,953,974
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
28
29
donaco international limited 2015 annual reportdonaco international limited 2015 annual report statement of financial position
FOR THE YEAR ENDED 30 JUNE 2015
statement of changes in equity
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
Note
2015
$
2014
$
CONSOLIDATED
Issued
capital
$
Reserves
Retained
profits
Non-controlling
interest
Total equity
$
$
$
$
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepaid construction costs
Other
Assets of disposal groups classified as held for sale
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Construction in progress
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Income tax
Employee benefits
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Non-current liabilities
Borrowings
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Equity attributable to the owners of Donaco International Limited
Non-controlling interest
Total equity
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
210,175,119
2,064,923
700,866
273,207
11,883,206
225,097,321
–
225,097,321
82,017,909
2,464,577
205,737
533,765
85,221,988
98,034,937
802,301
1,405,726
18,815,625
2,207,269
121,265,858
5,706,816
126,972,674
5,894,577
9,830,615
39,151,630
18,637
54,895,459
310,319,309
181,868,133
16,016,059
2,962,712
427,505
315,879
19,722,155
–
19,722,155
13,217,093
9,011
13,226,104
12,635,132
1,446,596
4,851,700
70,490
19,003,918
2,998,897
22,002,815
10,608,370
20,485
10,628,855
32,948,259
32,631,670
277,371,050
149,236,463
246,719,609
15,757,522
13,907,457
276,384,588
986,462
129,964,909
(478,093)
18,690,859
148,177,675
1,058,788
277,371,050
149,236,463
Balance at 1 July 2013
34,692,937
964,633
12,745,584
–
6,793,403
3,599,303
1,476,679
52,002,457
8,270,082
Profit after income tax (expense)/benefit for
the year
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
–
–
–
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction
costs (note 24)
Unissued shares
Share issue expense
101,073,907
(300,000)
(5,501,935)
Additional holding in Lao Cai JV
Dividends paid to non-controlling interest
–
–
(1,442,726)
–
126,618
(1,316,108)
(1,442,726)
6,793,403
1,603,297
6,953,974
–
–
–
–
–
–
300,000
–
–
–
–
101,073,907
–
(5,501,935)
(1,148,128)
(3,322,272)
(4,470,400)
–
(821,540)
(821,540)
Balance at 30 June 2014
129,964,909
(478,093)
18,690,859
1,058,788
149,236,463
CONSOLIDATED
Issued
capital
$
Reserves
Retained
profits
Non-controlling
interest
Total equity
$
$
$
$
Balance at 1 July 2014
129,964,909
(478,093)
18,690,859
1,058,788
149,236,463
Loss after income tax (expense)/benefit for
the year
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
–
–
–
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction
costs (note 24)
133,340,451
Share buy backs
Share issue expense
Return of capital on iSentric sale*
Employee share options
Transfer from retained earnings
(825,113)
(7,260,638)
(8,500,000)
–
–
–
(2,928,075)
(72,326)
(3,000,401)
12,412,538
–
–
12,412,538
12,412,538
(2,928,075)
(72,326)
9,412,137
–
–
–
–
1,967,750
–
–
–
–
–
1,855,327
(1,855,327)
–
–
–
–
–
–
133,340,451
(825,113)
(7,260,638)
(8,500,000)
1,967,750
–
Balance at 30 June 2015
246,719,609
15,757,522
13,907,457
986,462
277,371,050
* Pursuant to the sale of iSentric Sdn Bhd to OMI Holdings Limited, which took effect on 8 September 2014, the
shareholders of Donaco voted at an extraordinary general meeting on 25 August 2014 to approve an ordinary resolution
under section 256C of the Corporations Act 2001, to a return of Donaco’s share capital to shareholders in the amount
of $8,500,000. This equated to $0.0185 per Donaco ordinary share.
The above statement of financial position should be read in conjunction with the accompanying notes.
The above statement of changes in equity should be read in conjunction with the accompanying notes.
30
31
donaco international limited 2015 annual reportdonaco international limited 2015 annual report
statement of cash flows
FOR THE YEAR ENDED 30 JUNE 2015
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other revenue
Interest received
Government levies, gaming taxes and GST
Consolidated
Note
2015
$
2014
$
26,924,930
34,465,583
(16,099,850)
(16,517,800)
10,825,080
17,947,783
(358,371)
2,463,582
–
566,303
(4,427,829)
(8,825,898)
Net cash from operating activities
37
8,502,462
9,688,188
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Payments for property, plant and equipment
Proceeds from disposal of business
Proceeds from disposal of investments
Proceeds from disposal of property, plant and equipment
Other
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Net borrowings
Payment of equity raising expenses
Dividends paid by controlled entities to non-controlling interests
Purchase of additional 20% non controlling interest in Lao Cai JV
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
(6,073,857)
–
(26,354,575)
(41,262,043)
450,000
–
–
1,003
6,720
103,865
(186,673)
–
(31,970,709)
(41,344,851)
132,515,339
101,073,907
1,785,151
(7,260,638)
–
–
12,054,966
(5,501,935)
(821,540)
(4,470,400)
127,039,852
102,334,998
103,571,605
99,496,165
7,107,349
70,678,335
29,404,205
(586,375)
Cash and cash equivalents at the end of the financial year
9
210,175,119
99,496,165
The above statement of cash flows should be read in conjunction with the accompanying notes.
32
33
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report note 1. significant accounting policies
The principal accounting policies adopted in the
preparation of the financial statements are set out below.
These policies have been consistently applied to all the
years presented, unless otherwise stated.
New, revised or amending Accounting Standards and
Interpretations adopted
The consolidated entity has adopted all of the new, revised
or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board
(‘AASB’) that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or
Interpretations that are not yet mandatory have not been
early adopted.
The adoption of these Accounting Standards and
Interpretations did not have any significant impact on the
financial performance or position of the consolidated entity.
The following Accounting Standards and Interpretations are
most relevant to the consolidated entity:
AASB 2012-3 Amendments to Australian
Accounting Standards – Offsetting Financial Assets
and Financial Liabilities
The amendments are applicable to annual reporting
periods beginning on or after 1 January 2014. The
amendments add application guidance to address
inconsistencies in the application of the offsetting criteria in
AASB 132 ‘Financial Instruments: Presentation’, by clarifying
the meaning of ‘currently has a legally enforceable right of
set-off’; and clarifies that some gross settlement systems
may be considered to be equivalent to net settlement. The
adoption of the amendments from 1 July 2014 will not have
a material impact on the consolidated entity.
AASB 2013-3 Amendments to AASB 136 – Recoverable
Amount Disclosures for Non-Financial Assets
These amendments are applicable to annual reporting
periods beginning on or after 1 January 2014. The
disclosure requirements of AASB 136 ‘Impairment of Assets’
have been enhanced to require additional information
about the fair value measurement when the recoverable
amount of impaired assets is based on fair value less costs
of disposals. Additionally, if measured using a present value
technique, the discount rate is required to be disclosed.
The adoption of these amendments from 1 January 2014
may increase the disclosures by the consolidated entity.
Annual Improvements to IFRSs 2010-2012 Cycle
These amendments are applicable to annual reporting
periods beginning on or after 1 July 2014 and affects several
Accounting Standards as follows: Amends the definition of
‘vesting conditions’ and ‘market condition’
and adds definitions for ‘performance condition’ and
‘service condition’ in AASB 2 ‘Share-based Payment’;
Amends AASB 3 ‘Business Combinations’ to clarify that
contingent consideration that is classified as an asset or
liability shall be measured at fair value at each reporting
date; Amends AASB 8 ‘Operating Segments’ to require
entities to disclose the judgments made by management
in applying the aggregation criteria; Clarifies that AASB
8 only requires a reconciliation of the total reportable
segments assets to the entity’s assets, if the segment assets
are reported regularly; Clarifies that the issuance of AASB
13 ‘Fair Value Measurement’ and the amending of AASB
139 ‘Financial Instruments: Recognition and Measurement’
and AASB 9 ‘Financial Instruments’ did not remove the
ability to measure short-term receivables and payables with
no stated interest rate at their invoice amount, if the effect
of discounting is immaterial; Clarifies that in AASB 116
‘Property, Plant and Equipment’ and AASB 138 ‘Intangible
Assets’, when an asset is revalued the gross carrying
amount is adjusted in a manner that is consistent with
the revaluation of the carrying amount (i.e. proportional
restatement of accumulated amortisation); and Amends
AASB 124 ‘Related Party Disclosures’ to clarify that an
entity providing key management personnel services to the
reporting entity or to the parent of the reporting entity is a
‘related party’ of the reporting entity. The adoption of these
amendments from 1 January 2015 will not have a material
impact on the consolidated entity.
Annual Improvements to IFRSs 2011-2013 Cycle
These amendments are applicable to annual reporting
periods beginning on or after 1 July 2014 and affects four
Accounting Standards as follows: Clarifies the ‘meaning of
effective IFRSs’ in AASB 1 ‘First-time Adoption of Australian
Accounting Standards’; Clarifies that AASB 3 ‘Business
Combination’ excludes from its scope the accounting
for the formation of a joint arrangement in the financial
statements of the joint arrangement itself; Clarifies that the
scope of the portfolio exemption in AASB 13 ‘Fair Value
Measurement’ includes all contracts accounted for within
the scope of AASB 139 ‘Financial Instruments: Recognition
and Measurement’ or AASB 9 ‘Financial Instruments’,
regardless of whether they meet the definitions of financial
assets or financial liabilities as defined in AASB 132
‘Financial Instruments: Presentation’; and Clarifies that
determining whether a specific transaction meets the
definition of both a business combination as defined in
AASB 3 ‘Business Combinations’ and investment property
as defined in AASB 140 ‘Investment Property’ requires
the separate application of both standards independently
of each other. The adoption of these amendments from
1 January 2015 will not have a material impact on the
consolidated entity.
Basis of preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) and the Corporations
Act 2001, as appropriate for for-profit oriented entities.
These financial statements also comply with International
Financial Reporting Standards as issued by the International
Accounting Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the
historical cost convention, except for, where applicable,
the revaluation of available-for-sale financial assets, financial
assets and liabilities at fair value through profit or loss,
investment properties, certain classes of property, plant
and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the
use of certain critical accounting estimates. It also requires
management to exercise its judgment in the process of
applying the consolidated entity’s accounting policies. The
areas involving a higher degree of judgment or complexity,
or areas where assumptions and estimates are significant
to the financial statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these
financial statements present the results of the consolidated
entity only. Supplementary information about the parent
entity is disclosed in note 34.
Principles of consolidation
The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of Donaco
International Limited (‘Company’ or ‘parent entity’) as
at 30 June 2015 and the results of all subsidiaries for the
year then ended. Donaco International Limited and its
subsidiaries together are referred to in these financial
statements as the ‘consolidated entity’.
Subsidiaries are all those entities over which the
consolidated entity has control. The consolidated entity
controls an entity when the consolidated entity is exposed
to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns
through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the consolidated entity. They are
de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains
on transactions between entities in the consolidated entity
are eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with
the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as
an equity transaction, where the difference between the
consideration transferred and the book value of the share
of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Non-controlling interest in the results and equity of
subsidiaries are shown separately in the statement of profit
or loss and other comprehensive income, statement of
financial position and statement of changes in equity of the
consolidated entity. Losses incurred by the consolidated
entity are attributed to the non-controlling interest in full,
even if that results in a deficit balance.
Where the consolidated entity loses control over a
subsidiary, it derecognises the assets including goodwill,
liabilities and non-controlling interest in the subsidiary
together with any cumulative translation differences
recognised in equity. The consolidated entity recognises
the fair value of the consideration received and the fair
value of any investment retained together with any gain
or loss in profit or loss.
Operating segments
Operating segments are presented using the ‘management
approach’, where the information presented is on the
same basis as the internal reports provided to the Chief
Operating Decision Makers (‘CODM’). The CODM is
responsible for the allocation of resources to operating
segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars,
which is Donaco International Limited’s functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian
dollars using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and
from the translation at financial year-end exchange rates
of monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are
translated into Australian dollars using the exchange
rates at the reporting date. The revenues and expenses
of foreign operations are translated into Australian dollars
34
35
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report using the average exchange rates, which approximate the
rates at the dates of the transactions, for the period. All
resulting foreign exchange differences are recognised in
other comprehensive income through the foreign currency
reserve in equity.
The foreign currency reserve is recognised in profit or loss
when the foreign operation or net investment is disposed of.
Revenue recognition
Revenue is recognised when it is probable that the
economic benefit will flow to the consolidated entity and
the revenue can be reliably measured. Revenue is measured
at the fair value of the consideration received or receivable.
Casino revenue
Revenue at the playing tables is recognised upon the
differences between chips at the closing and chips at the
opening of each table plus chips transferred from the
playing table to the cage, less chips transferred from the
cage to the playing table. Revenue from slot machines
represents the amount received over the exchange counter
less the amount returned to customers.
Sale of goods
Sale of goods revenue is recognised at the point of sale,
which is where the customer has taken delivery of the
goods, the risks and rewards are transferred to the customer
and there is a valid sales contract.
Rendering of services
Revenue from the provision of services is recognised
in the accounting period in which the services are rendered.
Interest
Interest revenue is recognised as interest accrues using the
effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the
interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts
estimated future cash receipts through the expected life
of the financial asset to the net carrying amount of the
financial asset.
Other revenue
Other revenue is recognised when it is received or when
the right to receive payment is established.
Income tax
Current and non-current classification
Inventories
The income tax expense or benefit for the period is the
tax payable on that period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by
the changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to be
applied when the assets are recovered or liabilities are
settled, based on those tax rates that are enacted or
substantively enacted, except for:
• When the deferred income tax asset or liability arises
from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination
and that, at the time of the transaction, affects neither the
accounting nor taxable profits; or
• When the taxable temporary difference is associated with
interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it
is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it
is probable that future taxable amounts will be available
to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised
deferred tax assets are reviewed at each reporting date.
Deferred tax assets recognised are reduced to the extent
that it is no longer probable that future taxable profits
will be available for the carrying amount to be recovered.
Previously unrecognised deferred tax assets are recognised
to the extent that it is probable that there are future taxable
profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there
is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against
deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different
taxable entities that intend to settle simultaneously.
Discontinued operations
A discontinued operation is a component of the
consolidated entity that has been disposed of or is
classified as held for sale and that represents a separate
major line of business or geographical area of operations,
is part of a single coordinated plan to dispose of such a line
of business or area of operations, or is a subsidiary acquired
exclusively with a view to resale. The results of discontinued
operations are presented separately on the face of the
statement of profit or loss and other comprehensive income.
Assets and liabilities are presented in the statement of financial
position based on current and non-current classification.
An asset is classified as current when: it is either expected
to be realised or intended to be sold or consumed in
normal operating cycle; it is held primarily for the purpose
of trading; it is expected to be realised within 12 months
after the reporting period; or the asset is cash or cash
equivalent unless restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting
period. All other assets are classified as non-current.
A liability is classified as current when: it is expected to be
settled in normal operating cycle; it is held primarily for the
purpose of trading; it is due to be settled within 12 months
after the reporting period; or there is no unconditional right
to defer the settlement of the liability for at least 12 months
after the reporting period. All other liabilities are classified
as non-current.
Deferred tax assets and liabilities are always classified as
non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits
held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade
receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an
ongoing basis. Debts which are known to be uncollectable
are written off by reducing the carrying amount directly.
A provision for impairment of trade receivables is raised
when there is objective evidence that the consolidated
entity will not be able to collect all amounts due according
to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation and default
or delinquency in payments (more than 60 days overdue)
are considered indicators that the trade receivable may be
impaired. The amount of the impairment allowance is the
difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted
at the original effective interest rate. Cash flows relating
to short-term receivables are not discounted if the effect
of discounting is immaterial.
Other receivables are recognised at amortised cost, less any
provision for impairment.
Inventories include consumable stores, food and beverages
and are carried at the lower of cost and net realisable value.
Cost is determined on a first-in-first-out basis and comprises
all costs of purchases, conversion and other costs incurred
in bringing the inventories to their present location and
condition. Net realisable value is the estimated selling price
in the ordinary course of business, less the estimated costs
of completion and selling expenses.
When inventories are sold, the carrying amount of those
inventories is recognised as an expense in the period in
which the related revenue is recognised. The amount of
any write-down of inventories to net realizable value and
all losses of inventories are recognised as an expense in
the period of the write-down or loss occurs. The amount
of any reversal of any write-down of inventories, arising
from an increase in net realisable value, is recognised in
the statement of profit or loss and other comprehensive
income, in the period in which the reversal occurs.
Non-current assets of disposal groups classified
as held for sale
Non-current assets and assets of disposal groups are
classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than
through continued use. They are measured at the lower of
their carrying amount and fair value less costs of disposal.
For non-current assets or assets of disposal groups to
be classified as held for sale, they must be available for
immediate sale in their present condition and their sale
must be highly probable.
An impairment loss is recognised for any initial or
subsequent write-down of the non-current assets and
assets of disposal groups to fair value less costs of disposal.
A gain is recognised for any subsequent increases in fair
value less costs of disposal of non-current assets and assets
of disposal groups, but not in excess of any cumulative
impairment loss previously recognised.
Non-current assets are not depreciated or amortised
while they are classified as held for sale. Interest and other
expenses attributable to the liabilities of assets held for sale
continue to be recognised.
Non-current assets classified as held for sale and the assets
of disposal groups classified as held for sale are presented
separately on the face of the statement of financial position,
in current assets. The liabilities of disposal groups classified
as held for sale are presented separately on the face of the
statement of financial position, in current liabilities.
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notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report Property, plant and equipment
Property, plant and equipment is stated at historical cost
less accumulated depreciation and impairment. Historical
cost includes expenditure that is directly attributable to
the acquisition of the items.
Depreciation is calculated on a straight-line basis to
write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful lives
as follows:
Buildings and structures
Machinery and equipment
Motor vehicles
Office equipment and other
25 years
5–10 years
3–6 years
3–10 years
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each reporting date.
An item of property, plant and equipment is derecognised
upon disposal or when there is no future economic benefit
to the consolidated entity. Gains and losses between the
carrying amount and the disposal proceeds are taken to
profit or loss.
Leases
The determination of whether an arrangement is or contains
a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the
arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which
effectively transfer from the lessor to the lessee substantially
all the risks and benefits incidental to ownership of leased
assets, and operating leases, under which the lessor
effectively retains substantially all such risks and benefits.
Operating lease payments, net of any incentives received
from the lessor, are charged to the statement of profit or
loss and other comprehensive income, on a straight-line
basis over the term of the lease.
Intangible assets
The intangible asset includes costs incurred to acquire
interests in the usage of land in the Socialist Republic of
Vietnam for the original hotel, located in Lao Cai. The term
of the agreement is 30 years from the initial licensing date
of 19 July 2002. These land use rights are stated at cost less
accumulated amortisation. Amortisation is calculated on a
straight-line basis over a period of 30 years, from the licensing
date. At the expiry of the land term it is expected that the
relevant State body will consider an application for extension.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill
is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in
circumstances indicate that it might be impaired, and
is carried at cost less accumulated impairment losses.
Impairment losses on goodwill are taken to profit or
loss and are not subsequently reversed.
Prepaid construction costs
Amounts recognised as prepaid construction costs relate
to tranche payments made to third party developers in
connection with the construction of the new Lao Cai Casino.
Tranche payments are made in advance of construction
work being performed in accordance with the terms of the
contractor agreements, however once associated works
have been completed an amount equal to the tranche
payment is transferred from prepaid construction costs
to construction in progress. Once recognised as part of
construction in progress the amounts are then carried on
the statement of financial position at cost, until such time as
the asset is completed and ready for its intended use. Work
in progress is not depreciated, but tested for impairment
annually. Once ready for its intended use an amount equal
to the cost of the completed asset will be transferred
to property, plant and equipment and accounted for in
accordance with the consolidated entity’s accounting policy
for property, plant and equipment.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite
useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or
changes in circumstances indicate that they might be
impaired. Other non-financial assets are reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less
costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to
the asset using a pre-tax discount rate specific to the asset
or cash-generating unit to which the asset belongs. Assets
that do not have independent cash flows are grouped
together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services
provided to the consolidated entity prior to the end of the
financial year and which are unpaid. Due to their short-term
nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually
paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair
value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using
the effective interest method.
Where there is an unconditional right to defer settlement
of the liability for at least 12 months after the reporting
date, the loans or borrowings are classified as non-current.
Finance costs
Finance costs attributable to qualifying assets are
capitalised as part of the asset. All other finance costs are
expensed in the period in which they are incurred including:
– interest on short-term and long-term borrowings.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and long service leave expected
to be settled within 12 months of the reporting date are
measured at the amounts expected to be paid when
the liabilities are settled. Non-accumulating sick leave is
expensed to profit or loss when incurred.
Other long-term employee benefits
The liability for annual leave and long service leave not
expected to be wholly settled within 12 months of the
reporting date are recognised in non-current liabilities,
provided there is an unconditional right to defer settlement
of the liability. The liability is measured as the present value
of expected future payments to be made in respect of
services provided by employees up to the reporting date
using the projected unit credit method. Consideration is
given to expected future wage and salary levels, experience
of employee departures and periods of service. Expected
future payments are discounted using market yields at the
reporting date on national corporate bonds with terms
to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans
are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are
provided to employees. Equity-settled transactions are
awards of shares, or options over shares, that are provided
to employees in exchange for the rendering of services.
The cost of equity-settled transactions is measured at
fair value on grant date. Fair value is independently
determined using Black-Scholes option pricing model
that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant
date and expected price volatility of the underlying share,
the expected dividend yield and the risk-free interest
rate for the term of the option, together with non-vesting
conditions that do not determine whether the consolidated
entity receives the services that entitle the employees
to receive payment. No account is taken of any other
vesting conditions.
The cost of equity-settled transactions is recognised as an
expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is
calculated based on the grant date fair value of the award,
the best estimate of the number of awards that are likely
to vest and the expired portion of the vesting period. The
amount recognised in profit or loss for the period is the
cumulative amount calculated at each reporting date less
amounts already recognised in previous periods.
Market conditions are taken into consideration in
determining fair value. Therefore any awards subject
to market conditions are considered to vest irrespective
of whether or not that market condition has been met,
provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum
an expense is recognised as if the modification has
not been made. An additional expense is recognised,
over the remaining vesting period, for any modification
that increases the total fair value of the share-based
compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the
consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not
within the control of the consolidated entity or employee
and is not satisfied during the vesting period, any remaining
expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it
has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement
award is substituted for the cancelled award, the cancelled
and new awards are treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial,
is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would
be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the
measurement date; and assumes that the transaction will
take place either: in the principal market; or in the absence
of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
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notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report assuming they act in their economic best interest. For
non-financial assets, the fair value measurement is based
on its highest and best use. Valuation techniques that are
appropriate in the circumstances and for which sufficient
data is available to measure fair value, are used, maximising
the use of relevant observable inputs and minimising the
use of unobservable inputs.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
Business combinations
The acquisition method of accounting is used to account
for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-
date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former
owners of the acquiree and the amount of any non-
controlling interest in the acquiree. For each business
combination, the non-controlling interest in the acquiree
is measured at either fair value or at the proportionate share
of the acquiree’s identifiable net assets. All acquisition costs
are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity
assesses the financial assets acquired and liabilities
assumed for appropriate classification and designation
in accordance with the contractual terms, economic
conditions, the consolidated entity’s operating or
accounting policies and other pertinent conditions
in existence at the acquisition date.
Where the business combination is achieved in stages, the
consolidated entity remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value
and the difference between the fair value and the previous
carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer
is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration
classified as an asset or liability is recognised in profit or
loss. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted
for within equity.
The difference between the acquisition-date fair value
of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value
of the consideration transferred and the fair value of any
pre-existing investment in the acquiree is recognised
as goodwill. If the consideration transferred and the
pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase
to the acquirer, the difference is recognised as a gain
directly in profit or loss by the acquirer on the acquisition
date, but only after a reassessment of the identification
and measurement of the net assets acquired, the non-
controlling interest in the acquiree, if any, the consideration
transferred and the acquirer’s previously held equity interest
in the acquirer.
Business combinations are initially accounted for on
a provisional basis. The acquirer retrospectively adjusts
the provisional amounts recognised and also recognises
additional assets or liabilities during the measurement
period, based on new information obtained about the facts
and circumstances that existed at the acquisition date.
The measurement period ends on either the earlier of
(i) 12 months from the date of the acquisition or (ii) when the
acquirer receives all the information possible to determine
fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of Donaco International Limited,
excluding any costs of servicing equity other than ordinary
shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account the after income tax effect of interest and other
financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares
assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of
the amount of associated GST, unless the GST incurred
is not recoverable from the tax authority. In this case it is
recognised as part of the cost of the acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the tax authority
is included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or
financing activities that are recoverable from, or payable
to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net
of the amount of GST recoverable from, or payable to,
the tax authority.
New Accounting Standards and Interpretations not
yet mandatory or early adopted
Australian Accounting Standards and Interpretations
that have recently been issued or amended but are not
yet mandatory, have not been early adopted by the
consolidated entity for the annual reporting period ended
30 June 2015. The consolidated entity’s assessment of the
impact of these new or amended Accounting Standards
and Interpretations, most relevant to the consolidated
entity, are set out below.
AASB 9 Financial Instruments
This standard and its consequential amendments are
applicable to annual reporting periods beginning on or
after 1 January 2018 and completes phases I and III of
the IASB’s project to replace IAS 39 (AASB 139) ‘Financial
Instruments: Recognition and Measurement’. This standard
introduces new classification and measurement models
for financial assets, using a single approach to determine
whether a financial asset is measured at amortised cost or
fair value. The accounting for financial liabilities continues
to be classified and measured in accordance with AASB
139, with one exception, being that the portion of a change
of fair value relating to the entity’s own credit risk is to
be presented in other comprehensive income unless it
would create an accounting mismatch. Chapter 6 ‘Hedge
Accounting’ supersedes the general hedge accounting
requirements in AASB 139 and provides a new simpler
approach to hedge accounting that is intended to more
closely align with risk management activities undertaken
by entities when hedging financial and non-financial risks.
The consolidated entity will adopt this standard and
the amendments from 1 July 2017 but the impact of its
adoption is yet to be assessed by the consolidated entity.
Interpretation 21 Levies
This interpretation is applicable to annual reporting periods
beginning on or after 1 January 2014. The Interpretation
clarifies the circumstances under which a liability to pay
a levy imposed by a government should be recognised,
and whether that liability should be recognised in full at
a specific date or progressively over a period of time. The
adoption of the interpretation from 1 January 2014 will not
have a material impact on the consolidated entity.
AASB 2013-9 Amendments to Australian Accounting
Standards – Conceptual Framework, Materiality and
Financial Instruments makes amendments to AASB 9 to:
(i) replace the general hedge accounting requirements to
more closely align hedge accounting with risk management
activities undertaken when hedging financial and non-
financial risks; (ii) permit fair value changes due to changes
in ‘own credit risk’ of financial liabilities measured at fair
value to be recognised through other comprehensive
income, without applying all other requirements of AASB 9
at the same time; and (iii) defer the mandatory application
date of AASB 9 to annual reporting periods beginning
on or after 1 January 2017. This application date is subject
to review and is expected to be revised by the IASB.
AASB 2014-4 Amendments to Australian Accounting
Standards – Clarification of Acceptable methods of
Depreciation and Amortisation. This Standard makes
amendments to AASB 116 Property, Plant and Equipment
and AASB 138 Intangible Assets. The main principle is to
establish the basis of depreciation and amortisation as
being the expected pattern of consumption of the future
economic benefits of an asset rather than associated to
revenue streams. This Standard applies to annual reporting
periods beginning on or after 1 January 2016. The Company
has not elected early adoption.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods
beginning on or after 1 January 2017. The standard provides
a single standard for revenue recognition. The core principle
of the standard is that an entity will recognise revenue
to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for
those goods or services. The standard will require: contracts
(written, verbal or implied) to be identified, together with
the separate performance obligations within the contract;
determination of the transaction price, adjusted for the
time value of money excluding credit risk; allocation of the
transaction price to the separate performance obligations
on a basis of relative stand-alone selling price of each
distinct good or service, or estimation approach if no distinct
observable prices exist; and recognition of revenue when
each performance obligation is satisfied. Credit risk will be
presented separately as an expense rather than adjusted to
revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods.
For services, the performance obligation is satisfied when
the service has been provided, typically for promises to
transfer services to customers. For performance obligations
satisfied over time, an entity would select an appropriate
measure of progress to determine how much revenue
should be recognised as the performance obligation is
satisfied. Contracts with customers will be presented in
an entity’s statement of financial position as a contract
liability, a contract asset or a receivable, depending on
the relationship between the entity’s performance and the
customer’s payment. Sufficient quantitative and qualitative
disclosure is required to enable users to understand the
contracts with customers; the significant judgments made
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notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report note 3. operating segments
Identification of reportable operating segments
The consolidated entity is organised into three operating
segments: Casino operations, Gaming Technology
operations and Corporate operations. These operating
segments are based on the internal reports that are
reviewed and used by the Board of Directors (who are
identified as the Chief Operating Decision Makers
(‘CODM’)) in assessing performance and in determining
the allocation of resources. There is no aggregation
of operating segments.
The CODM reviews EBITDA (earnings before interest, tax,
depreciation and amortisation). The accounting policies
adopted for internal reporting to the CODM are consistent
with those adopted in the financial statements.
The information reported to the CODM is on at least
a monthly basis.
Types of products and services
The principal products and services of each of these
operating segments are as follows:
Casino
operations
Comprises the Aristo International
Hotel operations, including hotel
accommodation, gaming and leisure
facilities, operated in Vietnam.
Gaming Technology Comprises the operation and
operations
development of gaming technology,
including mobile payment gateways
and interactive media and gambling
applications for deployment on
television, mobile and internet.
Corporate
operations
Comprises of the development and
implementation of corporate strategy,
commercial negotiations, corporate
finance, treasury, management
accounting, corporate governance
and investor relations functions.
The consolidated entity is domiciled in Australia and
operates predominantly in four countries: Australia,
Vietnam, Singapore and Malaysia.
Intersegment transactions
Intersegment transactions were made at market rates.
Intersegment transactions are eliminated on consolidation.
in applying the guidance to those contracts; and any assets
recognised from the costs to obtain or fulfil a contract with
a customer. The consolidated entity will adopt this standard
from 1 January 2017 but the impact of its adoption is yet to
be assessed by the consolidated entity.
AASB 2014-1 Amendments to Australian Accounting
Standards (Parts A to C)
IFRS 15 ‘Revenue from Contracts with Customers’ contains
new requirements for the recognition of revenue. The
standard will also include additional disclosures about
revenue. Adoption of IFRS 15 is not mandatory until annual
periods beginning on or after 1 January 2017 and 1 January
2018 respectively. Early adoption is permitted. The potential
financial impact to the Group is not yet possible to determine.
note 2. critical accounting judgments,
estimates and assumptions
The preparation of the financial statements requires
management to make judgments, estimates and assumptions
that affect the reported amounts in the financial statements.
Management continually evaluates its judgments and
estimates in relation to assets, liabilities, contingent liabilities,
revenue and expenses. Management bases its judgments,
estimates and assumptions on historical experience and
on other various factors, including expectations of future
events, management believes to be reasonable under the
circumstances. The resulting accounting judgments and
estimates will seldom equal the related actual results. The
judgments, estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying
amounts of assets and liabilities (refer to the respective
notes) within the next financial year are discussed below.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled
transactions with employees by reference to the fair value
of the equity instruments at the date at which they are
granted. The fair value is determined by using the Black-
Scholes model taking into account the terms and conditions
upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-
based payments would have no impact on the carrying
amounts of assets and liabilities within the next annual
reporting period but may impact profit or loss and equity.
The fair value of assets and liabilities classified as level 3
is determined by the use of valuation models. These include
discounted cash flow analysis or the use of observable
inputs that require significant adjustments based on
unobservable inputs.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful
lives and related depreciation and amortisation charges for
its property, plant and equipment and finite life intangible
assets. The useful lives could change significantly as a
result of technical innovations or some other event. The
depreciation and amortisation charge will increase where
the useful lives are less than previously estimated lives, or
technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
Goodwill
The consolidated entity tests annually, or more frequently
if events or changes in circumstances indicate impairment,
whether goodwill and other indefinite life intangible
assets have suffered any impairment, in accordance with
the accounting policy stated in note 1. The recoverable
amounts of cash-generating units have been determined
based on value-in-use calculations. These calculations
require the use of assumptions, including estimated
discount rates based on the current cost of capital and
growth rates of the estimated future cash flows.
Income tax
The consolidated entity is subject to income taxes in the
jurisdictions in which it operates. Significant judgment is
required in determining the provision for income tax. There
are many transactions and calculations undertaken during
the ordinary course of business for which the ultimate
tax determination is uncertain. The consolidated entity
recognises liabilities for anticipated tax audit issues based
on the consolidated entity’s current understanding of the
tax law. Where the final tax outcome of these matters is
different from the carrying amounts, such differences will
impact the current and deferred tax provisions in the period
in which such determination is made.
Employee benefits provision
As discussed in note 1, the liability for employee benefits
expected to be settled more than 12 months from the
reporting date are recognised and measured at the present
value of the estimated future cash flows to be made in
respect of all employees at the reporting date.
In determining the present value of the liability, estimates
of attrition rates and pay increases through promotion and
inflation have been taken into account.
Business combinations
As discussed in note 1, business combinations are initially
accounted for on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities assumed are
initially estimated by the consolidated entity taking into
consideration all available information at the reporting date.
Fair value adjustments on the finalisation of the business
combination accounting is retrospective, where applicable,
to the period the combination occurred and may have
an impact on the assets and liabilities, depreciation and
amortisation reported.
42
43
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
Operating segment information for continuing and discontinuing operations
CONSOLIDATED – 2015
$
$
$
Casino
operations
Gaming
Technology
operations*
Corporate
operations
Total
$
Revenue
Sales revenue
Interest
Total revenue
EBITDA
Depreciation and amortisation
Gain on disposal of discontinued operation
Interest revenue
Other income
Non-recurring items
Net exchange gains
NCI
Finance costs
Tax expense disposed operations
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
17,069,618
1,296,742
1,308
18,367,668
40,310
2,529
17,109,928
1,299,271
1,997,195
1,998,503
2,040,034
20,407,702
6,382,587
(4,833,763)
–
40,310
–
–
(86,577)
(72,326)
(1,683,159)
–
(252,928)
96,330,444
52,459,098
34,930
(2,743)
–
2,529
(6,206)
–
–
–
–
(30,122)
(1,612)
(5,867,222)
550,295
(23,357)
(4,859,863)
2,203,374
1,997,195
–
(715,187)
(341,025)
–
–
–
2,203,374
2,040,034
(6,206)
(715,187)
(427,602)
(72,326)
(1,683,159)
(30,122)
(2,746,222)
(3,000,762)
361
(3,000,401)
–
–
213,988,865
310,319,309
310,319,309
(19,510,839)
32,948,259
32,948,259
CONSOLIDATED – 2014
$
$
Casino
operations
Gaming Technology
operations*
Revenue
Sales revenue
Interest
Total revenue
EBITDA
Depreciation and amortisation
Interest
Other income
Net exchange gains
NCI
Profit before income tax expense
Income tax expense
Profit after income tax expense
Assets
Segment assets
Total assets
Total assets includes:
19,471,405
101,529
19,572,934
8,943,888
(270,153)
101,529
–
126,732
1,476,679
10,378,675
8,821,721
851,093
9,672,814
82,672)
(21,937)
851,093
52,844
(5,059)
–
794,269
84,807,927
97,060,206
Total
$
28,293,126
952,622
29,245,748
8,861,216
(292,090)
952,622
52,844
121,673
1,476,679
11,172,944
(2,902,862)
8,270,082
181,868,133
181,868,133
Acquisition of non-current assets
39,151,630
–
39,151,630
Liabilities
Segment liabilities
Unallocated liabilities:
Provision for income tax
Total liabilities
24,463,950
3,316,020
27,779,970
4,851,700
32,631,670
* The above operating segment information includes iSentric Sdn Bhd, the discontinuing operation as at 30 June 2014,
which is reported under the category Gaming Technology operations.
* The above operating segment information includes iSentric Sdn Bhd, Way2Bet Pty Ltd and Donaco Australia Pty Ltd,
Geographical information
which are discontinued operations as at 30 June 2015.
Our Company now employs some 1,800 people across
two major leisure and entertainment properties in Asia.
Australia
Vietnam
Other countries (discontinuing operation)
Sales to external customers
Geographical non-current assets
2015
$
1,308
17,069,618
1,296,742
2014
$
747,050
19,471,405
8,074,671
2015
$
3,038,226
82,183,762
–
2014
$
9,805,003
44,863,004
227,452
18,367,668
28,293,126
85,221,988
54,895,459
The geographical non-current assets above are exclusive of, where applicable, financial instruments, deferred tax assets,
post-employment benefits assets and rights under insurance contracts.
44
45
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
Revenue and other income
note 6. expenses
Profit/(loss) before income tax from continuing operations includes the following specific expenses:
Consolidated
2015
$
2014
$
Total reportable segment revenues
Other segment revenues
Discontinued operation
Total revenue and other income
Consolidated
2015
$
2014
$
17,070,926
20,165,611
1,609,903
1,299,271
1,067,882
8,133,929
19,980,100
29,367,422
The group did not engage in inter-group sales, hence there were no intersegment revenues.
note 4. revenue
From continuing operations
Sales revenue
Casino operations
Corporate operations
Other revenue
Interest
Casino operations
Consolidated
2015
$
2014
$
17,013,088
1,308
17,014,396
2,037,505
56,530
2,094,035
19,471,405
694,206
20,165,611
946,208
–
946,208
Revenue from continuing operations
19,108,431
21,111,819
note 5. other income
Revenue from continuing operations
Consolidated
2015
$
2014
$
(427,602)
121,674
Cost of sales
Cost of sales
Depreciation
Land, buildings and structures
Machinery and equipment
Office equipment and other
Motor vehicles
Consumables
Total depreciation
Superannuation expense
Defined contribution superannuation expense
note 7. income tax expense/(benefit)
Income tax expense/(benefit)
Current tax
Adjustment recognised for prior periods
Aggregate income tax expense/(benefit)
Income tax expense/(benefit) is attributable to:
Profit/(loss) from continuing operations
Profit from discontinued operations
Aggregate income tax expense/(benefit)
2,208,639
1,270,995
1,371,729
1,459,734
202,989
101,022
1,721,646
4,857,120
58,758
108,821
45,081
57,493
–
270,153
71,310
63,296
Consolidated
2015
$
–
(361)
(361)
(361)
–
(361)
2014
$
2,883,202
19,660
2,902,862
2,892,203
10,659
2,902,862
9,592,155
1,580,789
11,172,944
3,351,883
284,972
3,636,855
19,660
(753,653)
2,902,862
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Profit/(loss) before income tax (expense)/benefit from continuing operations
(5,202,523)
Profit before income tax expense from discontinued operations
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-assessable or deductible items
Adjustment recognised for prior period
Difference in overseas tax rates
Income tax expense/(benefit)
2,201,761
(3,000,762)
(900,229)
472,075
(428,154)
(361)
428,154
(361)
46
47
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report note 8. discontinued operations
Description
On 26 February 2014, the Company announced that it
planned to spin off its mobile technology business, iSentric
Sdn Bhd, into a new company separately listed on the
ASX. A binding Share Sale Agreement to implement the
transaction was signed with OMI Holdings Limited on
9 May 2014. The agreed value for the sale was $12,000,000
in ordinary fully paid shares in OMI, which were distributed
to Donaco shareholders in specie.
The transaction was completed on 23 September 2014,
when OMI Holdings Limited changed its name to iSentric
Limited and iSentric Limited was requoted on the ASX
under the code ‘ICU’. Donaco distributed its shares in the
newly listed entity to Donaco shareholders in specie on
16 September 2014. Donaco shareholders with a minimum
of 19,206 shares on the record date of 12 September
2014 received approximately 0.13 iSentric shares for each
Donaco share. Holders of fewer Donaco shares had their
entitlements sold, and received the proceeds of sale (less
costs) in cash. No impairment loss was recognised on the
reclassification of iSentric to a discontinued operation. On
31 October 2014, Way2Bet Pty Ltd, a subsidiary of the
Company which managed the Company’s online wagering
marketing business, was sold to Punters Paradise Pty Limited.
The net proceeds of sale to the Company were $450,000.
Information on the financial performance of the
discontinued operation during the year ended 30 June 2015
is set out below.
Financial performance information
Consolidated
Discontinued revenue Mobile business solution
Gaming technology operations
Interest
Total revenue
Other income
Total other income
Cost of sales
Employee benefits expense
Depreciation and amortisation expense
Legal and compliance
Marketing and promotions
Professional and consulting fees
Property costs
Telecommunications and hosting
Discontinued tax expense
Other expenses
Total expenses
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) after income tax expense
Discontinued disposal iSentric
Discontinued disposal Way2Bet
Income tax expense
Gain on disposal after income tax expense
Profit after income tax expense from discontinued operations
2015
$
1,148,201
148,541
2,529
1,299,271
12,824
12,824
(746,309)
(196,389)
(2,743)
(20,283)
(79,452)
(174,112)
(6,972)
(9,929)
(30,123)
(47,396)
(1,313,708)
(1,613)
–
(1,613)
1,753,464
449,910
–
2,203,374
2,201,761
2014
$
–
8,127,515
6,414
8,133,929
–
–
(4,971,121)
(715,749)
(21,937)
(20,606)
(254,304)
(134,945)
(34,870)
(14,618)
–
(384,990)
(6,553,140)
1,580,789
(10,659)
1,570,130
–
–
–
–
1,570,130
Cash flow information
Net cash from operating activities
Net cash used in investing activities
Consolidated
2015
$
1,613,329
–
Net increase in cash and cash equivalents from discontinued operations
1,613,329
Carrying amounts of assets and liabilities disposed
2014
$
1,477,253
(209,172)
1,268,081
Cash and cash equivalents
Trade and other receivables
Other current assets
Property, plant and equipment
Other non-current assets
Total assets
Trade and other payables
Total liabilities
Net assets
Details of the disposal
Total sale consideration
Carrying amount of net assets disposed
Goodwill disposed
Gain on disposal before tax income
Income tax expense
Gain on disposal after income tax
2015
$
1,613,329
3,732,628
102,148
36,471
181,723
5,666,299
2,790,322
2,790,322
2,875,977
2015
$
12,450,000
(2,875,977)
(7,370,649)
–
2,203,374
–
2,203,374
Consolidated
2014
$
–
–
–
–
–
–
–
–
–
Consolidated
2014
$
–
–
–
–
–
–
–
48
49
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
note 9. current assets – cash and cash equivalents
note 12. current assets – prepaid construction costs
Cash on hand
Cash at bank
Cash on deposit
Consolidated
2015
$
8,613,555
201,561,564
–
2014
$
5,514,580
6,160,255
86,360,102
210,175,119
98,034,937
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the
financial year as shown in the statement of cash flows as follows:
Balances as above
Cash and cash equivalents – classified as held for sale
210,175,119
–
98,034,937
1,461,228
Balance as per statement of cash flows
210,175,119
99,496,165
note 10. current assets – trade and other receivables
Trade receivables
Receivable from related parties
Interest receivable on bank deposits
BAS and VAT receivable
Consolidated
2015
$
1,010,426
–
7,485
1,047,012
2,064,923
2014
$
449,720
27,039
294,551
30,991
802,301
Prepaid construction costs
Consolidated
2015
$
2014
$
273,207
18,815,625
Amounts recognised as prepaid construction costs relate to tranche payments made to third party developers in connection
with the construction of the new Aristo Casino. Tranche payments are made in advance of construction work being performed
in accordance with the terms of the contractor agreements, however once associated works have been completed an amount
equal to the tranche payment is transferred from prepaid construction costs to non-current construction in progress.
note 13. current assets – other
Bonds and security deposits
Tax receivable
Prepayments
Consolidated
2015
$
8,167
546
11,874,493
11,883,206
2014
$
8,167
1,238,204
960,898
2,207,269
In FY14, BAS and VAT receivables of $30,991 were classified as Current assets – Other. For FY15 this category has been
reclassified as Current assets – Trade and other receivables.
note 14. non-current assets – property, plant and equipment
Consolidated
In FY14, BAS and VAT receivables of $30,991 were classified as Current assets – Other. For FY15 this category has been
reclassified as Current assets – Trade and other receivables.
Leasehold buildings and structures – at cost
Less: Accumulated depreciation
Impairment of receivables
The consolidated entity has recognised a loss of $0 (2014: $0) in profit or loss in respect of impairment of receivables for the
year ended 30 June 2015.
note 11. current assets – inventories
Food and beverage – at cost
Consolidated
2015
$
2014
$
700,866
1,405,726
Machinery and equipment – at cost
Less: Accumulated depreciation
Motor vehicles – at cost
Less: Accumulated depreciation
Office equipment and other – at cost
Less: Accumulated depreciation
Consumables
Less: Accumulated depreciation
2015
$
62,808,775
(2,099,485)
60,709,290
17,491,217
(3,224,294)
14,266,923
627,077
(233,519)
393,558
1,797,220
(486,099)
1,311,121
7,058,663
(1,721,646)
5,337,017
82,017,909
2014
$
1,170,778
(488,769)
682,009
3,699,023
(1,366,871)
2,332,152
512,538
(143,948)
368,590
1,671,963
(202,541)
1,469,422
1,240,787
(198,383)
1,042,404
5,894,577
50
51
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
Reconciliations
Reconciliations of the written-down values (WDVs) at the beginning and end of the current and previous financial year are set
out below:
Machinery
and
equipment
Motor
vehicles
CONSOLIDATED
Balance at 1 July 2013
Additions
Disposals
Exchange differences
Transfers in/(out)
Leasehold
buildings
$
739,839
–
–
(996)
–
$
482,984
1,766,859
(12,950)
191,130
12,950
Depreciation expense
(56,834)
(108,821)
Balance at 30 June 2014
682,009
2,332,152
Additions
Disposals
Exchange differences
Transfers in/(out)
61,346,689
11,576,307
(8,525)
58,742
–
–
387,480
1,430,718
1,230,192
1,042,404
Office
equipment
and other
$
94,054
–
190,257
–
(45,081)
1,469,422
1,214,941
(205)
284,954
Consumables
Total
$
–
–
–
–
–
$
1,500,608
4,309,575
(63,365)
374,700
41,288
(268,229)
1,042,404
5,894,577
5,775,378
79,979,508
–
(8,730)
240,881
1,031,854
(1,455,002)
–
(24,284)
$
183,731
270,120
(50,415)
(5,691)
28,338
(57,493)
368,590
66,193
–
59,797
–
Reconciliations
Reconciliations of the written-down values at the beginning and end of the current and previous financial year are set out below:
CONSOLIDATED
Balance at 1 July 2013
Exchange differences
Amortisation expense
Balance at 30 June 2014
Disposals
Exchange differences
Amortisation expense
Balance at 30 June 2015
Land right
$
52,358
(16,654)
(1,925)
33,779
–
6,715
(2,104)
38,390
Goodwill
$
9,796,836
–
–
9,796,836
(7,370,649)
–
–
Total
$
9,849,194
(16,654)
(1,925)
9,830,615
(7,370,649)
6,715
(2,104)
2,426,187
2,464,577
Impairment testing of goodwill
Goodwill is monitored by the Chief Operating Decision Makers (‘CODM’) at the cash generating unit level. CODM reviews
the business performance based on geography and type of business. It has identified two reportable cash generating units.
A business-level summary of the goodwill allocation is presented below:
Depreciation expense
(1,369,625)
(1,459,734)
(101,022)
(202,989)
(1,721,646)
(4,855,016)
Balance at 30 June 2015
60,709,290
14,266,923
393,558
1,311,121
5,337,017
82,017,909
In FY14, Consumables of WDV $1,042,404 were classified as Non-current assets – Other. For FY15 this category has been
reclassified as Non-current assets – Property, plant and equipment. It represents low value, high turnover items that are
depreciated in accordance with company policy and local legislation.
In the FY14, Land right of $33,779 was classified as Non-current assets – Property, plant and equipment. For FY15 this
category has been reclassified as Non-current assets – Intangibles
Donaco Singapore
iSentric
Total goodwill
Consolidated
2015
$
2,426,187
–
2,426,187
2014
$
2,426,187
7,370,649
9,796,836
note 15. non-current assets – intangibles
Goodwill – at cost
Land right – at cost
Less: Accumulated amortisation
Consolidated
2015
$
2014
$
2,426,187
9,796,836
69,474
(31,084)
38,390
56,642
(22,863)
33,779
2,464,577
9,830,615
The recoverable amount of the cash generating unit
of Donaco Singapore has been determined based on
the value-in-use calculation. To calculate this, cash flow
projections are based on financial budgets approved by
senior management covering a five-year period.
The Group determines whether goodwill is impaired at least
on an annual basis. To do so, the Group employs a value-
in-use calculation using cash flow projections from financial
budgets approved by senior management. Management
has forecast a strong growth rate in budgeted gross margin
for FY16 based on the growth in revenue from Aristo’s main
gaming floor, VIP gaming, and the increase in the number
of slot machines. The new hotel room, entertainment,
restaurant and bar revenue lines, with associated marketing
programs, will increase visitation to the new hotel, which
will also contribute to overall revenue growth. Gross margin
projections for future years are based on past performance
and management’s expectations for future performance in
each segment.
Management determined budgeted gross margin based
on past performance and its expectations for the future and
are considered to be reasonably achievable. The weighted
average growth rates used are consistent with forecasts
included in industry reports. The discount rates used reflect
specific risks relating to the relevant segments and the
countries in which they operate.
The recoverable amount calculation for goodwill is most
sensitive to changes in growth rate and EBIT margin
on sales. Based on sensitivity analysis performed, no
reasonable change in these assumptions would give rise
to an impairment.
Land right
An intangible asset of $38,390 relates to a 30-year land use
right in the Socialist Republic of Vietnam. Land use right
is stated at cost less accumulated amortisation and any
impairment losses. The amortisation period is 30 years. This
intangible asset is tested for impairment annually or more
frequently if events or changes in circumstances indicate
that the carrying value may be impaired.
In FY14, Land right of $33,779 was classified as
Non-current assets – Property, plant and equipment. For
FY15 this category has been reclassified as Non-current
assets – Intangibles
52
53
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
note 16. non-current assets – construction in progress
note 18. current liabilities – trade and other payables
Consolidated
2015
$
2014
$
Property construction works in progress (WIP) – at cost
205,737
39,151,630
Reconciliations
Reconciliations of the written-down values at the beginning and end of the current and previous financial year are set out below:
Trade payables
Intercompany payable
Deposits received
Floating chips
Interest payable
Construction WIP
Other payables and accrued expenses
Consolidated
2015
$
3,160,938
9,081
115,098
12,326,032
141,494
263,416
16,016,059
2014
$
1,909,478
–
85,989
9,282,203
–
1,357,462
12,635,132
CONSOLIDATED
Balance at 1 July 2013
Additions
Exchange differences
Balance at 30 June 2014
Additions
Revaluation increments
Transfers in/(out)
Balance at 30 June 2015
$
12,336,321
27,005,239
(189,930)
39,151,630
26,073,612
8,869,600
(73,889,105)
205,737
Construction relates to costs incurred by the new
construction of the Aristo Casino.
Amounts previously recognised as prepaid construction
costs, are transferred to construction in progress, once
associated works have been completed. Once recognised
as part of construction in progress the amounts are then
carried on the statement of financial position at cost,
until such time as the asset is completed and ready for its
intended use. Work in progress is not depreciated, but
tested for impairment annually. Once ready for its intended
use an amount equal to the cost of the completed asset will
be transferred to property, plant and equipment or non-
current prepayment and accounted for in accordance
with the consolidated entity’s accounting policy for each
asset class.
All borrowing costs incurred in connection with the
borrowing of funds that are directly attributable to the
acquisition, construction or production of the qualifying
asset, that necessarily take a substantial period of time to
get ready for their intended use, are capitalised as part of
the cost of the asset, until substantially all those activities
necessary to prepare the qualifying asset for its intended
use, or sale, are complete. Total capitalised as at 30 June
2015 is $31,565 (2014: $1,232,870).
note 17. non-current assets – other
Other debtors
Consolidated
2015
$
533,765
2014
$
18,637
In FY14, Consumables of WDV $1,042,404 were classified as Non-current assets – Other debtors. For FY15 this category has
been reclassified as Non-current assets – Property, plant and equipment. It represents low value, high turnover items that are
depreciated in accordance with Company policy and local legislation.
Refer to note 29 for further information on financial instruments.
Floating chips
The number of floating chips is determined as the difference between the number of chips in use and the actual chips
counted by the casino as at reporting date.
note 19. current liabilities – borrowings
Joint Stock Commercial Ocean Bank
Joint Stock Commercial Bank for Foreign Trade of Vietnam
Refer to note 29 for further information on financial instruments.
Total secured liabilities
The total secured current liabilities are as follows:
Joint Stock Commercial Ocean Bank
Joint Stock Commercial Bank for Foreign Trade of Vietnam
Consolidated
Consolidated
2015
$
2,916,691
46,021
2,962,712
2015
$
2,916,691
46,021
2,962,712
2014
$
1,446,596
–
1,446,596
2014
$
1,446,596
–
1,446,596
Assets pledged as security
The bank overdraft and loans are secured by first mortgages over the consolidated entity’s land and buildings.
54
55
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit (current and non-current):
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Consolidated
2015
$
2014
$
21,808,808
17,988,139
Joint Stock Commercial Bank for Foreign Trade of Vietnam
Joint Stock Commercial Ocean Bank
Consolidated
2015
$
16,041,798
138,007
2014
$
12,054,966
–
16,179,805
12,054,966
Total facilities
Bank loans
Used at the reporting date
Bank loans
Unused at the reporting date
Bank loans
note 20. current liabilities – income tax
Provision for income tax
16,179,805
12,054,966
5,629,003
5,933,173
Consolidated
2015
$
2014
$
427,505
4,851,700
Assets pledged as security
The bank overdraft and loans are secured by first mortgages
over the consolidated entity’s land and buildings.
a lending facility for an additional VND180 billion. The term
of the loan is seven years payable by 2 October 2020.
On 11 July 2011, the Lao Cai International Hotel Joint
Venture (the Borrower) entered into a loan agreement with
Joint Stock Commercial Ocean Bank (the Lender) for a
lending facility of VND180 billion Vietnamese dong, for use
towards construction of the new Lao Cai International Hotel.
A second agreement was signed on 25 December 2013 for
On 7 April 2015 the Lao Cai International Hotel Joint
Venture (the Borrower) entered into a second loan
agreement with Joint Stock Commercial Bank for Foreign
Trade of Vietnam for a lending facility of VND3 billion
Vietnamese dong for the purchase of capital equipment.
The term is three years at 10.5%pa.
note 21. current liabilities – employee benefits
note 23. non-current liabilities – employee benefits
Consolidated
Consolidated
Annual leave
Long service leave
Other
note 22. non-current liabilities – borrowings
Joint Stock Commercial Ocean Bank
Joint Stock Commercial Bank for Foreign Trade of Vietnam
Refer to note 29 for further information on financial instruments.
2015
$
52,240
18,986
244,653
315,879
2014
$
32,928
–
37,562
70,490
Consolidated
2015
$
13,125,107
91,986
2014
$
10,608,370
–
13,217,093
10,608,370
Long service leave
Employee benefits
note 24. equity – issued capital
2015
$
–
9,011
9,011
2015
$
2014
$
20,485
–
20,485
2014
$
Consolidated
2015
SHARES
2014
SHARES
Ordinary shares – fully paid
683,524,102
460,282,631
246,719,609
129,964,909
56
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notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Issued shares
Issued shares
Issued shares
Issued shares
DNAO option conversion
Unissued shares
1 July 2013
371,719,896
26 November 2013
29,300,000
16 December 2013
1 April 2014
12 May 2014
multiple
31 December 2013
20,000
26,748,344
29,642,635
2,851,756
–
–
460,282,631
219,621,175
898,929
2,721,367
–
–
$0.860
$0.860
$1.330
$1.330
$0.300
$0.000
$0.000
$0.600
$0.300
$0.280
$0.000
$0.000
34,692,937
25,198,000
17,200
35,575,297
39,424,705
858,705
(300,000)
(5,501,935)
129,964,909
131,486,827
1,028,511
–
(7,260,638)
(8,500,000)
246,719,609
Less: transaction costs arising on share issue
multiple
Balance
Issued shares
DNAO option conversion
DNAO option conversion
Less: transaction costs arising on share issue
Return of capital on iSentric sale
30 June 2014
multiple
multiple
multiple
multiple
Balance
30 June 2015
683,524,102
Foreign currency reserve
The reserve is used to recognise exchange differences
arising from translation of the financial statements of foreign
operations to Australian dollars. The cumulative amount
is reclassified to profit or loss when the net investment is
disposed of.
of their remuneration, and other parties as part of their
compensation for services.
Revaluation surplus reserve
The reserve is used to recognise increments and decrements
in the fair value of net assets of disposed entities.
Employee share option reserve
The reserve is used to recognise the value of equity
benefits provided to employees and directors as part
Movements in reserves
Movements in each class of reserve during the current and
previous financial year are set out below:
Revaluation
surplus reserve*
Employee share
option reserve
Foreign
currency
CONSOLIDATED
Balance at 1 July 2013
Foreign currency translation
Balance at 30 June 2014
Revaluation – gross
Foreign currency translation
Employee share option reserve
Transfer to retained earnings
$
–
–
–
2,978,285
–
–
(1,122,958)
$
–
–
–
–
–
1,967,750
–
$
Total
$
964,633
964,633
(1,442,726)
(1,442,726)
(478,093)
–
12,412,538
–
–
(478,093)
2,978,285
12,412,538
1,967,750
(1,122,958)
Ordinary shares
Ordinary shares entitle the holder to participate in
dividends and the proceeds on the winding up of the
Company in proportion to the number of and amounts paid
on the shares held. The fully paid ordinary shares have no
par value and the Company does not have a limited amount
of authorised capital.
On a show of hands every member present at a meeting
in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Capital risk management
The consolidated entity’s objectives when managing capital
are to safeguard its ability to continue as a going concern,
so that it can provide returns for shareholders and benefits
for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
note 25. equity – reserves
In order to maintain or adjust the capital structure, the
consolidated entity may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue
new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when
an opportunity to invest in a business or company was seen
as value adding relative to the current parent entity’s share
price at the time of the investment.
The consolidated entity is subject to certain financing
arrangements and meeting these is given priority in all
capital risk management decisions. There have been no
events of default on the financing arrangements during
the financial year.
The capital risk management policy remains unchanged
from the 2014 Annual Report.
Revaluation surplus reserve
Foreign currency reserve
Employee share option reserve
Consolidated
2015
$
1,855,327
11,934,445
1,967,750
15,757,522
2014
$
–
(478,093)
–
(478,093)
Balance at 30 June 2015
1,855,327
1,967,750
11,934,445
15,757,522
* The Revaluation surplus reserve is used to recognise increments and decrements in the fair value of net assets
of disposed entities.
note 26. equity – retained profits
Retained profits at the beginning of the financial year
Profit/(loss) after income tax expense for the year
Transfer to revaluation surplus reserve*
Transfer from options reserve
Transfer from other reserves**
Adjustment on the acquisition of non-controlling interest
Consolidated
2015
$
18,690,859
(2,928,075)
(2,978,285)
–
1,122,958
–
2014
$
12,745,584
6,793,403
–
300,000
–
(1,148,128)
Retained profits at the end of the financial year
13,907,457
18,690,859
* Relates to the disposal of iSentric. ** Fair value adjustment on the acquisition of non-controlling interest from 24 July 2013.
note 27. equity – non-controlling interest
Retained profits
Consolidated
2015
$
2014
$
986,462
1,058,788
58
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notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
note 28. equity – dividends
There were no dividends to shareholders paid,
recommended or declared during the current or
previous financial year. A dividend was paid by the Lao
Cai International Hotel Joint Venture Company to non-
controlling interests (the Vietnamese Government) in the
previous financial year. The consolidated entity’s dividend
policy is unchanged from that set out in the prospectus
dated 13 December 2012, which stated: The Company
intends to pay dividends to Shareholders in the future
subject to the availability of sufficient profits and franking
credits and subject to the Company’s then current working
capital requirements and growth plans. Shareholders should
note that the payment of dividends is not guaranteed.
note 29. financial instruments
Financial risk management objectives
The consolidated entity’s activities expose it to a variety
of financial risks: market risk (including foreign currency
risk and interest rate risk), credit risk and liquidity risk.
The consolidated entity’s overall risk management program
focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial
performance of the consolidated entity. The consolidated
entity uses different methods to measure different types of
risk to which it is exposed. These methods include sensitivity
analysis in the case of interest rate, foreign exchange and
other price risks and ageing analysis for credit risk.
Directors (‘the Board’). These policies include identification
and analysis of the risk exposure of the consolidated
entity and appropriate procedures, controls and risk limits.
Finance identifies, evaluates and hedges financial risks
within the consolidated entity’s operating units. Finance
reports to the Board on a monthly basis.
Market risk
Market risk is the risk that changes in market prices, such
as interest rate and foreign exchange rate, will affect the
consolidated entity’s income.
Foreign currency risk
The consolidated entity is exposed to foreign exchange
fluctuations in relation to cash generated for working capital
purposes, denominated in foreign currencies and net
investments in foreign operations, namely Vietnam and Malaysia.
Foreign exchange risk arises from future commercial
transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the entity’s
functional currency. The risk is measured using sensitivity
analysis and cash flow forecasting. An assessment of the
sensitivity of the consolidated entity’s exposure to interest
rate movements was performed, and was found to be
immaterial for the purposes of this disclosure.
Exchange rate exposures are managed within approved
policy parameters and material movements are not expected.
The consolidated entity does not enter into any forward
exchange contracts to buy or sell specified foreign currencies.
Risk management is carried out by senior finance executives
(‘finance’) under policies approved by the Board of
The average exchange rates and reporting date exchange
rates applied were as follows:
Average exchange rates
Reporting date exchange rates
AUSTRALIAN DOLLARS
USD
VND
CNY
MYR
SGD
HKD
2015
1.2066
0.0001
5.1264
0.3485
0.9200
0.1556
2014
1.0931
0.0001
5.6245
0.3359
0.9070
0.1409
2015
1.3021
0.0001
4.7661
0.3443
0.9671
0.1680
2014
1.0616
0.0001
5.8466
0.3307
0.8501
0.1370
The carrying amount of the consolidated entity’s foreign currency denominated financial assets and financial liabilities at the
reporting date were as follows:
CONSOLIDATED
USD
VND
CNY
MYR
SGD
HKD
Assets
Liabilities
2015
$
178,267,338
26,998,893
8,515,466
27,636
47,643
94,811
2014
$
8,325,884
24,407,168
5,234,206
29,269
46,987
–
2015
$
(6,013,131)
(13,970,745)
(12,326,033)
(1,104)
(11,067)
–
2014
$
(2,265,498)
(11,939,946)
(10,076,241)
(1,058)
(7,644)
–
213,951,787
38,043,514
(32,322,080)
(24,290,387)
A 5% strengthening of the AUD against the various foreign currencies at the balance date would increase/(decrease) the
Company’s profit/(loss) after tax by the amounts shown below. The analysis assumes that all other variables remain constant.
CONSOLIDATED – 2015
% CHANGE
EFFECT ON PROFIT AFTER TAX
AUD strengthened
USD
VND
CNY
MYR
SGD
HKD
5%
5%
5%
5%
5%
5%
(8,612,710)
(651,407)
190,528
(1,327)
(1,829)
(4,740)
(9,081,485)
CONSOLIDATED – 2014
% CHANGE
EFFECT ON PROFIT AFTER TAX
AUD strengthened
USD
VND
CNY
MYR
SGD
5%
5%
5%
5%
5%
(303,019)
(623,361)
242,101
(1,410)
(1,967)
(687,656)
A 5% weakening of the AUD against the various currencies would have had the equal but opposite effect on the above
currencies to the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk
The consolidated entity’s main interest rate risk arises from cash and cash equivalents.
60
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notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
As at the reporting date, the consolidated entity had the following cash and cash equivalents:
CONSOLIDATED
Bank loans
Cash on hand and short-term deposits
Cash at bank and long-term deposits
Net exposure to cash flow interest rate risk
Weighted
average
interest rate
Weighted
average
interest rate
Balance
Balance
2015
2014
%
$
%
$
(11.00%)
(16,179,805)
(16.00%)
(12,054,966)
0.19%
0.70%
210,167,449
7,669
193,995,313
-%
3.35%
17,015,447
81,019,491
85,979,972
An analysis by remaining contractual maturities is shown
in ‘liquidity risk management’ below.
An assessment of the sensitivity of the consolidated entity’s
exposure to interest rate movements was performed, and was
found to be immaterial for the purposes of this disclosure.
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
consolidated entity. The consolidated entity has a strict code
of credit, including obtaining agency credit information,
confirming references and setting appropriate credit
limits. The consolidated entity obtains guarantees where
appropriate to mitigate credit risk. The maximum exposure
to credit risk at the reporting date to recognised financial
assets is the carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement
of financial position and notes to the financial statements.
The consolidated entity does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the consolidated
entity to maintain sufficient liquid assets (mainly cash and
cash equivalents) and available borrowing facilities to be
able to pay debts as and when they become due and
payable.
The consolidated entity maintains cash to meet all its
liquidity requirements and manages its liquidity by carefully
monitoring cash outflows due in a day-to-day and week-
to-week basis. Furthermore, the consolidated entity’s
long-term liquidity needs are identified in its annual Board
approved budget, and updated on a quarterly basis
through revised forecasts.
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank loans
Consolidated
2015
$
2014
$
5,629,003
5,933,173
Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time and have
an average maturity of five years (2014: six years).
Remaining contractual maturities
The following tables detail the consolidated entity’s
remaining contractual maturity for its financial liabilities.
The tables have been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest date
on which the financial liabilities are required to be paid.
The tables include both interest and principal cash flows
disclosed as remaining contractual maturities and therefore
these totals may differ from their carrying amount in the
statement of financial position.
CONSOLIDATED – 2015
Non-derivatives
Non-interest bearing
Trade payables
Floating chips
Weighted
average
interest rate
%
-%
-%
1 year or less
$
3,160,938
12,326,032
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
$
–
–
$
–
–
$
–
–
Remaining
contractual
maturities
$
3,160,938
12,326,032
Interest-bearing – variable
Bank loans
11.00%
Total non-derivatives
2,962,712
18,449,682
2,962,712
2,962,712
8,796,034
8,796,034
1,458,345
1,458,345
16,179,803
31,666,773
CONSOLIDATED – 2014
Non-derivatives
Non-interest bearing
Trade payables
Floating chips
Weighted
average
interest rate
%
-%
-%
1 year or less
$
1,909,478
9,282,203
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
$
–
–
$
–
–
$
–
–
Remaining
contractual
maturities
$
1,909,478
9,282,203
Interest-bearing – fixed rate
Borrowings
12.50%
Total non-derivatives
1,446,596
12,638,277
1,768,062
1,768,062
5,304,186
5,304,186
3,536,122
3,536,122
12,054,966
23,246,647
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
62
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notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
note 30. key management personnel disclosures
note 31. remuneration of auditors
Directors
The following persons were directors of Donaco International Limited during the financial year:
Stuart James McGregor
Joey Lim Keong Yew
Benedict Paul Reichel
Benjamin Lim Keong Hoe
Robert Andrew Hines
Non-Executive Director and Chairman
Managing Director and Chief Executive Officer
Executive Director and Company Secretary
Non-Executive Director
Non-Executive Director
Other key management personnel
The following persons also had the authority and responsibility for planning, directing and controlling the major activities
of the consolidated entity, directly or indirectly, during the financial year:
Richard Na Chun Wee
Kenny Goh Kwey Biaw
Chief Financial Officer and Deputy Group CEO
Deputy Chief Financial Officer and CEO of Donaco Singapore
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Consolidated
2015
$
2,036,484
53,451
7,600
824,179
2,921,714
2014
$
1,644,176
42,407
–
–
1,686,583
During the financial year the following fees were paid or payable for services provided by William Buck, the auditor of the
Company, and unrelated firms:
Audit services – William Buck
Audit or review of the financial statements
Other services – William Buck
Preparation of the tax return
Audit services – unrelated firms
Audit or review of the financial statements
Other services – unrelated firms
Preparation of the tax return
Due diligence
note 32. commitments
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property construction works
Lease commitments – operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2015
$
2014
$
92,391
80,000
18,000
110,391
5,000
85,000
42,764
33,564
7,850
26,571
34,421
77,185
2015
$
Consolidated
6,667
220
6,887
40,451
2014
$
2,427,717
7,012,564
195,127
63,240
258,367
55,200
182,719
237,919
Operating lease commitments includes contracted amounts
for various offices and sites within Australia and South East
Asia under non-cancellable operating leases. The leases
have varying terms, escalation clauses and renewal rights.
On renewal, the terms of the leases are renegotiated.
Mortgage to Joint Stock Commercial Ocean Bank
A mortgage was registered by the Ocean Bank of Vietnam
over the assets of the Aristo International Hotel, on 11 July
2011. Total borrowings as per the statement of financial
position as at 30 June 2015 under this arrangement were
$16,041,797 (2014: $12,054,966).
Mortgage to Joint Stock Commercial Bank for
Foreign Trade of Vietnam
In addition, a secondary mortgage was registered by Joint
Stock Commercial Bank for Foreign Trade of Vietnam over
assets of the Aristo International Hotel on 7 April 2015. Total
borrowings as per the statement of financial position as at 30
June 2015 under this arrangement were $138,007 (2014: $0).
64
65
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
note 33. related party transactions
Parent entity
Donaco International Limited is the legal parent entity.
Donaco International Limited is listed on the Australian
Securities Exchange (ASX: DNA).
Key management personnel
Disclosures relating to key management personnel are
set out in note 30 and the remuneration report in the
directors’ report.
Subsidiaries
Interests in subsidiaries are set out in note 35.
Transactions with related parties
The following transactions occurred with related parties:
note 34. parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Consolidated
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Employee share option reserve
Accumulated losses
Total equity
Other transactions:
Dividends paid by controlling entities to non-controlling interest
Management fee – associated entities
2015
$
–
–
2014
$
(821,540)
47,394
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated
2015
$
2014
$
Current receivables:
Amount owing to Donaco Singapore Pte Ltd by associated entity
511,356
27,039
Amounts due from associated companies and related parties are unsecured, interest free, repayable on demand and are
to be settled in cash.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Your Board is one of the most ethnically and culturally
diverse boards in the ASX300, with 57% of its members
having been born, educated and now residing in Asia.
This provides deep and direct experience and knowledge
of the regions in which we operate
Guarantees entered into by the parent entity in relation
to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts
of its subsidiaries as at 30 June 2015 and 30 June 2014.
Significant accounting policies
The accounting policies of the parent entity are consistent
with those of the consolidated entity, as disclosed in note 1,
except for the following:
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June
2015 and 30 June 2014.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property,
plant and equipment at as 30 June 2015 and 30 June 2014.
• Investments in subsidiaries are accounted for at cost, less
any impairment, in the parent entity.
• Dividends received from subsidiaries are recognised
as other income by the parent entity.
2015
$
(1,554,401)
(1,554,401)
Parent
2014
$
(813,264)
(813,264)
Parent
2015
$
2014
$
22,306,130
81,494,286
248,179,260
130,996,072
260,981
269,992
287,577
308,065
298,057,612
1,967,750
(52,116,094)
181,302,812
–
(50,614,805)
247,909,268
130,688,007
66
67
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report note 35. interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries
in accordance with the accounting policy described in note 1:
Name
Principal place
of business/country
of incorporation
Ownership interest
Donaco Australia Pty Ltd
Way2Bet Pty Ltd (sold 31 October 2014)
Donaco Singapore Pte Ltd
Donaco Holdings Ltd*
Donaco Holdings Sdn Bhd*
Lao Cai International Hotel Joint Venture Company*
iSentric Sdn Bhd (sold 8 September 2014)
Donaco Hong Kong Limited
Prime Standard Limited
Donaco Holdings (Hong Kong) Pte Ltd*
* Subsidiary of Donaco Singapore Pte Ltd.
The principal activities of each subsidiary are:
Donaco Australia Pty Ltd
Australia
Australia
Singapore
British Virgin Islands
Malaysia
Vietnam
Malaysia
Hong Kong
Hong Kong
Hong Kong
2015
%
100.00%
-%
100.00%
100.00%
100.00%
95.00%
-%
100.00%
100.00%
100.00%
2014
%
100.00%
90.00%
100.00%
100.00%
100.00%
95.00%
100.00%
-%
-%
-%
Dormant (previously operated New Zealand games service,
discontinued in January 2015).
Way2Bet Pty Ltd (sold 31 October 2014)
Previously operated wagering marketing portal.
Donaco Singapore Pte Ltd
Donaco Holdings Ltd
Donaco Holdings Sdn Bhd
Holding company for Vietnamese casino operations.
Cost centre for corporate operations.
Cost centre for corporate operations.
Donaco Holdings (Hong Kong) Pte Ltd
Cost centre for corporate operations and marketing activities.
Lao Cai International Hotel Joint Venture Company Operates Vietnamese casino operations.
Donaco Hong Kong Limited
Holding company for Cambodian casino operations.
iSentric Sdn Bhd (sold 8 September 2014)
Previously operated mobile commerce business.
Prime Standard Limited
Cost centre for corporate operations.
Summarised financial information
Summarised financial information of the subsidiary with non-controlling interests that are material to the consolidated entity
are set out below:
Lao Cai International Hotel Joint Venture Company
Summarised statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Summarised statement of profit or loss and other comprehensive income
Revenue
Expenses
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) after income tax expense
Other comprehensive income
Total comprehensive income
Statement of cash flows
Net cash from/(used in) operating activities
Net cash used in investing activities
Net cash from financing activities
2015
$
2014
$
14,146,682
82,183,762
32,597,267
45,564,285
96,330,444
78,161,552
29,605,474
22,853,623
29,002,058
29,594,711
52,459,097
58,596,769
43,871,347
19,564,783
17,109,928
(18,556,453)
(1,446,525)
–
19,381,119
(7,311,782)
12,069,337
(2,847,373)
(1,446,525)
9,221,964
–
–
(1,446,525)
9,221,964
(1,007,639)
(8,248,552)
7,026,938
10,144,827
(40,573,413)
25,962,545
Net decrease in cash and cash equivalents
(2,229,253)
(4,466,041)
Other financial information
Profit/(loss) attributable to non-controlling interests
Accumulated non-controlling interests at the end of reporting period
(72,326)
986,462
1,476,679
1,058,788
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notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
note 36. events after the reporting period
The ultimate parent company, Donaco International
Limited (DNA), entered into a share sale agreement on
23 January 2015, supplemental share sale agreement
on 22 May 2015, and amending and restating deed on
18 June 2015 (the ‘Sale and Purchase Agreements’) with
independent third parties for the acquisition of the 100%
equity interests in DNA Star Vegas Co., Ltd (‘DNA Star’) for
a consideration of USD360 million. DNA Star is principally
engaged in operation of a casino business in Cambodia. The
consideration to be paid by DNA to the vendor was made by:
1. Deposit of USD5 million within 14 days of execution
of the share sale agreement, which occurred in FY15.
2. USD135 million to be paid on completion date
of acquisition.
3. USD120 million by issuing consideration shares in DNA
on the completion date of acquisition.
4. USD100 million to be paid to an account or held
in escrow in favour of the vendor.
According to the nomination letter signed on 22 June
2015, DNA nominated its wholly-owned subsidiary, Donaco
Hong Kong Limited (‘DHK’), to be the registered owner of
DNA Star and vested unto DHK all of the rights, titles and
interest in DNA Star under and/or pursuant to the Sale and
Purchase Agreement.
The acquisition was completed on 1 July 2015. Consequent
on the completion of the acquisition, applicable legal and
consultancy fees of $10,444,225 were expensed and paid in
the month of July 2015. As part payment for the acquisition,
a term loan of USD100 million from Mega International
Commercial Bank Co, Ltd of Taiwan was drawn down on
1 July 2015, and the proceeds paid to the vendor.
Pursuant to a detailed valuation report and purchase price
allocation report dated 22 January 2015 prepared by Colliers
International Hong Kong Limited and its related party,
Colliers International Thailand, the fair value of the business
acquired by DNA was USD411.2 million. Since the price
paid was USD360 million, this valuation would require the
acquisition to be treated as a bargain purchase, which would
require the excess of USD51.2 million to be recorded as a
positive income amount in the Company’s income statement.
However the directors have decided to take a more
conservative approach to the valuation, and will continue
to evaluate the business and the assets acquired in more
detail over the next 12 months, before deciding whether
to treat the acquisition as a bargain purchase.
As a result of the successful acquisition of the Star Vegas
Resort & Club on 1 July 2015, the FY15 statutory results
relate only to the Company’s pre-existing business, the
Aristo International Hotel in Vietnam. Based on unaudited
Star Vegas management accounts for FY15, the Aristo now
represents approximately 15% of the Company’s overall
business, in terms of net (reported) revenue.
Unaudited management accounts for FY15 show that
the Star Vegas achieved actual net revenue of $92.66
million, and earnings before interest, tax, depreciation
and amortisation (EBITDA) of $70.22 million, with net profit
after tax (NPAT) of $65.4 million. Normalised results show
revenue of $100.82 million, EBITDA of $78.39 million, and
NPAT of $73.56 million.
In order to provide working capital for the consolidated
entity, a term loan facility in the amount of USD20 million
from OL Master Limited was drawn down on 7 July 2015.
No other matter or circumstance has arisen since 30 June
2015 that has significantly affected, or may significantly
affect, the consolidated entity’s operations, the results of
those operations or the consolidated entity’s state of affairs
in future financial years.
With the expansion of our business, we have also
expanded the capabilities of our senior management team.
note 37. reconciliation of profit/(loss) after income tax to net cash from operating activities
Profit/(loss) after income tax expense for the year
(3,000,401)
8,270,082
Consolidated
2015
$
2014
$
Adjustments for:
Depreciation and amortisation
Net gain on disposal of non-current assets
Share-based payments
Foreign exchange relating to capital raising
Interest on investing activities
Net gain on sale of assets
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Decrease/(increase) in other operating assets
Increase in trade and other payables
Decrease in provision for income tax
Increase/(decrease) in employee benefits
Increase/(decrease) in other provisions
4,857,120
(2,203,373)
1,967,750
381,544
–
–
(1,293,613)
704,860
7,897,925
3,379,938
(4,424,195)
245,389
(10,482)
292,090
–
–
1,545,565
(77,117)
(9,861)
2,408,358
(1,180,516)
(2,092,799)
1,187,897
(319,414)
(399,140)
63,043
Net cash from operating activities
8,502,462
9,688,188
note 38. earnings per share
Earnings per share for profit/(loss) from continuing operations
Profit/(loss) after income tax
Non-controlling interest
Profit/(loss) after income tax attributable to the owners
of Donaco International Limited
Weighted average number of ordinary shares used in calculating basic
earnings per share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Weighted average number of ordinary shares used in calculating diluted
earnings per share
Consolidated
2015
$
2014
$
(5,202,162)
72,326
6,699,952
(1,476,679)
(5,129,836)
5,223,273
Number
Number
542,208,524
306,593,004
23,047,578
7,869,582
565,256,102
314,462,586
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notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
Basic earnings per share
Diluted earnings per share
2015
CENTS
(0.95)
(0.91)
2015
$
Consolidated
Consolidated
2014
CENTS
1.70
1.66
2014
$
Earnings per share for profit from discontinued operations
Profit after income tax attributable to the owners of Donaco International Limited
2,201,761
1,570,130
Weighted average number of ordinary shares used in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Weighted average number of ordinary shares used in calculating
diluted earnings per share
Basic earnings per share
Diluted earnings per share
Earnings per share for profit/(loss)
Profit/(loss) after income tax
Non-controlling interest
Profit/(loss) after income tax attributable to the owners
of Donaco International Limited
Weighted average number of ordinary shares used in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Weighted average number of ordinary shares used in calculating
diluted earnings per share
Basic earnings per share
Diluted earnings per share
72
Number
Number
542,208,524
306,593,004
23,047,578
7,869,582
565,256,102
314,462,586
Cents
0.41
0.39
2015
$
Consolidated
Cents
0.51
0.50
2014
$
(3,000,401)
72,326
8,270,082
(1,476,679)
(2,928,075)
6,793,403
Number
Number
542,208,524
306,593,004
23,047,578
565,256,102
7,869,582
314,462,586
Cents
(0.54)
(0.52)
Cents
2.22
2.16
note 39. share-based payments
Employee Option Allocation FY14
At the Annual General Meeting on 21 November 2013,
shareholders approved the establishment of a long-term
incentive (LTI) plan for executives, consisting of the annual
grant of units under an option share trust (OST). On 23
December 2013, the Company announced that it had
issued options amounting to 1% of its then issued capital
(a total of 4,010,511 options) under the LTI plan. Approval
for the issue of these options under an employee incentive
scheme was obtained pursuant to ASX Listing Rule 10.14.
These options were not contributed to the OST until 1 July
2014. Accordingly employees were not allocated units
in the OST until 1 July 2014.
Employee Option Allocation FY15
Pursuant to the approval granted by shareholders at
the FY13 Annual General Meeting, further options were
contributed to the OST for FY15. These options were not
contributed to the OST until 1 July 2015, and accordingly
employees were not allocated additional units in the OST
(apart from those outlined below) until 1 July 2015.
Set out below are summaries of options granted during
FY15 under the plan:
2015
Grant date
Expiry date
01/07/2014
01/07/2016
01/07/2014
01/07/2017
01/07/2014
01/07/2018
Exercise
price
$0.590
$0.590
$0.590
Balance at
the start of
the year
Granted
Exercised
–
–
–
–
1,399,293
1,328,169
1,283,049
4,010,511
–
–
–
–
Expired/
forfeited/
other
Balance at
the end of
the year
(33,333)
(33,333)
(33,333)
(99,999)
1,365,960
1,294,836
1,249,716
3,910,512
Set out below are the options exercisable at the end of the financial year:
Grant date
01/07/2014
Expiry date
01/07/2016
2015
Number
1,365,960
1,365,960
2014
Number
–
–
The weighted average share price during the financial year was $0.78 (2014: $0.56).
The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.97 years
(2014: not applicable as no options were outstanding).
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
01/07/2014
01/07/2016
01/07/2014
01/07/2017
01/07/2014
01/07/2018
Share price
at valuation
date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value at
grant date
$0.930
$0.930
$0.930
$0.610
$0.610
$0.610
78.74%
78.74%
78.74%
-%
-%
-%
2.52%
2.52%
2.52%
$0.490
$0.560
$0.616
73
notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015donaco international limited 2015 annual reportdonaco international limited 2015 annual report
t directors’ declaration 30 june 2015
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In the directors’ opinion:
• the attached financial statements and notes comply with the Corporations Act 2001, the
Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
• the attached financial statements and notes comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board as described in note 1
to the financial statements;
• the attached financial statements and notes give a true and fair view of the consolidated
entity’s financial position as at 30 June 2015 and of its performance for the financial year
ended on that date; and
• there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
The directors have been given the declarations required by section 295A of the Corporations
Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
On behalf of the directors
Mr Stuart McGregor
Chairman
25 September 2015
Sydney
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independent auditor’s report to the members
of donaco international limited
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DONACO
INTERNATIONAL LIMTIED AND CONTROLLED ENTITIES
Report on the Financial Report
We have audited the accompanying financial report of Donaco International Limited (the
Company) on pages 26 to 72, which comprises the statement of financial position as at 30
June 2015, the statement of profit or loss and other comprehensive income, the statement
of changes in equity and the statement of cash flows for the year then ended, notes
comprising a summary of significant accounting policies and other explanatory information,
and the directors’ declaration of the company and the consolidated entity comprising the
company and the entities it controlled at the year’s end or from time to time during the
financial year.
Directorsʼ Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial statements comply with International Financial
Reporting Standards.
Auditorʼs Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards
require that we comply with relevant ethical requirements relating to audit engagements
and plan and perform the audit to obtain reasonable assurance about whether the financial
report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation of the financial report that
gives a true and fair view in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
William Buck is an association of independent firms, each trading under the name of William Buck across
Australia and New Zealand with affiliated offices worldwide. Liability limited by a scheme approved under
Professional Standards Legislation other than for acts or omissions of financial services licensees.
CHARTERED ACCOUNTANTS
& ADVISORS
Sydney Ofice
Level 29, 66 Goulburn Street
Sydney NSW 2000
Telephone: +61 2 8263 4000
Parramatta Ofice
Level 7, 3 Horwood Place
Parramatta NSW 2150
PO Box 19
Parramatta NSW 2124
Telephone: +61 2 8836 1500
williambuck.com
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independent auditor’s report to the members
of donaco international limited
shareholder information
FOR THE YEAR ENDED 30 JUNE 2015
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DONACO
INTERNATIONAL LIMTIED AND CONTROLLED ENTITIES (CONT)
Auditorʼs Opinion
In our opinion:
a)
the financial report of Donaco International Limited on pages 26 to 72 is in accordance with the
Corporations Act 2001, including:
i. giving a true and fair view of the Company and consolidated entity’s financial position as at 30 June
2015 and of its performance for the year ended on that date; and
ii. complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note
1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 20 of the directors’ report for the year
ended 30 June 2015. The directors of the company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Auditorʼs Opinion
In our opinion, the Remuneration Report of Donaco International Limited for the year ended 30 June 2015,
complies with section 300A of the Corporations Act 2001.
Matters Relating to the Electronic Presentation of the Audited Financial Report
This auditor’s report relates to the financial report of Donaco International Limited for the year ended 30
June 2015 included on Donaco International Limited’s web site. The company’s directors are responsible
for the integrity of the Donaco International Limited’s web site. We have not been engaged to report on the
integrity of the Donaco International Limited’s web site. The auditor’s report refers only to the financial
report. It does not provide an opinion on any other information which may have been hyperlinked to/from
these statements. If users of this report are concerned with the inherent risks arising from electronic data
communications they are advised to refer to the hard copy of the audited financial report to confirm the
information included in the audited financial report presented on this web site.
William Buck
Chartered Accountants
ABN 16 021 300 521
M.A. Nevill
Partner
Dated this 25th day of September, 2015
The shareholder information set out below was applicable as at 31 August 2015.
distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
equity security holders
Number of
holders of
ordinary shares
Number of
holders of
options over
ordinary shares
397
703
424
963
159
2,646
240
–
–
–
–
–
–
–
Twenty largest quoted equity security holders
The names of the 20 largest security holders of quoted equity securities are listed below:
Ordinary shares
HSBC Custody Nominees (Australia) Limited
Slim Twinkle Limited
RBC Investor Services Australia Nominees Pty Limited
National Nominees Limited
Convent Fine Limited
Total Alpha Investments Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
Mr Keong Yew Lim
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited – A/C 2
Mr Keong Yew Lim
UOB Kay Hian Private Limited
UBS Nominees Pty Ltd
National Nominees Limited
Chun Wee Na
Holdex Nominees Pty Ltd No 384 A/C
RBC Investor Services Australia Nominees Pty Limited
Malahon Securities Limited
Holdex Nominees Pty Ltd No 392 A/C
Number held
130,675,427
84,437,882
80,943,594
68,032,903
60,353,318
56,962,025
52,457,127
27,983,236
25,540,155
23,074,684
9,207,480
6,000,000
4,330,201
3,626,016
3,016,000
3,000,000
2,348,338
2,302,545
2,213,000
2,000,000
% of total
shares issued
15.73
10.16
9.74
8.19
7.27
6.86
6.31
3.37
3.07
2.78
1.11
0.72
0.52
0.44
0.36
0.36
0.28
0.28
0.27
0.24
648,503,931
78.06
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notes to the consolidated financial statements FOR THE YEAR ENDED 30 JUNE 2015
shareholder information
FOR THE YEAR ENDED 30 JUNE 2015
Unquoted equity securities
Employee options
Warrants
substantial holders
Substantial holders in the Company are set out below:
Lim Keong Yew
Lim Keong Hoe (jointly held with Lim Keong Yew)
Perpetual Limited and subsidiaries
Lee Bug Tong
Lee Bug Huy
Van Eck Associates and subsidiaries
Number on
issue
Number of
holders
5,212,142
70
6
1
Ordinary shares
Number held
264,358,496
144,791,200
103,426,683
73,599,765
73,599,764
44,538,698
% of total
shares issued
31.82
17.43
12.45
8.86
8.86
5.36
voting rights
The voting rights attached to ordinary shares and options are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Options
There are no voting rights attached to options. Upon exercise of the option, the issued shares will confer full voting rights.
Warrants
There are no voting rights attached to warrants. Upon conversion of the warrant, the issued shares will confer full voting rights.
There are no other classes of equity securities.
securities subject to voluntary escrow
Class
Fully Paid Ordinary 1 Year
Fully Paid Ordinary 2 Years
Expiry date
Number of shares
30 June 2016
48,575,845
30 June 2017
48,575,844
97,151,689
78
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corporate directory
FOR THE YEAR ENDED 30 JUNE 2015
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Directors
Company Secretary
Registered Office
Principal Place of Business
Share Register
Auditor
Stock Exchange Listing
Stuart James McGregor – Chairman
Joey Lim Keong Yew – Managing Director and CEO
Benedict Paul Reichel – Executive Director
Benjamin Lim Keong Hoe – Non-Executive Director
Robert Andrew Hines – Non-Executive Director
Ham Techatut Sukjaroenkraisri – Executive Director
(appointed 1 July 2015)
Paul Porntat Amatavivadhana – Non-Executive
Director (appointed 1 July 2015)
Benedict Paul Reichel
Suite 2.02, 55 Miller Street
Pyrmont NSW 2009
Telephone: +61 2 9017 7000
Facsimile: +61 2 9017 7001
Suite 2.02, 55 Miller Street
Pyrmont NSW 2009
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
Telephone: +61 2 9290 9600
William Buck
Level 29, 66 Goulburn Street
Sydney NSW 2000
Donaco International Limited shares are listed
on the Australian Securities Exchange
(ASX code: DNA)
Website
www.donacointernational.com
general information
The financial statements cover Donaco International Limited as a consolidated entity consisting
of Donaco International Limited and the entities it controlled at the end of, or during, the year.
The financial statements are presented in Australian dollars, which is Donaco International
Limited’s functional and presentation currency.
Donaco International Limited is a listed public company limited by shares, incorporated and
domiciled in Australia. Its registered office and principal place of business is:
Suite 2.02
55 Miller Street
Pyrmont NSW 2009
A description of the nature of the consolidated entity’s operations and its principal activities are
included in the directors’ report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on
25 September 2015. The directors have the power to amend and reissue the financial statements.
donaco international limited 2015 annual report
donaco international limited ABN: 28 007 424 777
Suite 2.02, 55 Miller Street, Pyrmont NSW 2009 Australia
Phone: +61 (02) 9017 7000 Fax: +61 (02) 9017 7001 Email: enquiries@donacointernational.com
www.donacointernational.com