2 0 1 6 A N N U A L R E P O R T
D O N A C O I N T E R N AT I O N A L L I M I T E D
A N N U A L R E P O R T
FULL YEAR S TATUTORY AC COUN TS – 30 J UNE 2016
YUNNAN
GUIZHOU
C O N T E N T S
ARISTO
INTERNATIONAL HOTEL
GUANGXI
VIETNAM
From the Chairman
LAOS
THAILAND
STAR VEGAS
RESORT & CLUB
From the Managing Director
Board of Directors
Manchester United Partnership
Directors’ Report
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
CAMBODIA
Shareholder Information
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Corporate Directory and General Information 84
N O T I C E O F A N NU A L G E N E R A L M E E T I N G
The Annual General Meeting of Donaco International Limited will be held on 24 November 2016
at Level 23, 52 Martin Place, Sydney NSW 2000. Commencing at 2:30pm (Sydney time)
Donation to the Palilay temple.
Donaco engages in a number of community projects
and a range of charitable activities throughout the local area.
We will continue our support into the future.
F R O M T H E C H A I R M A N
Another very positive aspect to the
Donaco Group, that sometimes gets
unnoticed, is what we can provide
to the local communities in which
we operate.
Dear fellow shareholders,
The 2016 financial year has been a transformational year for
your Company. From 1 July 2015 the newly acquired Star
Vegas resort and club became the dominant contributor to
the Group. It has been an extremely successful addition and
its contribution has exceeded our expectations. The strong
earnings and cash flow that have been generated from
this acquisition have strengthened the financial position
of Donaco over the year, and have enabled the Board to
declare our maiden dividend to our shareholders.
Whilst the Star Vegas acquisition has resulted in a seven-
fold increase in the size of Group revenues, it has not
distracted the management team from also improving the
performance of our Aristo business in Vietnam.
As Chairman of the Group it was pleasing to see the efforts
of management in driving the performance of both venues
and seamlessly integrating the much larger Star Vegas
business into the expanded Donaco Group.
Board and management believe the key to long-term
shareholder value is to deliver strong financial management
and earnings growth. We are determined to retain this focus
and believe this will reward our shareholders in the long term.
Of course the performance of casino operations is subject
to luck as well as good management, particularly in the
VIP segment of our business. The luck factor is a normal
feature of casino operations, but management initiatives
at both venues produced the strong financial performance
reflected in the results. Management have taken actions
to reduce the volatility of our earnings, and whilst the luck
factor cannot be eliminated, we are targeting more stable
earnings growth into the future.
widely recognised by governments and our guests as a
Group that operates with high standards of probity and good
governance. We believe that this becomes a competitive
advantage in pursuing further growth opportunities as
they arise into the future. Whilst our Board is culturally and
geographically diverse, we are operating cohesively and
effectively in overseeing the Group operations.
Another very positive aspect to the Donaco Group, that
sometimes gets unnoticed, is what we can provide to
the local communities in which we operate. We have
engaged in a number of community projects and a range
of charitable activities during the course of the financial year
and we see this continuing into the future. These include
donating bicycles to financially disadvantaged students
in Bac Ha district in Vietnam, sponsoring the provision
of uniforms and shoes for students at the local schools,
holding fundraising events for disadvantaged youth in
Hanoi and providing financial assistance to the orphans
and teachers of the Lao Cai orphanage.
In summary, the 2016 financial year was one in which
Donaco Group delivered strong results on all fronts with
respect to the financial operations of the business. We
exceeded expectations with the Star Vegas acquisition,
delivered strong growth in earnings at Aristo, reduced our
debt, strengthened the balance sheet and declared our
maiden dividend. We expect further improvements in our
financial performance over the 2017 financial year, which
has commenced in a positive fashion.
We believe that retaining our focus on our businesses,
continuing to deliver strong financial performance, and
communicating these results with investors, will be the key
to delivering long-term value to our shareholders.
A key feature of Donaco is the strength of our corporate
governance practices. In the Asian region we are becoming
Stuart McGregor
Chairman
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F R O M T H E M A N A G I N G D I R E C T O R
F R O M T H E M A N A G I N G D I R E C T O R
We deliberately shifted our focus to mass market and
premium play and away from the VIP segment. This initiative
has seen a significant increase in patronage, which was up
63% to 148,107 over FY16, but has also produced a lower
average bet size, which has had the benefit of reducing the
volatility in earnings generated at the Aristo. Our VIP play
achieved a 2.2% win rate which was an improvement on the
previous year’s results.
Our strong growth in non-gaming revenues was driven by
new facilities, such as a nightclub and a steakhouse, that
now attract local patronage to the venue and provide us
with attractive rental income. Our non-gaming revenues
now represent 45% of the total revenue generated by Aristo.
We have also kept a tight control on costs by introducing
operational improvements which still maintain high levels
of customer service. For example, we are now serving our
VIP customers with food rather than having a smorgasbord
style, and this has produced significant savings in food
costs, with an improved service level.
On the gaming floor we expect to achieve additional
synergies through using the purchasing power of DNA Star
Vegas for machines at Aristo. DNA Star Vegas currently
enjoys far better purchasing arrangements due to its larger
number of gaming machines on site.
In terms of our management I was pleased to appoint Mr Att
Asavanund to the role of Deputy CEO. He has brought a strong
commercial business background and experience with his
appointment to our senior management team and is already
making a notable improvement to our Group operations.
We have commenced FY17 well, and whilst our balance sheet
is healthy with a net debt to equity ratio of only 15%,
we expect to see further reductions in our Group debt over
the year, and further operating improvements at both venues.
We have commenced our capital management initiatives
through the introduction of a one cent dividend, and our
expectations would be to continue with an annual dividend
payment into FY17. The strength of our balance sheet
provides us with flexibility to pursue growth or additional
capital management initiatives over the course of the year.
I look forward to a year of consolidation and solid growth during
FY17, as we drive further operational efficiencies at both venues,
attract new patronage and generate new revenue streams from
Star Paradise, and begin to use our online gaming licence.
Joey Lim
Managing Director and Chief Executive Officer
Below: Dwight Yorke with Managing Director, Joey Lim, visiting KOTO –
Know one, teach one – a non-profit social enterprise supported by Donaco,
that gives disadvantaged youth employment training in hospitality.
Our company sponsored 315 sets of school uniforms and shoes for pupils
of Ta Gia Khau Primary school in Muong Khuong district – Lao Cai province
on occasion of the new school year 2015–2016. Total value VND140 million.
Our successful acquisition and integration
of the Star Vegas casino and resort
in Cambodia has performed ahead
of our expectations.
Dear fellow shareholders,
The 2016 financial year has proved to be a period
of exciting transformation for the Donaco Group.
Our successful acquisition and integration of the Star Vegas
casino and resort in Cambodia has performed ahead of
our expectations. The Group generated AUD143.4 million
in revenue of which DNA Star Vegas contributed AUD120
million and an underlying EBITDA of AUD66.6 million.
Whilst our reported net profit after tax was AUD78.7 million,
this included a positive non-recurring item of AUD55.2
million relating to an uplift in valuation for the Star Vegas
business. This non-cash item was required to be recorded
as income according to Australian and international
accounting standards. As DNA Star Vegas exceeded
its earnings targets, we also paid a AUD20.5 million
management fee to our Thai partner in accordance with the
purchase contract, and we expect to make a final payment
at the end of the FY17. Our results also included
AUD11.8 million of non-recurring M&A costs associated
with the transaction.
The underlying net profit after tax of AUD55.9 million is a
better reflection of the ongoing earnings that we achieved
in the business. Pleasingly our operating cash flow was
AUD48.7 million which shows the strong cash generative
nature of our profit.
This very strong financial performance allowed us to repay
debt, and to declare our maiden dividend of one cent per
share. We were also able to refinance our debt facility which
will produce further cost savings during the 2017 financial year.
DNA Star Vegas operations produced an increase in
patronage, and an increase in gaming and non-gaming
revenue. The results were driven by the introduction of new
games, promotions and new facilities at the venue.
We see further exciting growth prospects at DNA Star
Vegas from leveraging our relationship with Manchester
United, additional VIP promotions, and the potential to
expand into the neighbouring Star Paradise property. From
the beginning of September 2016, we have commenced
managing the newly constructed gaming floor of the
Star Paradise business for a monthly fee, and we have
the exclusive option to purchase the entire Star Paradise
operation, including the hotel, provided it is attractive to
do so from Donaco shareholders’ perspective. By managing
this gaming operation we are well positioned to assess
the attractiveness of this business to the Donaco Group.
It should also be noted that Donaco did not incur any costs
in the development of the Star Paradise gaming operation.
We have already commenced discussions to confirm
the continuing relationship with our Thai management
partner beyond FY17. Whilst these arrangements have not
yet been finalised, they will be commercially based and
reflective of senior executive remuneration, as opposed
to the current arrangements which were part of the
purchase arrangements, and included an EBITDA earnings
guarantee from the vendor.
The Star Vegas business also owns an online gaming licence
which has yet to be utilised. We are currently exploring the
alternatives for the utilisation of this licence and expect
some progress to occur during FY17.
Whilst DNA Star Vegas transformed the business, pleasingly
the integration with the Group did not distract us from
our focus on improving the performance of our Aristo
International Hotel in Vietnam. In local currency terms we
produced strong growth in both gaming and non-gaming
revenue together with tight cost control measures. These
contributed to a strong growth in EBITDA which was up
61.4% at this venue.
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT B O A R D O F D I R E C T O R S
B O A R D O F D I R E C T O R S
S T U A R T J A M E S M C G R E G O R
J O E Y L I M K E O N G Y E W
B E N E D I C T PA U L R E I C H E L
B E N J A M I N L I M K E O N G H O E
Independent Non-Executive Chairman
(appointed 19 November 2004)
Managing Director and Chief Executive Officer
(appointed 1 February 2013)
B.Com, LLB, MBA
B. Computer Science
Executive Director, Group General Counsel,
Company Secretary
(appointed 20 July 2007)
Non-Executive Director
(appointed 1 February 2013)
B. International Business
Experience and expertise:
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) (appointed in July 2013)
Former directorships (past three years):
None
Special responsibilities:
Member of the Audit & Risk Management Committee
and the Nominations, Remuneration & Corporate
Governance Committee
Interests in shares :
411,735 ordinary shares
Interests in options:
None
Experience and expertise:
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 (past three years):
None
Special responsibilities:
None
Interests in shares:
264,659,325 ordinary shares
Interests in options:
2,410,338 unlisted employee options
BA, LLB (Hons), LLM (Hons)
Experience and expertise:
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.
Other current directorships :
None
Former directorships (past three years):
None
Special responsibilities:
None
Interests in shares:
522,079 ordinary shares
Interests in options:
1,408,856 unlisted employee options
Experience and expertise:
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 Bachelor Degree in International Business with Design
Management from Regent Business School,
United Kingdom.
Other current directorships :
None
Former directorships (past three years):
None
Special responsibilities:
Member of the Audit & Risk Management Committee
and the Nominations, Remuneration & Corporate
Governance Committee
Interests in shares:
144,811,200 ordinary shares
Interests in options:
None
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
B O A R D O F D I R E C T O R S
H A M T E C H AT U T
S U K J A R O E N K R A I S R I
Executive Director
(appointed 1 July 2015)
BSc Chemical Engineering
Experience and expertise:
Mr Sukjaroenkraisri is Vice President, Casino at Star Vegas
Casino & Resorts Co, Ltd. He has more than nine 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 (past three years):
None
Special responsibilities:
None
Interests in shares:
73,599,764 ordinary shares
Interests in options:
None
R O B E R T A N D R E W H I N E S
Independent Non-Executive Director
(appointed 1 November 2013)
Experience and expertise:
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 (past three years):
None
Special responsibilities:
Chair of the Audit & Risk Management Committee
and the Nominations, Remuneration & Corporate
Governance Committee
Interests in shares:
145,321 ordinary shares
Interests in options:
None
10
PA U L P O R N TAT A M ATA V I V A D H A N A
Non-Executive Director
(appointed 1 July 2015)
MSc Management Science, BA Finance and Banking
Experience and expertise:
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 & 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) (appointed 13 June 2008)
Former directorships (past three years):
None
Special responsibilities:
None
Interests in shares :
None
Interests in options:
None
‘Other current directorships’ and ‘Former directorships
(past three years)’ quoted above are directorships for listed
entities only, and exclude directorships of all other types
of entities, unless otherwise stated.
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
In December 2015, Donaco International
Limited was pleased to announce the
formal launch of its partnership with
Manchester United, with a series of
events held in Vietnam.
Manchester United Ambassador, Dwight
Yorke, attended a press conference at
the Long Vi Palace in Hanoi, to discuss
the Club’s first ever Official Casino Resort
partnership with Donaco.
Mr Yorke then joined Donaco’s Managing
Director, Joey Lim, on a visit to the premises
of KOTO – Know one, teach one – a non-
profit social enterprise supported by Donaco.
KOTO trains at-risk and disadvantaged
youth in Hanoi and Ho Chi Minh City for
employment in hospitality in a 24-month
vocational training program, including a
life skills component which incorporates
communication and English language skills,
building the self-esteem of at-risk youth.
Mr Yorke then visited Donaco’s flagship
property, the Aristo International Hotel.
Manchester United fans from both Hanoi
and the local area had the opportunity
to meet and interact with the legendary
player via a series of fun activities.
Mr Yorke also visited Sapa, a beautiful
French Colonial resort located 45 minutes
from the Aristo, in the mountains of
northern Vietnam. Here he met the local
hill tribe people and toured the local area.
The event was promoted to Vietnam’s
fan base of 26 million Manchester United
followers via social media, with a particular
focus on Manchester United followers in
the Hanoi area. A large group of fans from
Hanoi were transported to the Aristo for
the meet and greet event, via the newest
and most modern highway in Vietnam. The
fans enjoyed the full range of leisure and
hospitality facilities at the five-star hotel.
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
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 2016.
D I R E C T O R S
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)
R E V I E W O F O P E R AT I O N S A N D
F I N A N C I A L R E S U LT S
Overview
The 12 months ended 30 June 2016 (FY16) saw the Group
transform and significantly grow in scale with the addition
of DNA Star Vegas:
• Group Revenue of $143.4 million with a $120 million
contribution from DNA Star Vegas;
• Reported Net Profit After Tax (NPAT) $78.7 million
includes non-recurring items:
o $55.2 million valuation uplift at DNA Star Vegas;
o ($20.5 million) management fee paid as DNA Star
Vegas exceeded targets;
o ($11.8 million) of M&A costs;
• Underlying NPAT $55.9 million (excluding non-
recurring items);
Paul Porntat Amatavivadhana (appointed 1 July 2015)
• Strong balance sheet with $78.2 million cash;
P R I N C I PA L A C T I V I T I E S
During the financial year the principal continuing activities
of the consolidated entity consisted of the operation of
leisure and hospitality businesses across the Asia Pacific
region. This included:
• operation of a hotel and casino in northern Vietnam;
• operation of a hotel and casino in Cambodia; and
• acquisition and disposal of businesses.
D I V I D E N D S
There were no dividends to shareholders paid,
recommended or declared during the current or previous
financial years. However, subsequent to the reporting date,
the consolidated entity has declared a maiden dividend of
one cent per share. The dividend is 100% conduit foreign
income and is unfranked.
The consolidated entity’s dividend policy is unchanged from
that set out in the prospectus dated 13 December 2012,
which stated:
o Available cash of $29.6 million allowing for bank and
working capital requirements; and
• Maiden dividend of one cent per share with intended
payment in October 2016.
Reported net profit after tax was $78.7 million, and
included a valuation uplift at DNA Star Vegas of $55.2
million following an independent valuation by Colliers
International Hong Kong Limited and its related parties
Colliers International Thailand and Singapore. The valuation
was required by Australian and international accounting
standards for the purpose of annual impairment testing,
and purchase price allocation. As the valuation exceeded
the original acquisition price, the accounting standards
require the acquisition to be treated as a bargain purchase,
and the uplift is required to be shown as income in the
reported results.
The results also included the previously announced non-
recurring acquisition costs of $11.8 million, and a management
fee payment of $20.5 million, which resulted from DNA Star
Vegas exceeding its targeted performance levels.
Venue performances
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.
Both venues produced strong operational performances.
DNA Star Vegas contributed to earnings from 1 July 2015
for the full 12 months following its acquisition, and achieved
a 21% increase in EBITDA in local currency terms to THB2.2
billion under Donaco ownership, compared to the previous
year. Star Vegas exceeded its USD60 million EBITDA target
by USD3.3 million. The Aristo International Hotel also
recorded impressive growth, with EBITDA increasing by
61% in local currency terms to RMB51 million.
In local currency terms DNA Star Vegas performed strongly,
with revenue up 16.3% to THB3.1 billion, driven by an
increase in the VIP gross win rate to 2.97%, up from 2.72%
in FY15. Cost control initiatives implemented during the
year helped to manage operating expenses and resulted
in a 21.1% increase in EBITDA.
The Company has negotiated a deal to expand the DNA
Star Vegas gaming business into the adjoining Star Paradise
property. Donaco will receive a monthly fee for managing
the Star Paradise gaming area under the Star Vegas gaming
licence of THB5 million (approximately AUD2.3 million per
annum), in addition to reimbursement of the operating
costs incurred by DNA Star Vegas for the venue.
The existing Star Paradise property has been upgraded with
a new gaming hall constructed and financed by Donaco’s
Thai partner. Accordingly, there is no capital expenditure
required by Donaco.
The Aristo International Hotel recorded EBITDA growth
of 61.4%, underpinned by an impressive increase in both
gaming and non-gaming revenue, together with stringent
cost control measures. Visitor numbers were up by 63% to
148,107 over FY16, including a record 17,455 players in May
2016. However the average bet size declined, in line with
marketing strategies focused on increasing the number of
‘mass market’ players, to reduce the win rate volatility. Win
rates will continue to fluctuate, but the average VIP win rate
achieved of 2.2% was an improvement on the rate achieved
last year.
Hotel occupancy averaged 81.3% during FY16, compared
to 65.2% in FY15, and non-gaming revenues accounted
for 45% of revenue at Aristo overall. While Vietnamese
locals are not permitted to enter gaming facilities, the
comprehensive five star resort facilities are very popular with
local residents.
Capital management
The Company maintains a healthy balance sheet with a net
debt to equity of 16%. The FY16 finance expense of $20.5
million was comfortably covered by EBITDA of $55.5 million.
Net debt to underlying EBITDA was 0.84x. The refinancing
of a USD20 million working capital facility announced to the
market in July 2016 will save the Company approximately
USD3.8 million over FY17 and FY18, compared to the costs
of leaving the original facility in place.
Due to the strong cash generated by the business, the
Board has announced that it intends to declare a maiden
dividend of one cent per share. The planned record date
for the dividend is 5 October 2016, and payment date is
19 October 2016.
S I G N I F I C A N T C H A N G E S I N T H E
S TAT E O F A F F A I R S
During the financial year, the consolidated entity
successfully completed the acquisition of the Star Vegas
Resort and Club in Poipet, Cambodia. Full details are
provided under notes 40 and 41 to the financial statements.
The consideration consisted of USD240 million cash
(AUD316,451,000), and 147,199,529 ordinary shares in the
Company issued to the vendor. Primarily as a result of this
acquisition, the consolidated entity has increased its total
borrowings by AUD135,621,328 and increased its contributed
equity by AUD114,248,759 in the year ended 30 June 2016.
There were no other significant changes in the state of
affairs of the consolidated entity during the financial year.
M AT T E R S S U B S E Q U E N T T O T H E
E N D O F T H E F I N A N C I A L Y E A R
Dividend
On 30 August 2016, the Board of Donaco International Limited
announced that it intended to declare a maiden dividend
of one cent per share. The dividend is 100% conduit foreign
income and is unfranked. Proposed dates for the dividend
payment are: ex-dividend date 4 October 2016, record date
5 October 2016 and payment date 19 October 2016.
Long-term incentive scheme
The consolidated entity has resolved to introduce a new
long term incentive (LTI) scheme for its senior executives,
to replace the previous options scheme that expired at the
end of FY16.
As announced in the ASX release on 1 October 2015, the
Board has been considering new LTI schemes, and has
actively sought to align senior executive remuneration with
shareholder interests. Under the new scheme, shares will be
purchased on market and held in an employee share trust
(‘the Trust’). The shares will vest to the employees according
to their level of performance, over the vesting period of
three years.
The aim of the scheme is to ensure that executives are
motivated to think like shareholders, with a focus on taking
actions that will lead to sustainable increases in share price.
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
The structure of the scheme also ensures that there is no
dilution of shareholders.
The total annual dollar value of shares to be purchased will
be maximum of AUD1,000,000. The number of shares to be
purchased each year will depend on the share price at the
time that purchases take place.
The scheme will be executed in a similar manner to an on-
market buy-back, allowing the Trust to stand in the market and
purchase shares at appropriate times. However, the shares will
not be cancelled, but will be held in the Trust, to be distributed
to employees over the vesting period of three years.
The Trust intends to commence the on-market purchase
of shares pursuant to the terms of the new LTI scheme from
30 August 2016 onwards.
Loan
The Company has refinanced its USD20 million working capital
facility that was announced to the ASX on 23 June 2015 and
1 July 2015. Of the original USD100 million term loan facility
with Mega International Commercial Bank Co Limited of
Taiwan, the Company has now repaid USD10 million of
the principal amount in January 2016, and a further USD15
million in July 2016, leaving USD75 million to be repaid.
Donaco International Limited refinanced USD10 million of
its working capital facility provided by OL Master Limited
and has facilities in place to refinance a further USD10
million within the next 12 months. The refinancing will
further reduce financing costs by approximately USD3.8
million over the next two financial years (FY17 and FY18),
compared to the cost of repaying the facility in accordance
with its original terms.
Share options
On 1 July 2016 the Company announced the expiration of
1,365,959 options in accordance to their terms. The options
were part of the FY14 option series. Currently, there are
7,296,692 remaining options on issue.
No other matter or circumstance has arisen since 30 June
2016 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.
L I K E LY D E V E L O P M E N T S
A N D E X P E C T E D R E S U LT S
O F O P E R AT I O N S
The Company operates leisure and entertainment
businesses across the Asia Pacific region.
16
Our largest business is the Star Vegas resort and 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 1500 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.
E N V I R O N M E N TA L R E G U L AT I O N S
The consolidated entity is not subject to any significant
environmental regulation under Australian Commonwealth
or State law.
R E M U N E R AT I O N R E P O R T ( A U D I T E D )
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
it is considered to conform 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
& 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
& 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 shareholders’ wealth,
consisting of growth in share price, as well as focusing
the executive on key non-financial drivers of values
• 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 shareholders wealth
• provides a clear structure for earning rewards.
17
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
All remuneration paid to directors and executives is valued
at cost to the Company and expensed.
The executive remuneration and reward framework has
four components:
In accordance with best practice corporate governance, the
structures of remuneration for non-executive directors and
for executives are separate.
Non-executive directors’ remuneration
Fees and payments to non-executive directors reflect the
demands which are made on, and the responsibilities of,
the directors. Non-executive directors’ fees and payments
are reviewed annually by the Nominations, Remuneration
& Corporate Governance Committee. The Nominations,
Remuneration & 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, 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.
• base pay and non-monetary benefits
• short-term performance incentives
•
long-term incentives, currently consisting of restricted
shares purchased on market
• other remuneration such as superannuation 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 &
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 includes bonuses
and share issues and is designed to align the targets of
executives with the targets of the consolidated entity. STI
payments and share issues are granted to executives based
on the achievement of specific annual targets and key
performance indicators (‘KPIs’). During FY16, applicable
KPIs related to revenue growth at each operating business,
namely the Star Vegas and the Aristo International Hotel,
as well as the achievement of budgeted EBITDA targets
for the consolidated entity. The FY16 KPIs were chosen
to ensure that management focused on driving top-line
revenue growth at both of the Company’s operating
businesses, while ensuring that focus was also maintained
on cost control across the Group, to ensure that the
budgeted earnings growth would be achieved.
The long-term incentive (‘LTI’) program currently consists
of restricted shares purchased on market. For FY16 and
prior financial years, the LTI consisted of participation in
the Company’s option plan. Options were 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.
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, General Counsel and Company Secretary
• Benjamin Lim Keong Hoe –
Non-Executive Director
• Robert Andrew Hines –
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 (resigned 31 March 2016)
• Kenny Goh Kwey Biaw –
Deputy Chief Financial Officer and CEO of Donaco
Singapore
• Chong Kwong Yang (appointed 1 July 2015) –
Chief Financial Officer
• Att Asavanund (appointed 1 December 2015) –
Chief Operating Officer and (from 1 May 2016)
Deputy Chief Executive Officer
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 movements in revenue, earnings, share
price and market capitalisation for the consolidated entity
over the past three years.
The increases in revenue and earnings during FY16 are
directly attributable to the successful acquisition of the Star
Vegas resort and club on 1 July 2015. This has transformed
the size and scale of the consolidated entity. In addition,
management initiatives have significantly improved the
performance of the Aristo International Hotel during FY16.
The Nominations, Remuneration & Corporate Governance
Committee is of the opinion that the expansion of the
size and scale of the consolidated entity’s revenues,
earnings, profits and cash flow 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
During the financial year ended 30 June 2016,
the consolidated entity received a remuneration
recommendation (as defined in the Corporations
Act) from Egan Associates Pty Limited, to review its
existing remuneration policies and provide market
benchmarking. Egan Associates was paid $25,725 plus
GST for these services.
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 2015
Annual General Meeting (‘AGM’)
At the AGM held on 26 November 2015, 95.89% of the
eligible votes received supported the adoption of the
remuneration report for the year ended 30 June 2015.
Eligible votes received represented approximately 30%
18
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
SHORT-TERM BENEFITS
POST-
EMPLOYMENT
BENEFITS
LONG-TERM
BENEFITS
SHARE-
BASED
PAYMENTS
Bonus
Super
Leave
entitlements
Equity-
settled
2016
Non-Executive Directors
S J McGregor
Lim K H
R A Hines
P P Amatavivadhana
Executive Directors
Lim K Y
B P Reichel
H T Sukjaroenkraisri
Cash salary
and fees
$
155,606
195,521
137,300
106,104
696,106
224,799
23,220
Other Key Management Personnel
Na C W
Goh K B
Chong K Y
A Asavanund
298,632
266,362
193,708
144,165
$
–
–
–
–
349,198
113,052
–
232,268
84,954
32,000
–
The proportion of remuneration linked to performance and the fixed proportion are as follows:
NAME
2016
2015
2016
2015
2016
2015
FIXED REMUNERATION
AT RISK – STI
AT RISK – LTI
Non-Executive Directors
S J McGregor
Lim K H
R A Hines
P P Amatavivadhana
Executive Directors
Lim K Y
B P Reichel
H T Sukjaroenkraisri
100%
100%
100%
100%
48%
43%
100%
Other Key Management Personnel
Na C W
Goh K B
Chong K Y
A Asavanund
28%
40%
87%
100%
100%
100%
100%
–
61%
53%
–
44%
36%
–
–
0%
0%
0%
0%
24%
19%
0%
22%
13%
13%
0%
0%
0%
0%
–
19%
12%
–
14%
11%
–
–
0%
0%
0%
0%
28%
36%
0%
50%
47%
0%
0%
0%
0%
0%
–
20%
35%
–
42%
53%
–
–
Total
$
170,389
195,521
150,344
106,104
1,450,449
602,322
23,220
1,054,820
665,739
252,810
144,165
$
–
–
–
–
–
13,172
–
–
–
5,169
–
$
–
–
–
–
405,145
217,952
–
523,920
314,423
–
–
2,441,523
811,472
18,341
1,461,440
4,815,883
The proportion of the cash bonus paid/payable or forfeited is as follows:
SHORT-TERM BENEFITS
POST-
EMPLOYMENT
BENEFITS
LONG-TERM
BENEFITS
SHARE-
BASED
PAYMENTS
Bonus
Super
Leave
entitlements
Equity-
settled
2015
Non-Executive Directors
S J McGregor
Lim K H
R A Hines
Executive Directors
Lim K Y
B P Reichel
Cash salary
and fees
$
155,606
144,792
137,300
$
–
–
–
514,008
219,716
163,293
50,000
Other Key Management Personnel
Na C W
Goh K B
342,075
154,746
1,668,243
108,796
46,152
368,241
$
–
–
–
$
–
–
–
Total
$
170,389
144,792
150,344
–
7,600
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
CASH BONUS PAID/PAYABLE
CASH BONUS FORFEITED
NAME
Executive Directors
Lim K Y
B P Reichel
H T Sukjaroenkraisri
Other Key Management Personnel
Na C W
Goh K B
Chong K Y
A Asavanund
2016
100%
100%
n/a
100%
100%
100%
n/a
2015
100%
100%
n/a
100%
100%
n/a
n/a
2016
2015
–
–
n/a
–
–
n/a
n/a
–
–
n/a
–
–
n/a
n/a
DNA Star Vegas contributed to earnings from 1 July 2015 for
the full 12 months following its acquisition, and achieved a 21%
increase in EBITDA in local currency terms to THB2.2 billion
under Donaco ownership, compared to the previous year.
$
14,783
–
13,044
–
–
33,347
–
–
–
21,933
–
83,107
$
14,783
–
13,044
–
25,623
–
–
20
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
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 & Corporate Governance
Committee, applied these criteria in determining the award
of performance-based remuneration during the year.
Performance-based bonuses and share issues were paid in
October 2015, $712,959 cash bonuses were awarded to the
executive directors and other key management personnel.
A break up of the bonuses paid is in the tables above.
Further shares were issued to key management personnel
with a value of $341,455 as set out below. These bonuses
related to performance during FY15. The relevant criteria
for award of these bonuses related to the achievement of
corporate objectives, specifically the successful acquisition
of DNA Star Vegas, and the successful raising of $132 million
to enable the consolidated entity to pursue its objectives.
For performance during FY16, the relevant criteria for
the award of bonuses relate to revenue growth at each
operating business, namely the Star Vegas and the Aristo
International Hotel, as well as the achievement of budgeted
EBITDA targets for the consolidated entity.
The proportion of the share options granted or forfeited is as follows:
SHARE OPTIONS GRANTED
SHARE OPTIONS FORFEITED
NAME
Executive Directors
Lim K Y
B P Reichel
Other Key Management Personnel
Na C W
Goh K B
2016
100%
100%
100%
100%
2015
100%
100%
100%
100%
2016
2015
–
–
–
–
–
–
–
–
The proportion of the share issued or forfeited is as follows:
SHARES ISSUED
SHARES FORFEITED
NAME
Executive Directors
Lim K Y
B P Reichel
Other Key Management Personnel
Na C W
Goh K B
2016
100%
100%
100%
100%
2015
100%
100%
100%
100%
2016
2015
–
–
–
–
–
–
–
–
The Aristo International Hotel also recorded impressive growth,
with EBITDA increasing by 61% in local currency terms to
RMB51 million.
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
duties. Otherwise, the Company may terminate the contracts
by giving three months’ notice or paying three months’
salary, or six months in the case of Mr Reichel. In the case of
Mr J Lim, 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
Shares are issued to employees under the STI subject to meeting KPIs outlined above.
Details of shares issued to directors and other key management personnel as part of compensation during the year ended
30 June 2016 are set out below:
NAME
Lim K Y
B P Reichel
Na C W
Goh K B
DATE
SHARES
ISSUE PRICE
1 October 2015
1 October 2015
1 October 2015
1 October 2015
200,829
71,429
147,071
68,464
487,793
$0.70
$0.70
$0.70
$0.70
$
140,580
50,000
102,950
47,925
341,455
Approval for the issue of these shares was obtained pursuant to ASX Listing Rule 10.14.
Options
Options are not issued subject to any performance hurdles. Options are issued to key management personnel with an
exercise price equal to market value. Therefore the options are only of value to the holder if the share price increases.
This links the key management personnel compensation with shareholder value.
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
VESTING DATE AND
EXERCISABLE DATE
EXPIRY DATE
EXERCISE PRICE
1 July 2015
1 July 2015
1 July 2015
25 August 2015
25 August 2015
25 August 2015
1 July 2015
1 July 2016
1 July 2017
1 July 2016
1 July 2017
1 July 2018
1 July 2017
1 July 2018
1 July 2019
1 July 2018
1 July 2019
1 July 2020
$0.89
$0.89
$0.89
$0.77
$0.77
$0.77
Options granted carry no dividend or voting rights.
Approval for the issue of these options was obtained pursuant to ASX Listing Rule 10.14.
FAIR VALUE PER
OPTION AT
GRANT DATE
$0.3777
$0.4368
$0.4941
$0.1516
$0.1816
$0.2084
22
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
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 2016 are set out below:
Additional information
The earnings of the consolidated entity for the four years to 30 June 2016 are summarised below:
NAME
Lim K Y
B P Reichel
Na C W
Goh K B
NUMBER OF
OPTIONS GRANTED
DURING THE
YEAR 2016
NUMBER OF
OPTIONS GRANTED
DURING THE
YEAR 2015
NUMBER OF
OPTIONS VESTED
DURING THE
YEAR 2016
NUMBER OF
OPTIONS VESTED
DURING THE
YEAR 2015
2,002,967
1,001,484
1,335,312
412,376
407,371
407,372
1,585,594
1,210,174
326,116
229,796
653,872
442,099
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 2016 are set out below:
2016
$
2015
$
2014
$
2013
$
Revenue from continuing operations
143,385,778
19,108,431
21,111,819
16,076,337
EBITDA
Profit after income tax
55,532,350
78,723,501
550,295
(2,928,075)
8,861,216
6,793,403
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.
Other factors that are considered to affect total shareholder return are summarised below:
2016
2015
2014
2013
VALUE OF OPTIONS
GRANTED DURING
THE YEAR
VALUE OF OPTIONS
EXERCISED DURING
THE YEAR
NUMBER OF
OPTIONS LAPSED
DURING THE YEAR
REMUNERATION
CONSISTING OF
OPTIONS FOR
THE YEAR
Share price at financial year end ($)
Market capitalisation at year end ($)
Basic earnings per share (cents per share)
0.42
344,952,741
9.47
0.72
623,042,723
(0.54)
0.90
414,254,367
2.22
0.34
126,372,057
2.53
NAME
Lim K Y
B P Reichel
Na C W
Goh K B
$
483,908
241,954
322,606
99,628
$
–
–
–
–
$
–
–
–
–
%
16%
26%
38%
39%
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 2016 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
Total
B P Reichel
Total
Na C W
Total
Goh K B
Total
1 July 2014
1 July 2015
25 August 2015
1 July 2015
1 July 2015
Various
1 July 2014
1 July 2015
25 August 2015
1 July 2015
1 July 2015
Various
1 July 2014
1 July 2015
25 August 2015
1 July 2015
1 July 2015
Various
1 July 2014
1 July 2015
25 August 2015
1 July 2015
1 July 2015
Various
–
506,472
1,496,495
2,002,967
–
253,236
748,248
1,001,484
–
337,648
997,664
1,335,312
–
104,274
308,102
412,376
–
218,280
265,628
483,908
–
109,140
132,814
241,954
–
145,520
177,086
322,606
–
44,940
54,688
99,628
74,800
72,760
–
147,560
74,800
36,380
–
111,180
294,460
48,507
–
342,967
225,526
14,980
–
240,506
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The significant increases in revenue, earnings, net profit after tax and earnings per share can be attributed in part to the
consolidated entity’s remuneration practices and policies set out above.
Additional disclosures relating to key management personnel
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
4,996,744
731,395
415,656,934
147,071
68,464
487,793
–
–
(3,346,744)
(31,395)
73,948,371
(3,378,139)
486,714,959
BALANCE AT
THE END OF
THE YEAR
1,797,071
768,464
Ordinary shares
Na C W
Goh K B
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:
Options over
ordinary shares
Lim K Y
B P Reichel
Na C W
Goh K B
BALANCE
AT THE
START OF
THE YEAR
407,371
407,372
1,585,594
1,210,174
2,002,967
1,001,484
1,335,312
412,376
3,610,511
4,752,140
GRANTED EXERCISED
EXPIRED/
FORFEITED/
OTHER
BALANCE
AT THE
END OF
THE YEAR
2,410,338
1,408,856
2,920,906
1,622,550
VESTED
AMOUNT
UNVESTED
AMOUNT
478,582
382,264
1,204,638
852,357
1,931,757
1,026,592
1,716,268
770,193
8,362,651
2,917,841
5,444,810
–
–
–
–
–
–
–
–
–
–
24
25
This concludes the remuneration report, which has been audited.
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
D I R E C T O R S ’ R E P O R T
D I R E C T O R S ’ R E P O R T
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.
A U D I T O R ’ S I N D E P E N D E N C E
D E C L A R AT I O N
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.
A U D I T O R
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) (1) of the Corporations
Act 2001.
On behalf of the directors
O F F I C E R S O F T H E C O M PA N Y
W H O A R E F O R M E R PA R T N E R S
O F W I L L I A M B U C K
There are no officers of the Company who are former
partners of William Buck.
Mr Stuart McGregor
Chairman
30 September 2016
Melbourne
Aristo together with Red Cross Association of Lao Cai province set up a Humanitarian fund box at Aristo. Customers and staff can donate money into this box, then
Red Cross Association will open it periodically for charity activities.
S H A R E S U N D E R O P T I O N
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 2015
1 July 2015
1 July 2015
25 August 2015
25 August 2015
25 August 2015
EXPIRY DATE
EXERCISE PRICE
NUMBER UNDER OPTION
1 July 2017
1 July 2018
1 July 2017
1 July 2018
1 July 2019
1 July 2018
1 July 2019
1 July 2020
$0.590
$0.590
$0.890
$0.890
$0.890
$0.770
$0.770
$0.770
1,294,836
1,249,716
457,047
395,208
349,376
1,385,700
1,156,784
1,008,025
7,296,692
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.
In addition to the above, on 7 July 2015 Donaco
International Limited issued 70 warrants to subscribe for
its ordinary shares. Each warrant has a notional value of
USD100,000. The warrants have a term of 39 months and
expire on 6 October 2018. The exercise price is AUD0.7579
cents and the maximum number of ordinary shares which
may be issued is 12,339,408. The Company may elect to
settle the difference between the share price and exercise
price in cash.
S H A R E S I S S U E D O N T H E E X E R C I S E
O F O P T I O N S
The were no ordinary shares of Donaco International
Limited issued, during the year ended 30 June 2016 and
up to the date of this report, on the exercise of options
granted (2015: 3,295,767).
I N D E M N I T Y A N D I N S U R A N C E
O F O F F I C E R S
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.
I N D E M N I T Y A N D I N S U R A N C E
O F A U D I T O R
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.
P R O C E E D I N G S O N B E H A L F
O F T H E C O M PA N Y
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.
N O N - A U D I T S E R V I C E S
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.
26
27
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
A U D I T O R ’ S I N D E P E N D E N C E D E C L A R AT I O N
FOR T HE YEAR ENDED 30 JUN E 2 0 16
2 0 1 6 F I N A N C I A L S
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 2016
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 30th day of September, 2016
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
Statement of Profit or Loss and
other Comprehensive Income 28
Note 12. Current assets – prepaid
50
construction costs
Note 26. Equity – reserves
60
Statement of Financial
Position
Statement of
Changes in Equity
Statement of Cash Flows
30
31
32
Note 1. Significant accounting
33
policies
Note 2. Critical accounting
judgments, estimates
and assumptions
41
Note 3. Operating segments 42
Note 4. Revenue
Note 5. Other income/
(expense)
Note 6. Expenses
45
45
46
Note 7.
Income tax expense/
(benefit)
47
Note 8. Discontinued
operations
48
Note 9. Current assets – cash
and cash equivalents 50
Note 10. Current assets – trade
and other receivables 50
Note 13. Current assets – other 51
retained profits
61
Note 27. Equity –
Note 14. Non-current assets –
Note 28. Equity – dividends
61
property, plant and
equipment
51
Note 29. Financial instruments 62
Note 15. Non-current assets –
intangibles
52
Note 30. Key management
personnel disclosures 66
Note 16. Non-current assets –
Note 31. Remuneration
construction in
progress
Note 17. Non-current assets –
other
54
55
Note 18. Current liabilities – trade
and other payables 55
Note 19. Current liabilities –
borrowings
55
Note 20. Current liabilities –
financial liabilities
57
Note 21. Current liabilities –
income tax
57
Note 22. Current liabilities –
employee benefits
57
Note 23. Non-current liabilities –
58
borrowings
Note 24. Non-current liabilities –
59
employee benefits
of auditors
Note 32. Commitments
Note 33. Related party
transactions
Note 34. Parent entity
information
Note 35. Interests in
subsidiaries
Note 36. Events after the
reporting period
67
67
68
69
70
72
Note 37. Reconciliation of profit/
(loss) after income tax
to net cash from
operating activities 73
Note 38. Earnings per share 73
Note 39. Share-based
payments
75
Note 40. Contingent liabilities 76
Note 11. Current assets –
inventories
50
Note 25. Equity –
28
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
issued capital
59
Note 41. Business
combinations
77
D
O
N
A
C
O
I
N
T
E
R
N
A
T
I
O
N
A
L
L
I
M
I
T
E
D
2
0
1
6
A
N
N
U
A
L
R
E
P
O
R
T
29
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
STATE MENT OF PROFIT OR LOS S
AND OT HER CO MPREHENSI VE I NC OM E
FOR T HE YEAR ENDED 30 JUN E 2 0 16
STATE MENT OF PROFIT OR LOSS
AN D OTHE R COMPREHEN SIVE INC OME
FOR THE YE AR EN DED 30 JUNE 2016
Revenue from continuing operations
Other income/(expense)
Gain on bargain purchase
Total income
Expenses
Food and beverages
Employee benefits expense
DSV Management Fee
Depreciation and amortisation expense
Legal and compliance
Marketing and promotions
Professional and consultants
Property costs
Telecommunications and hosting
Gaming costs
Other expenses
Finance costs
Total expenses
Profit/(loss) before income tax expense from continuing operations
Income tax (expense)/benefit
Profit/(loss) after income tax expense from continuing operations
Profit after income tax expense from discontinued operations
Profit/(loss) after income tax expense for the year
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
NOTE
4
5
41
41
7
8
CONSOLIDATED
2016
$
2015
$
143,385,778
19,108,431
2,596,962
55,165,316
(427,602)
–
201,148,056
18,680,829
(6,182,949)
(22,773,119)
(20,492,174)
(9,945,976)
(382,525)
(4,696,896)
(13,304,649)
(5,862,681)
(267,816)
(6,559,572)
(7,264,048)
(20,545,536)
(2,208,639)
(9,902,974)
–
(4,857,120)
(605,044)
(269,058)
(1,058,511)
(1,202,828)
(171,965)
(262,458)
(1,661,596)
(1,683,159)
(118,277,941)
(23,883,352)
82,870,115
(5,202,523)
(3,996,731)
361
78,873,384
(5,202,162)
–
2,201,761
78,873,384
(3,000,401)
7,763,303
12,412,538
7,763,303
12,412,538
86,636,687
9,412,137
149,883
78,723,501
(72,326)
(2,928,075)
78,873,384
(3,000,401)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
Total comprehensive income for the year is attributable to:
Continuing operations
Non-controlling interest
Continuing operations
Discontinued operations
Owners of Donaco International Limited
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
CONSOLIDATED
2016
$
149,883
149,883
86,486,804
–
86,486,804
86,636,687
2015
$
(72,326)
(72,326)
7,282,702
2,201,761
9,484,463
9,412,137
NOTE
CONSOLIDATED
2016
CENTS
2015
CENTS
38
38
38
38
38
38
9.47
9.47
0.00
0.00
9.47
9.47
(0.95)
(0.91)
0.41
0.39
(0.54)
(0.52)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
30
31
Donation of bicycles to disadvantaged students in Bac Ha district in Vietnam.
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
STATE MENT OF FIN ANCIAL PO S I T I O N
FOR T HE YEAR ENDED 30 JUN E 2 0 16
STATEMEN T OF C HA NGES IN EQ UIT Y
FOR THE YE AR EN DED 30 JUNE 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepaid construction costs
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangibles (inc. licences)
Construction in progress
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Financial liabilities
Income tax
Employee benefits
Non-current liabilities
Borrowings – non-current
Employee benefits – non-current
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
NOTE
CONSOLIDATED
2016
$
2015
$
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
78,221,019
24,002,817
1,418,876
12,800
3,120,464
210,175,119
2,064,923
700,866
273,207
11,883,206
106,775,976
225,097,321
171,715,958
403,005,941
1,143,158
78,451
82,017,909
2,464,577
205,737
533,765
575,943,508
85,221,988
682,719,484
310,319,309
47,754,947
40,107,134
1,794,520
1,560,149
482,097
16,016,059
2,962,712
–
427,505
315,879
91,698,847
19,722,155
111,693,999
16,212
13,217,093
9,011
111,710,211
13,226,104
203,409,058
32,948,259
479,310,426
277,371,050
360,968,368
24,574,755
92,630,958
478,174,081
1,136,345
246,719,609
15,757,522
13,907,457
276,384,588
986,462
479,310,426
277,371,050
The above statement of financial position should be read in conjunction with the accompanying notes.
CONSOLIDATED
Balance at 1 July 2014
ISSUED
CAPITAL
RESERVES RETAINED
PROFITS
NON-
CONTROLLING
INTEREST
TOTAL
EQUITY
$
$
$
$
$
129,964,909
(478,093)
18,690,859
1,058,788
149,236,463
Loss after income tax 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:
–
(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
Contributions of equity, net of transaction costs
Share buybacks
Share issue expense
Return of capital on iSentric sale
Employee share options
Transfer from retained earnings
133,340,451
(825,113)
(7,260,638)
(8,500,000)
–
–
–
–
–
–
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.
ISSUED
CAPITAL
RESERVES RETAINED
PROFITS
NON-
CONTROLLING
INTEREST
TOTAL
EQUITY
CONSOLIDATED
Balance at 1 July 2015
$
$
$
$
$
246,719,609
15,757,522
13,907,457
986,462
277,371,050
Profit after income tax expense 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:
–
78,723,501
149,883
78,873,384
7,763,303
–
–
7,763,303
7,763,303
78,723,501
149,883
86,636,687
Contributions of equity, net of transaction costs
(note 41)
154,999,579
Shares issued to employees
Adjustment to value of shares issued for
acquisition (note 41)
341,455
(41,363,075)
–
–
–
Employee share options
Transfer from reserves
–
1,324,730
270,800
(270,800)
–
–
–
–
–
–
–
–
–
–
154,999,579
341,455
(41,363,075)
1,324,730
–
Balance at 30 June 2016
360,968,368
24,574,755
92,630,958
1,136,345
479,310,426
The above statement of changes in equity should be read in conjunction with the accompanying notes.
32
33
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
STATE MENT OF CASH FLOWS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other revenue
Interest and other finance costs paid
Government levies, gaming taxes and GST
NOTE
CONSOLIDATED
2016
$
2015
$
447,352,472
(376,237,266)
26,924,930
(16,099,850)
71,115,206
10,825,080
72,176
10,846
(14,772,928)
(7,767,763)
2,463,582
(358,371)
–
(4,427,829)
Net cash flows from operating activities
37
48,657,537
8,502,462
Cash flow from investing activities
Payment for purchase of business, net of cash acquired
Payments for property, plant and equipment
Proceeds from disposal of business
Cash investment in subsidiary, net of cash retained
Payment of expenses relating to acquisitions
Proceeds from disposal of property, plant and equipment
Other
Net cash flows from investing activities
Cash flow from financing activities
Proceeds from issue of shares
Net borrowings
Share issue transaction costs
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents, beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
41
41
41
–
(1,815,637)
–
(316,451,000)
(11,819,338)
–
–
(6,073,857)
(26,354,575)
450,000
–
–
1,003
6,720
(330,085,975)
(31,970,709)
–
144,744,337
(443,131)
132,515,339
1,785,151
(7,260,638)
144,301,206
127,039,852
(137,127,232)
210,175,119
5,173,132
103,571,605
99,496,165
7,107,349
Cash and cash equivalents at the end of the financial year
9
78,221,019
210,175,119
The above statement of cash flows should be read in conjunction with the accompanying notes.
N O T E 1 . S I G N I F I C A N T
A C C O U N T I N G P O L I C I E S
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.
The adoption of these Accounting Standards and
Interpretations did not have any material impact on the
financial performance or position of the consolidated entity.
Any new, revised or amending Accounting Standards or
Interpretations that are not yet mandatory have not been
early adopted.
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 the revaluation of
financial assets and liabilities at fair value through profit
or loss 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 2016 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.
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
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.
Revenue from slot machines represents the amount
received over the exchange counter less the amount
returned to customers.
Operating segments
Sale of goods
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
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.
The consolidated entity sale of goods consist of food
and beverages sales. Revenue from the sale of goods
is recognised at the point of sale, when a Group entity
sells a product to the customer.
Rendering of services
Revenue from the provision of accommodation and
hospitality 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.
Cash flow
For the purposes of the statement of cash flows receipt
from customers includes gross casino winnings, and gross
slot machine takings and payment to suppliers includes
payments from slot machines, commission payments to
customers, junkets and profit sharing to slot operators.
Income tax
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.
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 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 which 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.
Current and non-current classification
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 the
consolidated entity’s 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 either expected
to be settled in the consolidated entity’s normal operating
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 and 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
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.
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
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 realisable value and
all losses of inventories are recognised as an expense in
the period 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 or 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.
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
Furniture and fittings
Consumables
25 years
5–10 years
3–6 years
3–10 years
5 years
1–8 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 profit or loss
and other comprehensive income, on a straight-line basis
over the term of the lease.
Intangible assets
Land rights
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.
Casino License
The Group considers casino licences to be intangible
assets with indefinite useful lives. Accordingly, they are
not amortised and are tested annually for impairment or
more frequently if events or changes in circumstances
indicate that they might be impaired, and are carried at cost
less accumulated impairment losses. Impairment losses
on casino licences are recognised in the profit or loss.
Goodwill
Trade and other payables
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.
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.
Warrants
Warrants issued as part of financing arrangements, which may
be net settled in cash or through the issue of shares of the
parent entity, are recognised as derivative financial liabilities
measured at fair value through profit or loss. The fair value of
the warrants is determined using the Black Scholes model.
At each reporting date the warrants are revalued to fair
value with any difference recognised in the profit or loss.
As the warrants were issued in connection with a loan
facility, on initial recognition the fair value of the related
loan facility is calculated as the difference between the
proceeds and the fair value of the warrants.
The difference between the fair value of the loan facility and
the proceeds is then amortised over the term of the loan
using the effective interest rate method.
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 wholly 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.
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
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 an amended Black Scholes model that takes into
account the exercise price, the term of the option,
an exercise price multiple, 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, they are treated as if they
have 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 award 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,
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.
The financial instruments recognised at fair value in the
consolidated statement of financial position have been
analysed and classified using a fair value hierarchy reflecting the
significance of the inputs used in making the measurements.
The fair value hierarchy consists of the following levels:
a. Quoted prices (unadjusted) in active markets for
identical assets or liabilities (level 1)
b. Inputs other than quoted prices included within level
1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices)
(level 2), and
c.
Inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (level 3).
During the current reporting period, the Group issued
warrants which are classified as derivative financial liabilities
and which are measured at fair value through profit or loss.
The warrants (as detailed in note 20) are classified as level
2 in the fair value hierarchy, as the value is based on an
adjustment to quoted market prices.
The warrants are measured using a Black Scholes model.
There were no transfers between the levels of the fair
value hierarchy during either the current or previous
reporting period.
The directors consider that the carrying amount of all other
financial assets and liabilities recorded in the financial
statements approximate their fair value.
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.
Dividends
Provision is made for the amount of any dividend declared,
determined or announced by the directors on or before the
end of the financial year but not distributed at balance date.
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.
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
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 which 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 2016. 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
AASB 9 Financial Instruments and applicable amendments,
effective from 1 January 2018, addresses the classification,
measurement and derecognition of financial assets
and financial liabilities. 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. It has now
also introduced revised rules around hedge accounting and
impairment. The consolidated entity will adopt this standard
and the amendments from 1 July 2017 and it does not
expect this to have a significant impact on the recognition
and measurement of the consolidated entity’s financial
instruments as they are carried at fair value through profit
or loss. The derecognition rules have not been changed
from the previous requirements, and the consolidated entity
does not apply hedge accounting.
AASB 2014-4 Clarification of Acceptable Methods of
Depreciation and Amortisation (Amendments to AASB
116 and AASB 138)
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 2018. 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 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 2018 and is assessing
the impact of its adoption.
AASB 16 Leases
The new standard will be effective for annual periods beginning
on or after 1 January 2019. Early application is permitted,
provided the new revenue standard, AASB 15 Revenue from
Contracts with Customers, has been applied, or is applied
at the same date as AASB 16. AASB 16 will primarily affect
the accounting by lessees and will result in the recognition of
almost all leases on the balance sheet. The standard removes
the current distinction between operating and financing leases
and requires recognition of an asset (the right to use the
leased item) and a financial liability to pay rentals for almost
all lease contracts. The accounting by lessors, however, will
not significantly change. The Company has not elected
early adoption and is assessing the impact of its adoption.
AASB 2015-1 Amendments to Australian Accounting
Standards – Annual Improvements to Australian
Accounting Standards 2012-2014 Cycle
AASB 119 Employee Benefits contains new requirements
when estimating the discount rate for post-employment
benefit obligations. It clarifies that the high quality
corporate bond should be used and denominated in the
same currency as the liability. Further it clarifies that the
depth of the market for high quality corporate bonds
should be assessed at the currency level. The consolidated
entity will adopt this standard from 1 July 2016 but the
impact of its adoption is yet to be assessed.
IFRS 2 – Classification and Measurement of Share-based
Payment Transactions (Amendments to IFRS 2)
This standard amends to IFRS 2 Share-based Payment,
clarifying how to account for certain types of share-
based payment transactions. The amendments provide
requirements on the accounting for the effects of vesting and
non-vesting conditions on the measurement of cash settled
share-based payments and a modification to the terms
and conditions of a share-based payment that changes the
classification of the transaction from cash-settled to equity-
settled. Adoption of IFRS 2 is not mandatory until annual
period beginning on or after 1 January 2018. The potential
financial impact to the Group is not yet possible to determine.
N O T E 2 . C R I T I C A L A C C O U N T I N G
J U D G M E N T S , E S T I M AT E S A N D
A S S U M P T I O N S
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 of options is determined by using
an amended 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 value of shares issued to employees is based on the
market value of shares traded on the ASX at the time of issue.
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
42
43
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
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, including Cambodia,
Vietnam and Hong Kong. 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.
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.
Warrants
The consolidated entity measures the cost of warrants
issued by the reference to the fair value of the equity
instruments at the date at which they are granted. The fair
value of warrants is determined by using an amended Black
Scholes model taking into account the terms and conditions
upon which the instruments were granted.
Employee share trust and option trust
The consolidated entity has engaged an external unrelated
third party to form trusts to administer the Group’s
employee share schemes. The consolidated entity has
no ownership interest in the trusts and the trusts are not
consolidated as they are not controlled by the consolidated
entity. In determining whether or not the consolidated
entity had control over the trusts, management considered
the trust’s status as an independent trust with an
independent trustee, which holds the assets for the benefit
of the employees rather than the consolidated entity.
In making this determination management have considered
a number of factors, the most relevant being that the trust
deed which governs the trusts, outlines that the trustees
have no obligation to comply with the consolidated entity’s
directions in respect of the allocation and issue of shares
and share options.
N O T E 3 . O P E R AT I N G S E G M E N T S
Identification of reportable operating segments
The consolidated entity is organised into three operating
segments: Casino operations in Vietnam, Casino operations
in Cambodia 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 consolidated entity is domiciled in Australia and
operates predominantly in five countries: Australia,
Cambodia, Vietnam, Singapore and Malaysia. The Casino
operations are segmented geographically between casino
operations in Vietnam and Cambodia.
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 a monthly basis.
Types of products and services
The principal products and services of each of these
operating segments are as follows:
Casino operations – Vietnam
Comprises the Aristo International Hotel operating in
Vietnam. These operations include hotel accommodation
and gaming and leisure facilities.
Casino operations – Cambodia
Comprises the Star Vegas Resort and Club (which was
acquired on 1 July 2015), operating in Cambodia. These
operations include hotel accommodation and gaming and
leisure facilities.
Corporate operations
Comprises the development and implementation of
corporate strategy, commercial negotiations, corporate
finance, treasury, management accounting, corporate
governance and investor relations functions.
Intersegment transactions
Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.
Operating segment information for continuing and discontinuing operations
CONSOLIDATED – 2016
Revenue
Sales to external customers
Interest and other income
Total revenue
Gain on bargain purchase
Other income
Total income
EBITDA
Depreciation and amortisation
Interest revenue
Other income
Net exchange gains/(losses)
Non-controlling interest
Finance costs
CASINO
OPERATIONS
VIETNAM
CASINO
OPERATIONS
CAMBODIA
CORPORATE
OPERATIONS
TOTAL
$
$
$
$
23,202,203
13,962
120,116,215
–
23,216,165
120,116,215
–
–
–
–
361
53,037
53,398
55,165,316
2,596,962
143,318,779
66,999
143,385,778
55,165,316
2,596,962
23,216,165
120,116,215
57,815,676
201,148,056
11,683,102
(5,704,998)
13,962
–
(557,147)
(149,883)
(1,466,270)
66,571,238
(4,008,916)
–
–
–
–
–
(22,721,990)
(232,062)
53,037
57,774,655
544,770
–
(19,079,266)
55,532,350
(9,945,976)
66,999
57,774,655
(12,377)
(149,883)
(20,545,536)
Profit before income tax expense
3,818,766
62,562,322
16,339,144
82,720,232
Income tax expense
Profit after income tax expense attributable
to the owners of Donaco International Limited
(3,996,731)
78,723,501
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
97,614,196
537,688,394
47,416,894
682,719,484
682,719,484
28,996,850
29,961,285
144,450,923
203,409,058
203,409,058
44
45
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
CONSOLIDATED – 2015
Revenue
Sales to external customers
Interest
Total revenue
Other income
Total income
CASINO
OPERATIONS
GAMING
TECHNOLOGY
OPERATIONS*
CORPORATE
OPERATIONS
TOTAL
$
$
$
$
17,069,618
40,310
17,109,928
1,296,742
2,529
1,299,271
1,308
1,997,195
18,367,668
2,040,034
1,998,503
20,407,702
(86,577)
–
(341,025)
(427,602)
17,023,351
1,299,271
1,657,478
19,980,100
EBITDA
Depreciation and amortisation
Gain on disposal of discontinued operation
Interest revenue
Other income
Non-recurring items
Net exchange gains
Non-controlling interest
Finance costs
Tax expense disposed operations
6,382,587
(4,833,763)
–
40,310
–
–
(86,577)
(72,326)
(1,683,159)
–
34,930
(2,743)
–
2,529
(6,206)
–
–
–
–
(30,122)
(5,867,222)
(23,357)
2,203,374
1,997,195
–
(715,187)
(341,025)
–
–
–
550,295
(4,859,863)
2,203,374
2,040,034
(6,206)
(715,187)
(427,602)
(72,326)
(1,683,159)
(30,122)
Loss before income tax benefit
(252,928)
(1,612)
(2,746,222)
(3,000,762)
361
(3,000,401)
Income tax benefit
Loss after income tax benefit
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Geographical information
Australia
Vietnam
Cambodia
Other countries
(discontinuing operation)
Revenue and other income
Total reportable segment revenues
Other segment revenues
Discontinued operation
Total revenue and other income
N O T E 4 . R E V E N U E
96,330,444
52,459,098
–
–
213,988,865
310,319,309
FROM CONTINUING OPERATIONS
310,319,309
(19,510,839)
32,948,259
32,948,259
Sales revenue
Casino
Corporate operations
Interest
Revenue from continuing operations
SALES TO EXTERNAL CUSTOMERS
GEOGRAPHICAL NON-CURRENT ASSETS
2016
$
361
23,202,203
120,116,215
–
2015
$
1,308
17,069,618
–
1,296,742
2016
$
33,286,593
494,361,114
48,295,800
–
2015
$
3,038,226
82,183,762
–
–
143,318,779
18,367,668
575,943,508
85,221,988
CONSOLIDATED
2016
$
143,318,779
57,829,277
–
201,148,056
2015
$
17,070,926
1,609,903
1,299,271
19,980,100
CONSOLIDATED
2016
$
143,318,418
361
66,999
143,385,778
2015
$
17,069,618
1,308
2,037,505
19,108,431
CONSOLIDATED
2016
$
(12,377)
2,609,339
2015
$
(427,602)
–
* The above operating segment information included iSentric Sdn Bhd, Way2Bet Pty Ltd and Donaco Australia Pty Ltd which
were discontinued operations as at 30 June 2015.
N O T E 5 . O T H E R I N C O M E / ( E X P E N S E )
Net foreign exchange loss
Gain on derivative financial instrument at fair value through the
profit and loss
46
47
Other income/(expense)
2,596,962
427,602)
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
N O T E 6 . E X P E N S E S
N O T E 7 . I N C O M E TA X E X P E N S E / ( B E N E F I T )
CONSOLIDATED
Profit/(loss) before income tax from continuing operations includes the following specific expenses:
2016
$
Depreciation
Land, buildings and structures
Furniture and fittings
Machinery and equipment
Office equipment and other
Motor vehicles
Consumables
Amortisation
Land right
Total depreciation and amortisation
Operating lease payments
M&A costs
4,278,759
483,024
2,786,083
285,413
115,978
1,994,417
9,943,674
2,302
9,945,976
526,546
11,819,338
2015
$
1,369,625
–
1,459,734
202,989
101,022
1,721,646
4,855,016
2,104
4,857,120
376,247
–
Superannuation expense
Defined contribution superannuation expense
92,249
71,310
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)
CONSOLIDATED
2016
$
3,232,356
764,375
3,996,731
3,996,731
–
3,996,731
2015
$
–
(361)
(361)
(361)
–
(361)
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Profit/(loss) before income tax (expense)/benefit from continuing operations
Profit before income tax expense from discontinued operations
82,870,115
–
(5,202,523)
2,201,761
Tax at the statutory tax rate of 30%
82,870,115
(3,000,762)
24,861,035
(900,229)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-assessable or deductible items
Gain on bargain purchase
Other items
(16,549,595)
846,404
Adjustment recognised for prior periods
Difference in overseas tax rates
Income tax expense/(benefit)
9,157,844
764,375
(5,925,488)
3,996,731
–
472,075
(428,154)
(361)
428,154
(361)
The Aristo International Hotel recorded EBITDA growth
of 61.4%, underpinned by an impressive increase in both
gaming and non-gaming revenue, together with stringent
cost control measures.
48
49
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
N O T E 8 . D I S C O N T I N U E D O P E R AT I O N S
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
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
50
2016
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2015
$
1,148,201
148,541
2,259
1,299,271
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
Cash flow Information
Net cash from operating activities
Net cash used in investing activities
Net increase in cash and cash equivalents from discontinued operations
Carrying amounts of assets and liabilities disposed
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 income tax
Gain on disposal after income tax
CONSOLIDATED
2015
$
1,613,329
–
1,613,329
CONSOLIDATED
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
CONSOLIDATED
2015
$
12,450,000
(2,875,977)
(7,370,649)
2,203,374
2,203,374
2016
$
–
–
–
2016
$
–
–
–
–
–
–
–
–
–
2016
$
–
–
–
–
–
51
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
N O T E 9 . C U R R E N T A S S E T S – C A S H A N D C A S H E Q U I V A L E N T S
N O T E 1 3 . C U R R E N T A S S E T S – O T H E R
Cash on hand
Cash at bank
Cash on deposit
CONSOLIDATED
2016
$
26,704,465
51,508,616
7,938
78,221,019
2015
$
8,613,555
201,561,564
–
210,175,119
Bonds and security deposits
Tax receivable
Prepayments
Other receivables
CONSOLIDATED
2016
$
8,167
–
2,606,234
506,063
3,120,464
2015
$
8,167
546
11,874,493
–
11,883,206
N O T E 1 0 . C U R R E N T A S S E T S – T R A D E A N D O T H E R R E C E I V A B L E S
CONSOLIDATED
N O T E 1 4 . N O N - C U R R E N T A S S E T S – P R O P E R T Y, P L A N T A N D E Q U I P M E N T
Trade receivables
Interest receivable on bank deposits
BAS and VAT receivable
Impairment of receivables
2016
$
23,980,928
1,678
20,212
24,002,818
2015
$
1,010,426
7,485
1,047,012
2,064,923
The consolidated entity has recognised a loss of $0 (2015: $0) in profit or loss in respect of impairment of receivables for the
year ended 30 June 2016.
N O T E 1 1 . C U R R E N T A S S E T S – I N V E N T O R I E S
Food and beverage – at cost
CONSOLIDATED
2016
$
1,418,876
N O T E 1 2 . C U R R E N T A S S E T S – P R E PA I D C O N S T R U C T I O N C O S T S
Prepaid construction costs
CONSOLIDATED
2016
$
12,800
2015
$
700,866
2015
$
273,207
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.
Leasehold buildings and structures – at cost
Less: Accumulated depreciation
Furniture and fittings – at cost
Less: Accumulated depreciation
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
CONSOLIDATED
2016
$
156,603,786
9,144,218)
47,459,568
4,673,598
(3,716,907)
956,691
32,856,942
(15,619,942)
17,237,000
1,726,296
(1,105,804)
620,492
3,621,967
(2,284,589)
1,337,378
4,104,829
–
4,104,829
171,715,958
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
52
53
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
Reconciliations
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
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 2014
Additions
Disposals
Exchange
differences
Transfers in/(out)
Depreciation
expense
Balance at
30 June 2015
Acquisition of
a subsidiary
Additions
Disposals
Exchange
differences
Transfers in/(out)
Depreciation
expense
Balance at
30 June 2016
LEASE-
HOLD
BUILDINGS
FURNITURE
AND
FITTINGS
MACHINERY
AND
EQUIPMENT
MOTOR
VEHICLES
OFFICE
EQUIPMENT
AND OTHER
CONSUM-
ABLES
TOTAL
682,009
61,346,689
(8,525)
58,742
–
(1,369,625)
60,709,290
$
–
–
–
–
–
–
–
$
$
$
$
$
2,332,152
368,590
1,469,422
1,042,404
5,894,577
11,576,307
–
387,480
66,193
–
59,797
1,214,941
(205)
284,954
5,775,378
–
240,881
79,979,508
(8,730)
1,031,854
1,430,718
(1,459,734)
–
(101,022)
(1,455,002)
(202,989)
–
(1,721,646)
(24,284)
(4,855,016)
14,266,923
393,558
1,311,121
5,337,017
82,017,909
GOODWILL
LAND RIGHT
CASINO LICENCE
TOTAL
CONSOLIDATED
Balance at 1 July 2014
Disposal
Exchange differences
Amortisation expense
Balance at 30 June 2015
Additions through business
combinations
Exchange differences
Amortisation expense
$
9,796,836
(7,370,649)
–
–
2,426,187
–
–
–
Balance at 30 June 2016
2,426,187
$
33,779
–
6,715
(2,104)
38,390
–
309
(2,302)
36,397
$
–
–
–
–
–
400,543,357
–
–
$
9,830,615
(7,370,649)
6,715
(2,104)
2,464,577
400,543,357
309
(2,302)
400,543,357
403,005,941
90,768,919
1,245,292
2,662,344
354,580
46,903
–
95,078,038
Impairment testing of goodwill
1,434,892
–
(1,008,995)
246,750
–
–
3,077,746
(704)
(35,554)
–
–
(11,668)
251,858
–
12,909
391,951
–
370,278
5,403,197
(704)
(673,030)
Goodwill is monitored by the Chief Operating Decision Maker (‘CODM’) at the cash-generating unit level. CODM reviews
the business performance based on geography and type of business. It has identified one reportable cash generating unit.
A business-level summary of the goodwill allocation is presented below:
(165,779)
(4,278,759)
(52,327)
(483,024)
52,328
(2,786,083)
–
(115,978)
–
(285,413)
–
(1,994,417)
(165,778)
(9,943,674)
147,459,568
956,691
17,237,000
620,492
1,337,378
4,104,829
171,715,958
Donaco Singapore
Total goodwill
CONSOLIDATED
2016
$
2,426,187
2,426,187
2015
$
2,426,187
2,426,187
Consumables represent low value, high turnover items that are depreciated in accordance with company policy and
local legislation.
N O T E 1 5 . N O N - C U R R E N T A S S E T S – I N TA N G I B L E S
Goodwill – at cost
Land right – at cost
Less: Accumulated amortisation
Casino licence (note 41)
CONSOLIDATED
2016
$
2015
$
2,426,187
2,426,187
70,047
(33,650)
36,397
400,543,357
403,005,941
69,474
(31,084)
38,390
–
2,464,577
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.
The recoverable amount of the cash-generating unit of
Donaco Singapore is $37,902,109. No impairment has been
recognised for the year ended 30 June 2016 (2015: nil).
54
55
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
Land right
Casino licence
N O T E 1 7 . N O N - C U R R E N T A S S E T S – O T H E R
Intangible asset of $36,397 (2015: $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.
The casino licence relates to the licence to operate the
DNA Star Vegas casino acquired on 1 July 2015 (see note
41). The licence is stated at cost less any impairment losses.
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.
Other debtors
CONSOLIDATED
2016
$
78,451
2015
$
533,765
N O T E 1 8 . C U R R E N T L I A B I L I T I E S – T R A D E A N D O T H E R PAYA B L E S
N O T E 1 6 . N O N - C U R R E N T A S S E T S – C O N S T R U C T I O N I N P R O G R E S S
Property construction works in progress
Reconciliations
CONSOLIDATED
2016
$
1,143,158
2015
$
205,737
Trade payables
Deposits received
Floating chips
Interest payable
Other payables and accrued expenses
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
CONSOLIDATED
2016
$
5,046,135
111,510
13,652,683
93,071
28,851,548
47,754,947
2015
$
3,170,019
115,098
12,326,032
141,494
263,416
16,016,059
CONSOLIDATED
Balance at 1 July 2014
Additions
Exchange differences
Transfer in/(out)
Balance at 30 June 2015
Additions
Exchange differences
Transfers out
Balance at 30 June 2016
CONSTRUCTION
WIP
TOTAL
$
39,151,630
26,073,612
8,869,600
(73,889,105)
205,737
1,539,648
7,031
(609,258)
1,143,158
$
39,151,630
26,073,612
8,869,600
(73,889,105)
205,737
1,539,648
7,031
(609,258)
1,143,158
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.
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.
N O T E 1 9 . C U R R E N T L I A B I L I T I E S – B O R R O W I N G S
Joint Stock Commercial Ocean Bank
Joint Stock Commercial Bank for Foreign Trade of Vietnam
Mega International Commercial Bank Co Ltd
Refer to note 29 for further information on financial instruments.
CONSOLIDATED
2016
$
2,942,907
–
37,164,227
40,107,134
2015
$
2,916,691
46,021
–
2,962,712
56
57
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
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
Mega International Commercial Bank Co Ltd
CONSOLIDATED
2016
$
2,942,907
–
37,164,227
40,107,134
2015
$
2,916,691
46,021
–
2,962,712
Assets pledged as security
The loan from Mega International Commercial Bank Co Ltd
was drawn down on 1 July 2015 and the proceeds paid to
v. A security assignment of contractual rights held by the
parent entity under the purchase agreement for DNA
Star Vegas;
the vendor as part of the consideration for the acquisition
vi. A security agreement over the assets of DNA Star
of DNA Star Vegas.
Vegas; and
The loan from Mega International Commercial Bank Co Ltd
vii. A hypothec agreement over the land and buildings
is secured by the following:
of DNA Star Vegas.
i. A parent company guarantee from the parent entity for
Mortgage to Joint Stock Commercial Ocean Bank
the debt owed by Donaco Hong Kong Limited;
ii. A pledge of the shares in Donaco Hong Kong Limited
owned by the parent entity;
iii. A pledge of the shares in DNA Star Vegas Co Ltd owned
by Donaco Hong Kong Limited;
iv. A pledge of the debt service reserve account
maintained by Donaco Hong Kong Limited;
The loans from Ocean Bank of Vietnam are secured by first
mortgages over the land and buildings in Vietnam, more
specifically the Aristo International Hotel operation.
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 2016 under this arrangement were
$13,243,080 (2015: $16,041,797).
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit (current and non-current):
Total facilities
Bank loans
Used at the reporting date
Bank loans
Unused at the reporting date
Bank loans
CONSOLIDATED
2016
$
2015
$
151,801,133
21,808,808
151,801,133
16,179,805
–
5,629,003
N O T E 2 0 . C U R R E N T L I A B I L I T I E S – F I N A N C I A L L I A B I L I T I E S
Derivative financial liability at fair value through profit and loss
Warrants
CONSOLIDATED
2016
$
1,794,520
2015
$
–
As a requirement of the terms of the Group’s facility provided
by OL Master Limited, the Company as guarantor has issued
70 warrants to subscribe for its ordinary shares. Each warrant
has a notional value of USD100,000. The warrants have a term
of 39 months and expire on 6 October 2018. The exercise
price is AUD0.7579 and the maximum number of ordinary
shares which may be issued is 12,334,408, and the Company
may elect to settle the difference between the share price
and exercise price in cash.
The warrants associated with this transaction are classified
as a derivative financial liability. On initial recognition the
warrants issued are measured at fair value. At each reporting
date the derivative financial liability is re-valued to fair value
with the movement in the fair value recorded in profit or loss.
For the warrants granted during the current financial year,
fair value at grant date was $4,403,859 (2015: not applicable)
and the valuation model inputs used to determine the fair
value at the grant date, are as follows:
GRANT
DATE
EXPIRY
DATE
SHARE
PRICE AT
REPORTING
DATE
EXERCISE
PRICE
EXPECTED
VOLATILITY
DIVIDEND
YIELD
FAIR VALUE
RISK-FREE
INTEREST
RATE
07/07/2015
06/10/2018
$0.415
$0.76
90.80%
–
1.90%
$1,794,520
The remaining contractual life at 30 June 2016 is 2.27 years (2015: not applicable). The warrants are classified as current
liabilities as they can be exercised at any time.
N O T E 2 1 . C U R R E N T L I A B I L I T I E S – I N C O M E TA X
Provision for income tax
CONSOLIDATED
2016
$
1,560,149
2015
$
427,505
N O T E 2 2 . C U R R E N T L I A B I L I T I E S – E M P L O Y E E B E N E F I T S
Annual leave
Long service leave
Accrued salaries, wages and other benefits
CONSOLIDATED
2016
$
39,775
–
442,322
482,097
2015
$
52,240
18,986
244,653
315,879
58
59
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
N O T E 2 3 . N O N - C U R R E N T L I A B I L I T I E S – B O R R O W I N G S
Joint Stock Commercial Ocean Bank
Joint Stock Commercial Bank for Foreign Trade of Vietnam
OL Master Ltd
Mega International Commercial Bank Co Ltd
Refer to note 29 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Joint Stock Commercial Ocean Bank
Joint Stock Commercial Bank for Foreign Trade of Vietnam
OL Master Ltd
Mega International Commercial Bank Co Ltd
CONSOLIDATED
2016
$
10,300,174
–
22,519,671
78,874,154
111,693,999
2015
$
13,125,107
91,986
–
–
13,217,093
CONSOLIDATED
2016
$
13,243,081
–
22,519,671
116,038,381
151,801,133
2015
$
16,041,798
138,007
–
–
16,179,805
Assets pledged as security
vii. A hypothec agreement over the land and buildings
The loan from Mega International Commercial Bank Co Ltd
was drawn down on 1 July 2015 and the proceeds paid to
the vendor as part of the consideration for the acquisition
of DNA Star Vegas.
The loan from Mega International Commercial Bank Co Ltd
is secured by the following:
i. A parent company guarantee from the parent entity for
the debt owed by Donaco Hong Kong Limited;
ii. A pledge of the shares in Donaco Hong Kong Limited
owned by the parent entity;
iii. A pledge of the shares in DNA Star Vegas Co Ltd owned
by Donaco Hong Kong Limited;
of DNA Star Vegas.
A term loan facility from OL Master Limited was drawn
down on 7 July 2015 to provide working capital for the
consolidated entity. As a requirement of the terms of
the consolidated entity’s facility provided by OL Master
Limited, the Company as guarantor has issued 70 warrants
to subscribe for its ordinary shares. Each warrant has a
notional value of USD100,000. The warrants have a term
of 39 months and expire on 6 October 2018. The exercise
price is AUD0.7579 and the maximum number of ordinary
shares which may be issued is 12,339,408. The Company
may elect to settle the difference between the share price
and exercise price in cash.
iv. A pledge of the debt service reserve account
maintained by Donaco Hong Kong Limited;
Mortgage to Joint Stock Commercial Bank for Foreign
Trade of Vietnam
v. A security assignment of contractual rights held by the
parent entity under the purchase agreement for DNA
Star Vegas;
The loans from Ocean Bank of Vietnam are secured by first
mortgages over the land and buildings in Vietnam, more
specifically the Aristo International Hotel operation.
vi. A security agreement over the assets of DNA Star
Vegas; and
60
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, for use towards
construction of the new Lao Cai International Hotel.
A second agreement was signed on 25 December 2013 for
a lending facility for an additional VND180 billion. The term
of the loan is seven years payable by 2 October 2020.
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 for
the purchase of capital equipment. The term is three years
at 10.5% pa.
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 2016 under this arrangement were $0 (2015: $138,007).
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 2016 under this arrangement were
$13,243,081 (2015: $16,041,798).
N O T E 2 4 . N O N - C U R R E N T L I A B I L I T I E S – E M P L O Y E E B E N E F I T S
Long service leave
CONSOLIDATED
2016
$
16,212
16,212
2015
$
9,011
9,011
N O T E 2 5 . E Q U I T Y – I S S U E D C A P I TA L
2016
CONSOLIDATED
2015
2016
SHARES
SHARES
$
2015
$
Ordinary shares – fully paid
831,211,424
683,250,290
360,968,368
246,719,609
DETAILS
DATE
SHARES
ISSUE PRICE
$
Balance
Issued shares
DNAO option conversion
DNAO option conversion
Less: transaction costs arising on share issue
Return of capital on iSentric sale
Balance
Issued shares – consideration for DNA Star Vegas Co Ltd
Employee short-term incentive*
Less: transaction costs arising on share issue
Transfer from share-based payments reserve for 2014
share-based payments.*
1 July 2014
multiple
multiple
multiple
multiple
460,282,631
219,347,363
898,929
2,721,367
–
–
30 June 2015
1 July 2015
1 October 2015
multiple
–
683,250,290
147,199,529
487,793
–
273,812
–
$0.600
$0.300
$0.280
–
–
–
$0.775
$0.700
–
–
129,964,909
131,486,827
1,028,511
–
(7,260,638)
(8,500,000)
246,719,609
114,079,635
341,455
(443,131)
270,800
Balance at 30 June 2016
831,211,424
360,968,368
* These amounts relate to shares issued under the short-term incentive (‘STI’) program as discussed in the directors’ report.
61
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
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.
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.
N O T E 2 6 . E Q U I T Y – R E S E R V E S
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. The financing arrangements
contain certain covenants relating to interest cover (the
ratio of consolidated EBITDA to consolidated finance
charges), and debt ratio (the ratio of consolidated net debt
to EBITDA), which apply to Donaco Hong Kong Limited. In
addition, covenants relating to the debt equity ratio (the ratio
of consolidated total debt to consolidated total equity), and
minimum cash holdings, apply to the consolidated entity.
There have been no events of default on the financing
arrangements during the financial year.
The capital risk management policy remains unchanged
from the 2015 financial statements.
Revaluation surplus reserve
Foreign currency reserve
Employee share option reserve
CONSOLIDATED
Balance at 1 July 2014
Revaluation – gross
Foreign currency translation
Employee share option expense
Transfer to retained earnings
Balance at 30 June 2015
Foreign currency translation
Employee share option expense
Transfer to share capital*
Balance at 30 June 2016
CONSOLIDATED
2016
$
1,855,327
19,697,748
3,021,680
24,574,755
2015
$
1,855,327
11,934,445
1,967,750
15,757,522
REVALUATION
SURPLUS
RESERVE
EMPLOYEE
SHARE OPTION
RESERVE
FOREIGN
CURRENCY
TOTAL
$
–
2,978,285
–
–
(1,122,958)
1,855,327
–
–
–
1,855,327
$
–
–
–
1,967,750
–
1,967,750
–
1,324,730
(270,800)
3,021,680
$
(478,093)
–
12,412,538
–
–
11,934,445
7,763,303
–
–
19,697,748
$
(478,093)
2,978,285
12,412,538
1,967,750
(1,122,958)
15,757,522
7,763,303
1,324,730
(270,800)
24,574,755
Nature and purpose of equity reserves
Revaluation surplus
The revaluation surplus reserve is used to record
increments and decrements in the fair value of net assets
of disposed entities.
Employee share option
The employee share option reserve is used to recognise:
• the grant date fair value of options issued to key
management personnel but not exercised; and
• the issue of options held by the Employee Share Option
Trust to key management personnel.
Foreign currency
Exchange differences arising on translation of the foreign
controlled entity are recognised in other comprehensive
income as described in note 1 and accumulated in a
separate reserve within equity. The cumulative amount
is reclassified to profit or loss when the net investment
is disposed of.
N O T E 2 7 . E Q U I T Y – R E TA I N E D P R O F I T S
Retained profits at the beginning of the financial year
Profit/(loss) after income tax expense/(benefit) for the year
Transfer to revaluation surplus reserve*
Transfer from other reserves**
Retained profits at the end of the financial year
CONSOLIDATED
2016
$
13,907,457
78,723,501
–
–
92,630,958
2015
$
18,690,859
(2,928,075)
(2,978,285)
1,122,958
13,907,457
* Relates to the disposal of iSentric.
** Fair value adjustment on the acquisition of non-controlling interest from 24 July 2013.
N O T E 2 8 . E Q U I T Y – D I V I D E N D S
There were no dividends to shareholders paid, recommended
or declared during the current or previous financial year.
However, subsequent to the end of the financial year, the
Board has announced that it intends to declare a dividend
of one cent per share. The dividend is 100% conduit foreign
income and is unfranked. Proposed dates for the dividend
payment are: ex-dividend date 4 October 2016, record date
5 October 2016 and payment date 19 October 2016.
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.
Franking credit balance
The dividend recommended after 30 June 2016 is fully unfranked due to insufficient franking credits as at the end of the
reporting period.
Franking credits available for subsequent reporting periods after payment
of tax liability based on a tax rate of 30% (2015: 30%)
CONSOLIDATED
2016
$
501,543
2015
$
–
* The transfer to share capital related to shares issued to key management personnel subject to the short-term incentive plan.
62
63
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
N O T E 2 9 . F I N A N C I A L I N S T R U M E N T S
Market risk
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.
Risk management is carried out by senior finance executives
(‘finance’) under policies approved by the Board of
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 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.
The average exchange rates and reporting date exchange rates applied were as follows:
AUSTRALIAN DOLLARS
USD
VND
CNY
MYR
SGD
HKD
THB
AVERAGE EXCHANGE RATE
REPORTING DATE EXCHANGE RATE
2016
1.3730
0.0001
0.2132
0.3322
0.9881
0.1770
0.0387
2015
1.2066
0.0001
0.1951
0.3485
0.9200
0.1556
NA
2016
1.3466
0.0001
0.2027
0.3344
0.9973
0.1736
0.0382
2015
1.3021
0.0001
0.2098
0.3443
0.9671
0.1680
NA
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
THB
64
ASSETS
LIABILITIES
2016
12,533,288
1,599,488
8,806
37,714
419
24,772
17,144,269
31,348,756
2015
178,267,338
26,998,893
8,515,466
27,636
47,643
94,811
–
213,951,787
2016
(45,600,442)
(1,415,252)
(9,538,865)
–
–
(41,271)
–
(56,595,830)
2015
(6,013,131)
(13,970,745)
(12,326,033)
(1,104)
(11,067)
–
–
(32,322,080)
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 – 2016
USD
VND
CNY
MYR
SGD
HKD
THB
CONSOLIDATED – 2015
USD
VND
CNY
MYR
SGD
HKD
AUD STRENGTHENED
% CHANGE
EFFECT ON
PROFIT AFTER TAX
5%
5%
5%
5%
5%
5%
5%
(1,653,358)
9,212
(476,503)
1,886
21
(825)
857,213
(1,262,354)
AUD STRENGTHENED
% CHANGE
EFFECT ON
PROFIT AFTER TAX
5%
5%
5%
5%
5%
5%
(8,612,710)
(651,407)
190,528
(1,327)
(1,829)
(4,740)
(9,081,485)
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 exposure to the risk of changes in market interest rates relates primarily to the consolidated entity’s
bank loans and debt obligations and its cash and cash equivalents. The consolidated entity manages its interest rate risk by
using a combination of variable and fixed rate borrowings.
As at the reporting date, the consolidated entity had the following cash and cash equivalents:
2016
BALANCE
WEIGHTED
AVERAGE
INTEREST RATE
2015
BALANCE
WEIGHTED
AVERAGE
INTEREST RATE
%
8.12%
0.05%
0.00%
$
(151,801,133)
78,213,081
7,938
(73,580,114)
%
11.00%
0.19%
0.70%
$
(16,179,805)
210,167,449
7,669
193,995,313
CONSOLIDATED
Bank loans
Cash on hand and cash at bank
Fixed deposits
Net exposure to cash flow interest
rate risk
65
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
An analysis by remaining contractual maturities is shown
in ‘liquidity and interest rate 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
2016
$
–
2015
$
5,629,003
Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time and have
an average maturity of four years (2015: five 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.
WEIGHTED
AVERAGE
INTEREST
RATE
1 YEAR OR
LESS
BETWEEN
1 AND 2
YEARS
BETWEEN
2 AND 5
YEARS
OVER 5
YEARS
TOTAL
CONTRACTUAL
MATURITIES
CONSOLIDATED – 2016
%
$
$
–
–
$
–
–
–
–
5,046,135
13,652,683
Non-derivatives
Non-interest bearing
Trade payables
Floating chips
Interest-bearing – fixed
Bank loans
9.64
2,942,907
5,885,813
26,934,032
Non-interest bearing – variable
Bank loans
7.65
37,164,227
38,484,710
40,389,444
Total non-derivatives
58,805,952
44,370,523
67,323,476
$
–
–
–
–
–
$
5,046,135
13,652,683
35,762,752
116,038,381
170,499,951
CONSOLIDATED – 2015
%
$
WEIGHTED
AVERAGE
INTEREST
RATE
1 YEAR OR
LESS
BETWEEN
1 AND 2
YEARS
BETWEEN
2 AND 5
YEARS
OVER 5
YEARS
TOTAL
CONTRACTUAL
MATURITIES
$
–
–
$
–
–
$
–
–
$
3,170,019
12,326,032
–
–
3,170,019
12,326,032
11.00
2,962,712
2,962,712
8,796,036
1,458,345
16,179,805
Non-derivatives
Non-interest bearing
Trade payables
Floating chips
Interest-bearing – fixed
Bank loans
Total non-derivatives
18,458,763
2,962,712
8,796,036
1,458,345
31,675,856
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.
66
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
N O T E 3 0 . K E Y M A N A G E M E N T P E R S O N N E L D I S C L O S U R E S
N O T E 3 1 . R E M U N E R AT I O N O F A U D I T O R S
Directors
Other key management personnel
The following persons were directors of Donaco
International Limited during the financial year:
Stuart James McGregor
Joey Lim Keong Yew
Benedict Paul Reichel
Non-Executive Director
and Chairman
Managing Director and
Chief Executive Officer
Executive Director and
Company Secretary
Benjamin Lim Keong Hoe
Non-Executive Director
Robert Andrew Hines
Non-Executive Director
Ham Techatut Sukjaroenkraisri
Paul Porntat Amatavivadhana
Executive Director
(appointed 1 July 2015)
Non-Executive Director
(appointed 1 July 2015)
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
Chong Kwong Yang
Att Asavanund
Deputy Group CEO
(resigned 31 March 2016)
Deputy Chief Financial
Officer and CEO of Donaco
Singapore
Chief Financial Officer
(appointed 1 July 2015)
Chief Operating Officer
(appointed 1 December 2015)
and Deputy Chief Executive
Officer (appointed 1 May 2016)
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:
CONSOLIDATED
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
Other services
N O T E 3 2 . C O M M I T M E N T S
2016
$
91,570
10,000
101,570
198,409
7,509
–
343,892
351,401
549,810
2015
$
92,391
18,000
110,391
42,764
7,850
26,571
–
34,421
77,185
CONSOLIDATED
2016
$
2015
$
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property construction works
1,291,389
2,427,717
Lease commitments – operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
304,374
817,283
7,709,285
8,830,942
195,127
63,240
63,241
321,608
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.
Star Paradise gaming floor.
68
69
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
N O T E 3 3 . R E L AT E D PA R T Y T R A N S A C T I O N S
Parent entity
N O T E 3 4 . PA R E N T E N T I T Y I N F O R M AT I O N
Set out below is the supplementary information about the parent entity.
Donaco International Limited is the legal parent entity. Donaco International Limited is listed on the Australian Securities
Exchange (ASX: DNA).
Subsidiaries
Interests in subsidiaries are set out in note 35.
Key management personnel
Disclosures relating to key management personnel are set out in note 30 and the remuneration report included in the
directors’ report.
Transactions with related parties
The following transactions occurred with related parties:
CONSOLIDATED
2016
$
10,915,776
16,159
116,100
1,030,727
2015
$
–
–
–
–
Labour hire fee to Star Vegas Co, Ltd – a director related entity
Leasing fees paid to Lee Hoe Property Co, Ltd – a director related entity
Rental received from director’s immediate family
Purchase of fixed assets by DNA Star Vegas from Star Vegas Co, Ltd –
a director related entity
The above transactions occurred at commercial rates.
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current receivables:
Amount owing to Donaco Singapore Pte Ltd by associated entity
CONSOLIDATED
2016
$
–
2015
$
511,356
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.
Statement of profit or loss and other comprehensive income
PARENT
Loss after income tax
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
2016
$
(16,796,945)
(16,796,945)
2015
$
(1,554,401)
(1,554,401)
PARENT
2016
$
2015
$
35,588,600
22,306,130
372,146,330
248,179,260
29,089,505
29,105,717
408,931,972
3,021,680
(68,913,039)
260,981
269,992
298,057,612
1,967,750
(52,116,094)
343,040,613
247,909,268
Guarantees entered into by the parent entity in relation
to the debts of its subsidiaries
As at 30 June 2016, the parent entity acts as a guarantor for
the facility provided by Mega International Commercial Bank
Co Ltd to a controlled entity, Donaco Hong Kong Limited.
As at 30 June 2016, the parent entity acts as guarantor for
the facility provided by OL Master Ltd to a controlled entity,
Prime Standard Limited. As a requirement of the terms
of the facility the parent entity has issued 70 warrants to
subscribe for its ordinary shares. Each warrant has a notional
value of USD100,000. The warrants have a term of 39
months and expire on 6 October 2018. The exercise price
is AUD0.7579 cents and the maximum number of ordinary
shares which may be issued is 12,339,408, and the Company
may elect to settle the difference between the share price
and exercise price in cash.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June
2016 and 30 June 2015.
Capital commitments – property, plant and equipment
The parent entity had no capital commitments for property,
plant and equipment at as 30 June 2016 and 30 June 2015.
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:
•
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.
70
71
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
N O T E 3 5 . I N T E R E S T S I N S U B S I D I A R I E S
Summarised financial information
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries
in accordance with the accounting policy described in note 1:
Summarised financial information of the subsidiary with non-controlling interests that are material to the consolidated entity
are set out below:
OWNERSHIP INTEREST
Lao Cai International Hotel Joint Venture Company
NAME
PRINCIPAL PLACE OF
BUSINESS/COUNTRY
OF INCORPORATION
Donaco Australia Pty Ltd
Donaco Singapore Pte Ltd
Donaco Holdings Ltd*
Donaco Holdings Sdn Bhd*
Lao Cai International Hotel Joint Venture Company*
Donaco Hong Kong Limited
Prime Standard Limited
Donaco Holdings (Hong Kong) Pte Ltd*
DNA Star Vegas Co Limited**
Australia
Singapore
British Virgin Islands
Malaysia
Vietnam
Hong Kong
Hong Kong
Hong Kong
Cambodia
2016
%
100%
100%
100%
100%
95%
100%
100%
100%
100%
2015
%
100%
100%
100%
100%
95%
100%
100%
100%
0%
* Subsidiary of Donaco Singapore Pte Ltd
** Subsidiary of Donaco Hong Kong Limited.
The principal activities of each subsidiary are:
Donaco Australia Pty Ltd
Donaco Singapore Pte Ltd
Donaco Holdings Ltd
Donaco Holdings Sdn Bhd
Dormant (previously operated New Zealand games service,
discontinued in January 2015).
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
Prime Standard Limited
DNA Star Vegas Co Limited
Holding company for Cambodian casino operations.
Cost centre for corporate operations.
Operates Cambodian casino operations.
The strength of our balance sheet provides us with flexibility
to pursue growth or additional capital management
initiatives over the course of the year.
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
Net decrease in cash and cash equivalents
Other financial information
Profit/(loss) attributable to non-controlling interests
Accumulated non-controlling interests at the end of reporting period
2016
$
14,098,132
58,391,246
72,489,378
20,060,871
17,514,202
37,575,073
34,914,305
22,659,016
(18,690,367)
3,968,649
(296,582)
3,672,067
–
3,672,067
8,794,600
(685,635)
(2,483,479)
5,625,486
149,883
1,136,345
2015
$
14,146,682
82,183,762
96,330,444
29,605,474
22,853,623
52,459,097
43,871,347
17,109,928
(18,556,453)
(1,446,525)
–
(1,446,525)
–
(1,446,525)
(1,007,639)
(8,248,552)
7,026,938
(2,229,253)
(72,326)
986,462
72
73
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
N O T E 3 6 . E V E N T S A F T E R T H E R E P O R T I N G P E R I O D
Dividend
On 30 August 2016, the Board of Donaco International Limited
announced that it intended to declare a maiden dividend
of one cent per share. The dividend is 100% conduit foreign
income and is unfranked. Proposed dates for the dividend
payment are: ex-dividend date 4 October 2016, record date
5 October 2016 and payment date 19 October 2016.
Long-term incentive scheme
The consolidated entity has resolved to introduce a new
long term incentive (LTI) scheme for its senior executives,
to replace the previous options scheme that expired at the
end of FY16.
As announced in the ASX release on 1 October 2015, the
Board has been considering new LTI schemes, and has
actively sought to align senior executive remuneration with
shareholder interests. Under the new scheme, shares will be
purchased on market and held in an employee share trust
(‘the Trust’). The shares will vest to the employees according
to their level of performance, over the vesting period of
three years.
The aim of the scheme is to ensure that executives are
motivated to think like shareholders, with a focus on taking
actions that will lead to sustainable increases in share price.
The structure of the scheme also ensures that there is no
dilution of shareholders.
The total annual dollar value of shares to be purchased will
be maximum of AUD1,000,000. The number of shares to be
purchased each year will depend on the share price at the
time that purchases take place.
The scheme will be executed in a similar manner to an on-
market buy-back, allowing the Trust to stand in the market and
purchase shares at appropriate times. However, the shares will
not be cancelled, but will be held in the Trust, to be
distributed to employees over the vesting period of three years.
The Trust intends to commence the on-market purchase
of shares pursuant to the terms of the new LTI scheme from
30 August 2016 onwards.
Loan
The Company has refinanced its USD20 million working
capital facility that was announced to the ASX on 23 June
2015 and 1 July 2015. Of the original USD100 million term
loan facility with Mega International Commercial Bank Co
Limited of Taiwan, the Company has now repaid USD10
million of the principal amount in January 2016, and a
further USD15 million in July 2016, leaving USD75 million
to be repaid.
Donaco International Limited refinanced USD10 million of
its working capital facility provided by OL Master Limited
and has facilities in place to refinance a further USD10
million within the next 12 months. The refinancing will
further reduce financing costs by approximately USD3.8
million over the next two financial years (FY17 and FY18),
compared to the cost of repaying the facility in accordance
with its original terms.
Share options
On 1 July 2016 the Company announced the expiration
of 1,365,959 options in accordance to their terms. The
options were part of the FY14 option series. Currently, there
are 7,296,692 remaining options on issue.
No other matter or circumstance has arisen since 30 June
2016 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.
N O T E 3 7 . R E C O N C I L I AT I O N O F P R O F I T / ( L O S S ) A F T E R I N C O M E TA X
T O N E T C A S H F R O M O P E R AT I N G A C T I V I T I E S
Profit/(loss) after income tax (expense)/benefit for the year
78,873,384
(3,000,401)
CONSOLIDATED
2016
$
2015
$
Adjustments for:
Depreciation and amortisation
Net loss/(gain) on disposal of non-current assets
Gain on bargain purchase
Share-based payments
Foreign exchange movements
Expenses related to acquisition
Gain on revaluation of derivative financial liability
Change in operating assets and liabilities:
(Increase) in trade and other receivables
(Increase)/decrease in inventories
Decrease in other operating assets
Increase in trade and other payables
Increase/(decrease) in provision for income tax
Increase in provisions for employee benefits
(Decrease) in other provisions
Net cash from operating activities
N O T E 3 8 . E A R N I N G S P E R S H A R E
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
9,945,976
167,630
(55,165,316)
1,666,185
(2,023,567)
11,819,338
(2,609,339)
(21,943,702)
(718,010)
(1,949,631)
29,288,527
1,132,643
173,419
–
48,657,537
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)
8,502,462
CONSOLIDATED
2016
$
78,873,384
(149,883)
78,723,501
2015
$
(5,202,162)
72,326
(5,129,836)
NUMBERS
NUMBERS
831,087,477
542,208,524
376,433
23,047,578
74
75
Weighted average number of ordinary shares used in calculating diluted
earnings per share
831,463,910
565,256,102
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
Basic earnings per share
Diluted earnings per share
Earnings per share for profit from discontinued operations
Profit 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
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
CENTS
9.47
9.47
CENTS
(0.95)
(0.91)
CONSOLIDATED
2016
$
–
2015
$
2,201,761
831,087,477
542,208,524
376,433
23,047,578
831,463,910
565,256,102
CENTS
–
_
CENTS
0.41
0.39
CONSOLIDATED
2016
$
78,873,384
(149,883)
78,723,501
2015
$
(3,000,401)
72,326
(2,928,075)
NUMBERS
NUMBERS
831,087,477
542,208,524
376,433
23,047,578
831,463,910
565,256,102
An additional 8,286,218 options over ordinary shares and 12,339,408 shares subject to warrants are anti dilutive and have been
excluded from the above calculations as the exercise price of these warrants exceeds the average market share price during the year.
Basic earnings per share
Diluted earnings per share
76
CENTS
9.47
9.47
CENTS
(0.54)
(0.52)
N O T E 3 9 . S H A R E - B A S E D PAY M E N T S
Employee Option Allocation FY15
Employee options
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.
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
until 1 July 2015.
Employee Option Allocation FY16
Pursuant to the approval granted by shareholders at
the FY13 Annual General Meeting, further options were
contributed to the OST for FY16. These options were
contributed to the OST and employees were allocated
additional units on 25 August 2015.
Set out below are summaries of options granted during
FY15 and FY16 under the plan:
GRANT
DATE
EXPIRY
DATE
EXERCISE
PRICE
01/07/2014
01/07/2014
01/07/2014
01/07/2015
01/07/2015
01/07/2015
25/08/2015
25/08/2015
25/08/2015
01/07/2016
01/07/2017
01/07/2018
01/07/2017
01/07/2018
01/07/2019
01/07/2018
01/07/2019
01/07/2020
$0.59
$0.59
$0.59
$0.89
$0.89
$0.89
$0.77
$0.77
$0.77
BALANCE
AT START
OF THE
YEAR
1,365,960
1,294,836
1,249,716
–
–
–
–
–
–
–
–
–
457,047
395,208
349,376
1,385,700
1,156,784
1,008,025
3,910,512
4,752,140
GRANTED
EXERCISED
EXPIRED/
FORFEITED/
OTHER
BALANCE
AT THE END
OF THE
YEAR
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,365,960
1,294,836
1,249,716
457,047
395,208
349,376
1,385,700
1,156,784
1,008,025
8,662,652
Set out below are the options exercisable at the end of the financial year:
GRANT DATE
EXPIRY DATE
EXERCISE PRICE
2016 NUMBER
2015 NUMBER
01/07/2014
01/07/2014
01/07/2015
01/07/2016
01/07/2017
01/07/2017
$0.59
$0.59
$0.89
–
1,294,836
457,047
1,751,883
1,365,960
–
–
1,365,960
The weighted average share price during the financial year was $0.65 (2015: $0.78).
The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.89 years
(2015: 1.97 years).
The weighted average exercise price for all outstanding options is $0.71 (2015: $0.59).
77
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
NOTES TO FINA NCI AL STAT EMENTS
FOR THE YE AR EN DED 30 JUN E 2016
N O T E 4 1 . B U S I N E S S C O M B I N AT I O N S
On 1 July 2015, the Group acquired Star Vegas resort and
club as it is complementary to the leisure and entertainment
activities of the Group, offers geographic and market
diversification and significantly increases the revenue and
earnings of the Group.
Control was acquired by the Group acquiring 100% of
the issued capital of DNA Star Vegas Co Ltd, which is
the owner of all the assets of the Star Vegas business, for
agreed consideration of USD360 million (AUD471,841,466).
This consideration consisted of USD240 million cash
(AUD316,451,000), and AUD147,199,529 ordinary shares
in the Company, with an agreed value of USD120
million (AUD154,999,579) and the Company credited
AUD154,999,579 to share capital, net of transaction costs.
The Company’s stock closing price on 1 July 2015 was
AUD0.775 (equivalent to approximately USD0.59698) and
the fair value of the shares issued as consideration on the
Completion Date was USD87,396,776 (AUD114,079,635).
As a result of this variance between the fair value of the
shares issued and the agreed price, AUD41,363,075 was
debited to contributed equity to ensure the value of
contributed equity was not recorded at an amount higher
than its fair value. A further adjustment was made for
movements in foreign exchange rates between the date
of the agreement and the date the transaction occurred.
The values of net assets acquired recognised in the
31 December 2015 financial statements were based
on a provisional assessment of their fair value. Pursuant
to a detailed valuation report and purchase price
allocation report dated 20 June 2016 prepared by Colliers
International Hong Kong Limited and its related parties
Colliers International Thailand and Singapore, the fair value
of the business acquired by DNA was USD368.1 million
(AUD495,621,397). The difference between the fair value
of the business acquired and fair value of the purchase
consideration of USD327.9 million (AUD440,456,080) gives
rise to a bargain purchase amounting to USD40.2 million
(AUD55,165,316). The bargain purchase of AUD55,165,316
is recognised as a gain in the Company’s income statement
in accordance with AASB 3 Business Combinations.
Donation to the Palilay temple.
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
SHARE
PRICE AT
VALUATION
DATE
01/07/2015
01/07/2015
01/07/2015
25/08/2015
25/08/2015
25/08/2015
01/07/2017
01/07/2018
01/07/2019
01/07/2018
01/07/2019
01/07/2020
$0.775
$0.775
$0.775
$0.705
$0.705
$0.705
EXERCISE
PRICE
EXPECTED
VOLATILITY
DIVIDEND
YIELD
RISK-FREE
INTEREST
RATE
FAIR VALUE
AT GRANT
DATE
$0.89
$0.89
$0.89
$0.77
$0.77
$0.77
71.48%
71.48%
71.48%
42.21%
42.21%
42.21%
–
–
–
–
–
–
2.52%
2.52%
2.52%
2.52%
2.52%
2.52%
$0.3777
$0.4368
$0.4941
$0.1516
$0.1816
$0.2084
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit
expense were as follows:
Options issued under employee option plan
Shares issued under employee share scheme
2016
$
1,196,242
469,943
1,666,185
2015
$
1,825,438
142,312
1,967,750
N O T E 4 0 . C O N T I N G E N T L I A B I L I T I E S
As part of the agreement for the purchase of the Star Vegas
resort and club, the vendor of the business will manage
the business for two full years following completion on
1 July 2015. The vendor also provided a guarantee that the
earnings before interest, tax depreciation and amortisation
(‘EBITDA’) of the business would be not less than USD60
million per year for the two full years following the
acquisition, being 2016 and 2017 financial years.
If the target EBITDA of USD60 million is not met, the vendor
will top up the shortfall in cash. However, if the target is
met, the vendor will receive a management fee in return
for the management services provided, in the sum of 25%
of the net profit after tax (‘NPAT’) of the business. No other
management fee is payable for the management services.
a Supplemental Share Sale Agreement dated 22 May 2015,
and an Amending and Restating Deed dated 18 June 2015.
At 31 December 2015 the possible obligation to pay a
management fee in respect of the December 2015 half year
was disclosed as a contingent liability as a reliable estimate
of the amount payable could not be made. A contingent
liability is: “a possible obligation that arises from past
events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the entity.”
At 30 June 2016, the earnings met the EBITDA target and
a management fee was payable by the consolidated entity.
A management fee of $20,492,174 has been recognised
in the statement of comprehensive income and as a liability
by the consolidated entity at 30 June.
These arrangements are set out in a Share Sale Agreement
and Management Agreement dated 23 January 2015,
The consolidated entity has no contingent liabilities
at 30 June 2016.
78
79
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT NOTE S TO FINA NCIAL STATEM E NTS
FOR T HE YEAR ENDED 30 JUN E 2 0 16
DIREC TORS’ DECLARAT ION
FOR THE YE AR EN DED 30 JUNE 2016
Details of the acquisition and the values of assets acquired are as follows:
PROVISIONAL VALUE
FAIR VALUE
DIFFERENCE
Equity
Casino licence – at fair value
Buildings
Plant and equipment
Motor vehicles
Slot machines
Furniture and fittings
Cash
Trade and other payables
Net assets acquired
Gain on bargain purchase
Acquisition-date fair value of the total
consideration transferred
Representing:
Cash paid or payable to vendor
Donaco International Limited shares issued to
vendor at agreed price
Share issue transaction costs
Adjustment to value of Donaco International
Limited shares issued to vendor
Effect of exchange rate movements
$
–
425,763,454
39,455,068
1,447,911
354,580
3,575,160
1,245,293
4,245,871
(4,245,871)
471,841,466
–
471,841,466
316,398,756
155,442,710
–
–
–
$
–
400,543,357
90,768,920
1,447,911
354,580
1,261,336
1,245,293
4,245,871
(4,245,871)
495,621,397
(55,165,316)
440,456,080
316,451,000
155,442,710
(443,131)
(41,363,075)
$
–
(25,220,097)
51,313,852
–
–
(2,313,824)
–
–
–
23,779,931
(55,165,316)
(31,385,386)
52,244
–
(443,131)
(41,363,075)
10,368,576
10,368,576
In the directors’ opinion:
• the attached financial statements and notes comply with the Corporations Act 2001, the
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 2016 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.
Acquisition costs expensed to profit or loss
11,844,375
11,819,338
(25,037)
471,841,466
440,456,080
(31,385,386)
On behalf of the directors
The operating results for DNA Star Vegas Co Ltd since
acquisition are shown in Casino Operations – Cambodia
in note 3 above.
As part of the agreement for the purchase, the vendor will
manage the business for two full years following completion
on 1 July 2015. The vendor also provided a guarantee
that the earnings before interest, tax, depreciation and
amortisation (‘EBITDA’) of the business would be not less
than USD60 million per year for the two full years following
the acquisition, being FY16 and FY17.
If the target EBITDA of USD60 million is not met, the vendor
will top up the shortfall in cash. However, if the target
is met, the vendor will receive a management fee in return
for the management services provided, in the sum of 25%
of the net profit after tax (‘NPAT’) of the business. No other
management fee is payable for the management services.
The amount of the management fee recognised in 2016
is AUD20,492,174.
Mr Stuart McGregor
Chairman
30 September 2016
Melbourne
80
81
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
IND E PENDENT AUDITOR’S RE P OR T TO T H E ME MB ER S
OF D ONACO IN TERNATIONA L L I M I TE D
AUDITORʼS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF DONACO INTERNATIONAL
LIMITED
IN DEPENDENT AUDITOR’S RE POR T TO T HE MEMBERS
OF DONAC O INTER NATIONAL LIMITE D
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 2016
there have been:
— no contraventions of the auditor independence requirements as set out in the
I declare that, to the best of my knowledge and belief during the year ended 30 June 2016
there have been:
Corporations Act 2001 in relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the
— no contraventions of the auditor independence requirements as set out in the
audit.
Corporations Act 2001 in relation to the audit; and
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
— no contraventions of any applicable code of professional conduct in relation to the
DONACO INTERNATIONAL LIMITED AND CONTROLLED ENTITIES
audit.
Report on the Financial Report
William Buck
Chartered Accountants
ABN 16 021 300 521
AUDITORʼS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF DONACO INTERNATIONAL
LIMITED
We have audited the accompanying financial report of Donaco International Limited (the Company) on pages 28
to 79, which comprises the statement of financial position as at 30 June 2016, 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
— no contraventions of the auditor independence requirements as set out in the
entities it controlled at the year’s end or from time to time during the financial year.
I declare that, to the best of my knowledge and belief during the year ended 30 June 2016
there have been:
Corporations Act 2001 in relation to the audit; and
William Buck
Chartered Accountants
ABN 16 021 300 521
Directors’ Responsibility for the Financial Report
— no contraventions of any applicable code of professional conduct in relation to the
audit.
M Nevill
Partner
Dated this 30th day of September, 2016
M Nevill
Partner
Dated this 30th day of September, 2016
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.
William Buck
Chartered Accountants
ABN 16 021 300 521
Auditor’s Responsibility
Auditor’s Opinion
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.
M Nevill
Partner
Dated this 30th day of September, 2016
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 judgement, 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.
Sydney Ofice
Level 29, 66 Goulburn Street
Sydney NSW 2000
Parramatta Ofice
Level 7, 3 Horwood Place
Parramatta NSW 2150
Telephone: +61 2 8263 4000
PO Box 19
Parramatta NSW 2124
CHARTERED ACCOUNTANTS
Telephone: +61 2 8836 1500
& ADVISORS
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
williambuck.com
audit opinion.
CHARTERED ACCOUNTANTS
& ADVISORS
Sydney Ofice
Level 29, 66 Goulburn Street
Sydney NSW 2000
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
Auditor’s Opinion
In our opinion:
a) the financial report of Donaco International Limited on pages 28 to 79 is in accordance with the Corporations
Act 2001, including:
AUDITORʼS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF DONACO INTERNATIONAL
LIMITED
i. giving a true and fair view of the Company and consolidated entity’s financial position as at 30 June 2016
and of its performance for the year ended on that date; and
I declare that, to the best of my knowledge and belief during the year ended 30 June 2016
there have been:
ii. complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
— no contraventions of the auditor independence requirements as set out in the
and the Corporations Regulations 2001; and
Corporations Act 2001 in relation to the audit; and
b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
— no contraventions of any applicable code of professional conduct in relation to the
Report on the Remuneration Report
audit.
We have audited the Remuneration Report included on pages 15 to 23 of the Directors’ Report for the year
ended 30 June 2016. 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
William Buck
express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Chartered Accountants
Auditing Standards.
ABN 16 021 300 521
AUDITORʼS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF DONACO INTERNATIONAL
LIMITED
In our opinion, the Remuneration Report of Donaco International Limited for the year ended 30 June 2016
complies with section 300A of the Corporations Act 2001.
AUDITORʼS INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
M Nevill
CORPORATIONS ACT 2001 TO THE DIRECTORS OF DONACO INTERNATIONAL
Matters Relating to the Electronic Presentation of the Audited Financial Report
Partner
LIMITED
Dated this 30th day of September, 2016
I declare that, to the best of my knowledge and belief during the year ended 30 June 2016
there have been:
— no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
I declare that, to the best of my knowledge and belief during the year ended 30 June 2016
there have been:
This auditor’s report relates to the financial report of Donaco International Limited for the year ended 30 June
2016 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.
— no contraventions of any applicable code of professional conduct in relation to the
— no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
audit.
— no contraventions of any applicable code of professional conduct in relation to the
William Buck
Chartered Accountants
ABN 16 021 300 521
audit.
Independence
Telephone: +61 2 8263 4000
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Parramatta Ofice
Level 7, 3 Horwood Place
Parramatta NSW 2150
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.
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
19
PO Box 19
Parramatta NSW 2124
Telephone: +61 2 8836 1500
williambuck.com
William Buck
William Buck
Chartered Accountants
Chartered Accountants
ABN 16 021 300 521
ABN 16 021 300 521
M Nevill
M.A. Nevill
Partner
Partner
Dated this 30th day of September, 2016
Dated this 30th September, 2016
82
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
M Nevill
Partner
Dated this 30th day of September, 2016
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
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
83
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
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
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
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
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
SHAR EHOLDER IN FORMATI ON
FOR T HE YEAR ENDED 30 JUN E 2 0 16
SHA REHOLDER INFORMATION
FOR THE YE AR EN DED 30 JUNE 2016
The shareholder information set out below was applicable as at 31 August 2016.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
NUMBER OF HOLDERS OF ORDINARY SHARES
Unquoted equity securities
Employee options
Warrants
NUMBER ON ISSUE
7,296,692
70
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
Twenty largest quoted equity security holders
366
609
387
950
154
2,466
381
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
ORDINARY SHARES
NUMBER HELD
% OF TOTAL
SHARES ISSUES
264,659,325
144,811,200
120,596,615
73,599,765
73,599,764
31.8
17.4
14.5
8.9
8.9
The names of the 20 largest security holders of quoted equity securities are listed below:
ORDINARY SHARES
NUMBER HELD
% OF TOTAL
SHARES ISSUES
Voting rights
The voting rights attached to ordinary shares and options are set out below:
Ordinary shares
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
SLIM TWINKLE LIMITED
NATIONAL NOMINEES LIMITED
CONVENT FINE LIMITED
TOTAL ALPHA INVESTMENTS LIMITED
CITICORP NOMINEES PTY LIMITED
MALAHON SECURITIES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
MR KEONG YEW LIM
LEE BUG HUY
LEE BUG TONG
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
MR KEONG YEW LIM
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
UBS NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 3
157,183,712
90,752,256
84,437,882
62,718,509
60,353,318
56,962,025
49,481,612
28,554,880
28,231,019
25,540,155
24,287,922
24,287,922
22,301,923
9,865,713
6,100,000
3,880,875
3,825,904
3,000,000
2,672,861
2,437,631
18.910
10.918
10.158
7.545
7.261
6.853
5.953
3.435
3.396
3.073
2.922
2.922
2.683
1.187
0.734
0.467
0.460
0.361
0.322
0.293
746,876,119
89.853
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 2 years
EXPIRY DATE
30 June 2017
NUMBER OF
SHARES
48,575,844
48,575,844
84
85
DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORTDONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT COR POR ATE DIRECTORY
FOR T HE YEAR ENDED 30 JUN E 2 0 16
Directors
Company secretary
Registered office
Principal place of business
Share register
Auditor
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
Paul Porntat Amatavivadhana – Non-Executive Director
Benedict Paul Reichel
Level 18, 420 George Street
Sydney NSW 2000 Australia
Telephone: +61 2 9106 2149
Facsimile: +61 2 9106 2106
Level 18, 420 George Street
Sydney NSW 2000 Australia
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
+61 2 9290 9600
William Buck
Level 29, 66 Goulburn Street
Sydney NSW 2000
Stock exchange listing
Donaco International Limited shares are listed on the
Australian Securities Exchange (ASX code: DNA)
Website
www.donacointernational.com
Corporate Governance Statement
The Corporate Governance Statement of Donaco International Limited
is available from our website www.donacointernational.com, via the tab headed
‘Investor Relations’.
GE NER AL 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:
Level 18, 420 George Street
Sydney NSW 2000 Australia
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 30 September 2016.
The directors have the power to amend and reissue the financial statements.
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DONACO INTERNATIONAL LIMITED 2016 ANNUAL REPORT
D O N A C O I N T E R N AT I O N A L L I M I T E D ABN: 28 007 424 777
Level 18, 420 George Street, Sydney NSW 2000 Australia
Phone: +61 2 9106 2149 Fax: +61 2 9106 2106
Email: enquiries@donacointernational.com
www.donacointernational.com