DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
Full Year Statutory Accounts
30 June 2020
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Contents Page
From the Chairman
From the Chief Executive Officer
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
Shareholder information
Corporate directory
General information
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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 October 2020. The directors have the power
to amend and reissue the financial statements.
2
D(cid:50)(cid:49)AC(cid:50) I(cid:49)(cid:55)E(cid:53)(cid:49)A(cid:55)I(cid:50)(cid:49)AL LI(cid:48)I(cid:55)ED
AB(cid:49) 28 007 424 777
30 J(cid:88)(cid:81)(cid:72) 2020
F(cid:85)(cid:82)(cid:80) (cid:87)(cid:75)(cid:72) C(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)
Dear fellow shareholders,
It is m(cid:92) privilege to once again return to the Board of Donaco International Limited albeit during a difficult period. The Compan(cid:92) has undergone a
number of challenges both internall(cid:92) and externall(cid:92). From the significant changes in shareholding, management, business operating environment,
travel restrictions and the arbitration settlement to the unexpected COVID-19 pandemic.
As we enter the 2021 financial (cid:92)ear, we have completed our renewal of the Board, and now have in place a highl(cid:92) experienced executive for the
role of Chief Executive Officer. Encouragingl(cid:92), we are seeing the earl(cid:92) signs of improved operational and financial performance as both the
Cambodian and Vietnamese governments allowed the reopening of casino operations.
An update on the progress of the settlement of litigation over the Compan(cid:92)(cid:182)s Star Vegas business in Cambodia. All parties to the litigation agreed
to a settlement as announced to the ASX in March 2020. However, the Compan(cid:92), DNA Star Vegas Co Ltd and Donaco Hong Kong Limited are
parties to a Facilit(cid:92) Agreement with Mega International Commercial Bank Co Ltd (Mega Bank). Provisions of the Facilit(cid:92) Agreement require the
Compan(cid:92) to obtain Mega Bank(cid:182)s consent to fulfil parts of the settlement agreement. The Compan(cid:92) has been in discussions with Mega Bank seeking
the required consents and remains confident that Mega Bank will support the agreed settlement. The Compan(cid:92) advises that all the settlement
parties have agreed to defer the settlement pa(cid:92)ments and additional lease pa(cid:92)ment whilst awaiting Mega Bank(cid:182)s consent. This significantl(cid:92)
reduces uncertaint(cid:92) around the settlement during this process. As previousl(cid:92) advised, no net change to the cash position of the Compan(cid:92) will
eventuate from the settlement. Furthermore, the settlement retires over 80% of the Compan(cid:92)(cid:182)s current liabilities (as at 31 December 2019) and
preserves the Star Vegas business, which is the Compan(cid:92)(cid:182)s primar(cid:92) cash and profit generating asset.
The 2020 financial (cid:92)ear produced a disappointing result, with the Compan(cid:92) reporting a statutor(cid:92) net loss after tax of $58.9 million for the 12
months ended 30 June 2020. This loss can be attributed to $52.6 million of non-recurring items. This primaril(cid:92) comprised a non-cash impairment
on the carr(cid:92)ing value of the Star Vegas casino license of $50.3 million, partiall(cid:92) due to a more conservative approach applied b(cid:92) the new Board. In
addition, a write-off of $0.2 million for trade and other receivables associated with junket programs that are being realigned, and an additional
$2.0 million of legal costs were also incurred. There was also a net foreign exchange loss of $0.1 million.
Whilst we are disappointed to present another significant loss at the statutor(cid:92) level as we seek to resolve the litigation issues with the vendor of
Star Vegas, nonetheless, we are encouraged that despite the disruption, both our venues continued to produce positive cash flows. Our financial
position continues to remain solid with further debt reduction, and improved terms and covenants were secured for our Mega Bank debt, which has
fallen to US$12.8 million (A$18.7 million as at 30 June 2020 spot rate), following the most recent repa(cid:92)ment in August 2020.
The group recorded an EBITDA of $10.4 million for the 2020 financial (cid:92)ear, down from $29.6 million previousl(cid:92), and generated an underl(cid:92)ing net
loss after tax of $6.3 million. Group revenues of $53.5 million were recorded, compared to $86.3 million previousl(cid:92), and the group recorded a
negative operating cash flow of $3.2 million, albeit lower than the $25.6 million recorded last (cid:92)ear. Whilst this performance is below last (cid:92)ear(cid:182)s
levels, it has been delivered during a period where there was significant management disruption, and we lacked senior management leadership
and direction for the majorit(cid:92) of the financial (cid:92)ear.
The Board recognises that our aim is to create value for our shareholders, and that capital allocation is one of the most important areas of value
creation for shareholders. We have not lost sight in the pursuit of a range of capital management initiatives such as the Entitlement Offer of A$14
million, as financial stabilit(cid:92) is restored.
Looking ahead to the 2021 financial (cid:92)ear, the board(cid:182)s main priorit(cid:92) will be to set the course for the Compan(cid:92) to pursue its operations under COVID-
19 and the new business norms successfull(cid:92). With the appointment of Lee Bug Hu(cid:92) as the Group Chief Executive Officer, I am confident we now
have the leadership and experience required to deliver significantl(cid:92) improved operational and financial performance at both our properties.
I would like to take this opportunit(cid:92) to thank our shareholders for their continued support and I look forward to delivering significantl(cid:92) improved
performance from both Star Vegas and the Aristo over the 2021 financial (cid:92)ear.
Paul Porntat Amatavivadhana
Chairman
3
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Dear Shareholders,
I am pleased to have this opportunity to communicate with you as the newly appointed Chief Executive Officer of Donaco International Limited.
I believe Star Vegas is an exceptional business, and even with the recently increased level of competition it remains a premier venue in the Poipet
strip. Despite difficulties during the year under the COVID-19 pandemic, the business still had a profitable baseline performance before the closing
of the borders between Cambodia and Thailand. I am optimistic about the improvements that can be made in the coming years.
We now have the opportunity to rework our gaming machine arrangements, utilise our ample space to introduce retail outlets, and to restructure
our arrangements with junket operators for improved outcomes.
We have started work on these issues with some simple early adjustments to some of our agreements with service providers in both the gaming
and non-gaming operations, such as more accurately allocating utilities expenses which had previously been borne by Star Vegas, and closely
monitoring labour and procurement expenses.
For financial year 2020, the 45% decline in net gaming revenue to THB 747.8 million was compounded by a higher win rate of 3.45% but with a
lower VIP turnover of THB 27,782 million, compared to a 2.69% win rate and THB 81,370 million turnover in the prior year. Slot machine gross
revenue also declined significantly by 54%. Going forward, we will revisit our arrangements on these machines and may look at revising profit-
share arrangements, and seeking additional partners. Non-gaming revenue was down by 45% to THB 68.4 million, and some further changes will
be introduced to boost the attractiveness of the non-gaming businesses.
The EBITDA decline of 63% to THB 223.8 million was due to a combination of the VIP turnover, higher staff count required for operation of the
online gaming business, and higher marketing costs related to our events program, which drove the strong increase in visitation. We intend to look
closely at the appropriateness of each these aspects of the business.
In Vietnam, Aristo(cid:182)s operation was also affected b(cid:92) the border closure between China and Vietnam under the COVID-19 pandemic. Whilst the full
year results reflect the impact of the COVID-19 pandemic, the Aristo operations had been resumed on a limited level and we are expecting a
better performance after the reopening of the borders which is expected to occur in the second half of CY2020.
To meet the Group(cid:182)s immediate capital requirments due to the impact of COVID-19 on its operations, including making repa(cid:92)ments under the
Group(cid:182)s loan facilit(cid:92) with Mega Bank, the Compan(cid:92) issued a pro-rata, non-renounceable full(cid:92) underwritten entitlement offer on 3 Jul(cid:92) 2020 of 1
new share in the Company for every 2 shares held by eligible shareholders to raise approximately US$10 million (before costs). The offer was
subsequently completed on 27 July 2020. The funds raised will be used to meet the working capital needs of the casino operations and other
corporate, administration and transaction costs.
The Group is optimistic that the COVID-19 situation will continue to improve in the region in which the casinos operate and the reopening of the
casino is a positive step towards the resumption of normal operations.
As the new Group Chief Executive Officer, I have confidence in the calibre and composition of the new Board. My role and focus are entirely on
improving the operational performance of the venues, without distraction. I believe there is significant growth potential achievable at both
businesses, and look forward to delivering improved performance from both properties.
Lee Bug Huy
Group Chief Executive Officer
4
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated
entity' or 'group') 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 2020.
Directors
The following persons were directors of Donaco International Limited as at the beginning of the financial year or as at the date of this report,
unless otherwise stated:
Stuart James McGregor (removed 29 November 2019)
Joey Lim Keong Yew (removed 18 July 2019)
Benedict Paul Reichel (resigned 29 November 2019)
Benjamin Lim Keong Hoe (removed 18 July 2019)
David John Green (removed 29 November 2019)
Yan Ho Leo Chan (appointed 12 August 2019)
Kurkye Wong (appointed 12 August 2019)
Yugo Kinoshita (appointed 14 August 2019, removed 29 November 2019)
Roderick John Sutton (appointed 29 November 2019)
Simon Vertullo (appointed 9 December 2019, resigned 2 September 2020)
Norman Mel Ashton (appointed 9 December 2019, resigned 2 September 2020)
Lee Bug Huy (appointed 3 August 2020)
Paul Porntat Amatavivadhana (appointed 3 August 2020)
Andrew Phillips (appointed 2 September 2020)
Issaraya Intrapaiboon (appointed 2 September 2020)
Principal activities
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, specifically:
(cid:322)
(cid:322)
operation of a hotel and casino in northern Vietnam; and
operation of a hotel and casino in Cambodia.
Dividends
No dividends were paid for the year ended 30 June 2020.
Review of operations and financial results
Result Highlights
Underlying net loss after tax (NLAT) of A$6.3 million, down from the restated net profit after tax (NPAT) of A$9.2 million in FY19. Revenue at Star
Vegas and Aristo was severely affected by the COVID-19 pandemic which resulted in the temporary closures of the casinos from 1 April 2020 and
border closures between Vietnam and China, and Cambodia and Thailand. While Aristo has been allowed to reopen on 8 May 2020, it has been
operating on a limited basis, as the border between Vietnam and China, from where most of Aristo's patrons originate, remains closed. The Star
Vegas casino is still closed, as the Cambodia-Thailand border also remains closed.
(cid:322) Statutory NLAT
(cid:322) Contribution of non-recurring items in NLAT result
(cid:322) Underlying (NLAT)/ NPAT
(cid:322) Group Revenue
- Star Vegas revenue
- Aristo revenue
(cid:322) Group Earnings Before Interest, Tax, Depreciation, Amortisation and Impairment (EBITDA)
(cid:322) Underlying Group EBITDA
(cid:322) Balance sheet with
(cid:677) Cash
(cid:677) Borrowings
(cid:677) Net debt
(cid:677) Net debt to equit(cid:92) ratio
2020
$ million
2019
Restated
$ million
(58.9)
(52.6)
(6.3)
53.5
39.7
13.7
10.4
10.4
12.6
28.2
15.6
11.5%
(198.0)
(207.2)
9.2
86.3
64.7
21.6
29.6
29.6
26.6
35.9
9.3
4.9%
5
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Review of operations and financial results (continued)
Reported loss after tax was A$58.9 million, which included non-recurring items totalling negative A$52.6 million. In contrast, the restated loss
after tax reported in FY19 was A$198.0 million which included non-recurring items totalling negative A$207.2 million.
The non-recurring items in FY20 include the Star Vegas licence impairment charge of A$50.3 million (2019: A$186.6 million). Impairment was also
recognised for trade and other receivables of A$0.2 million (restated 2019: A$13.8 million). In addition, there were A$2.0 million of non-recurring
legal fees in regard to ongoing litigation matters (2019: A$2.5 million) and a net foreign exchange loss of A$0.1 million (2019: $0.6 million).
Excluding the non-recurring items, underlying NLAT for the Group was A$6.3 million, down from NPAT of A$9.2 million in FY19.
Venue Performances
Star Vegas - FY20 v FY19
(cid:322) Net Gaming Revenue down 45% to THB 747.8 million
(cid:322) Non-Gaming Revenue down 45% to THB 68.4 million
(cid:322)
EBITDA down 63% to THB 223.8 million
Property Level NPAT down 54% to THB 52.4 million
(cid:322)
(cid:322) VIP Gross Win rate 3.45%
Gaming revenue at Star Vegas fell 45% due to the closure of the casino on 1 April 2020 in adherence with the Cambodian government mandating
the temporary closure of all casinos. VIP turnover decreased by 45% due to increased competition in Poipet and the emergence of unregulated
gambling affecting the entire market. Improved junket and slot profit sharing arrangements were implemented by new management however
these were offset by lower visitation and turnover. Operating expenses were down 33% as cost reduction measures were proactively implemented
to minimise the COVID-19 financial impact. The casino partially reopened as of 25 September 2020, however is still operating on a limited scale
for patrons based in Cambodia as the Cambodia-Thailand border remains closed. The limited reopening will allow the casino to test its operational
systems whilst ensuring the health and wellbeing of its staf and visitors. The Directors will continue to maintain a tight cost control strategy while
operations remain at limited operating capacity, and local management will have the discretion to tailor operations to local conditions.
Aristo International Hotel - FY20 v FY19
(cid:322) Net Gaming Revenue down 36% to RMB 38.7 million
(cid:322) Non-Gaming Revenue down 38% to RMB 28.0 million
(cid:322)
(cid:322)
(cid:322) VIP Gross Win rate 2.32%
EBITDA down 54% to RMB 24.2 million
Property Level NPAT down 95% to RMB 1.1 million
Aristo was temporarily closed from 1 April 2020 in adherence to the Vietnamese Government mandating the temporary closure of all casinos, and
was allowed to reopen on 8 May 2020. However the casino operated through the rest of FY20 on a limited basis as the border with China remains
closed. The COVID-19 impact on the FY20 result was mitigated by some extent as Aristo delivered a strong result for the first half of FY20, with
net gaming revenue up by 42% and EBITDA up 71% compared to the prior corresponding period. Cash flow from operations remained positive as
a result of the first half year performance. Operating expenses decreased by 19% compared to FY19, as robust cost reduction measures were
implemented to minimise the financial impact from COVID-19. Aristo will continue to adapt to border changes with local management having the
discretion to tailor operations to local conditions.
Capital Management
No FY20 dividend is payable due to the statutory loss, as dividends are restricted to 100% of statutory net profit after tax under the Mega Bank
loan facility.
On 12 June 2020, Donaco received a written waiver from Mega Bank deferring its US$5 million principal repayment due on 15 June 2020 to 31
December 2020, in light of the impact to Donaco as a result of the COVID-19 pandemic. Mega Bank also granted a waiver on all June 2020
covenants until 31 December 2020, including the requirements to hold minimum cash and cash equivalents as well as to meet interest cover ratio
and debt to EBITDA.
Subsequent to year end, Donaco successfully completed an entitlement offer that has raised approximately A$14.4 million. Under the entitlement
offer, 1 new share was offered for every 2 existing shares held by eligible shareholders at a price of $0.035 per new share, for a total of
411,796,609 new shares. This entitlement offfer was fully underwritten by Mr Lee Bug Huy and Mr Lee Bug Tong.
Under the agreement reached with Mega Bank, the proceeds of this capital injection will be used to settle the deferred principal repayment as well
as to meet the Donaco's working capital requirements.
Significant changes in the state of affairs
Apart from the impact of the COVID-19 pandemic as set out under Review of operations and financial results and elsewhere in the Directors'
report, there were no other significant changes in the state of affairs during the financial year.
Matters subsequent to the end of the financial year
Dividend
There will be no dividend declared for FY2020.
6
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Matters subsequent to the end of the financial year (continued)
Resumption of casino operations
On 29 July 2020 it was confirmed that the Government of Cambodia lifted the temporary closure of casino operations. Casino operations may
resume, contingent on receiving approval from the Ministry of Health (MOH) and implementing certain preventative measures against COVID-19.
The casino partially reopened as of 25 September 2020, however is still operating on a limited scale for patrons based in Cambodia as the
Cambodia-Thailand border remains closed.
The Company notes that Thailand has extended its state of emergency due to COVID-19 until 31 October 2020, which will likely impact the border
reopening date. As the majority of Star Vegas' visitors are from Thailand, Donaco expects patronage numbers will remain low at Star Vegas until
the border between Thailand and Cambodia is reopened.
Casino operations at the Aristo International Hotel in Lao Cai, Vietnam has been lifted since May 2020, however as the border with China remains
closed, patronage at the casino is expected to remain low as most of Aristo's patrons are Chinese residents.
The Company is optimistic that the COVID-19 situation will continue to improve in the region in which both casinos operate and the reopening of
both casinos is a positive step towards the resumption of normal operations.
Entitlement issue
The COVID-19 pandemic continues to disrupt casino operations in Vietnam and Cambodia and prevent resumption of normal business activities.
While both casinos have since reopened, international borders between Vietnam and China, and Cambodia and Thailand, remain closed which
adversely affects patronage at these casinos. Cost-cutting measures such as pay cuts and redundancies remain in place. To meet the company's
urgent need of capital due to the impact of COVID-19 on its operations as well as the requirement to make repayments under the company's loan
facility with Mega Bank, the company issued a pro-rata, non-renounceable fully underwritten entitlement offer on 3 July 2020 of 1 new share in the
company for every 2 shares held by eligible shareholders at a price of $0.035 for 411,796,609 new shares, to raise approximately AUD14.4 million
(before costs). The offer was subsequently completed on 27 July 2020, with a total of 113,692,949 of new shares applied for by shareholders and
the remaining 298,103,660 new shares acquired by Mr Lee Bug Tong and Mr Lee Bug Huy. Post completion of the entitlement offer and associated
underwriting, Mr Lee Bug Huy and Mr Lee Bug Tong hold a relevant interest in the Company of 42.12%, an increase from their previous interest of
17.99%.
The funds raised will be used to make principal repayments of USD10 million (approximately AUD14.57 million at 30 June 2020 spot rate) to Mega
Bank and also to meet the working capital needs of the casino operations and other corporate, administration and transaction costs.
Appointment of new directors
Following the completion of the underwriting agreement as part of the entitlement offer noted above, Mr Lee Bug Huy and Mr Paul Porntat
Amatavivadhana have been appointed as non-executive directors to the Board of the company effective from 3 August 2020.
On 2 September 2020, two additional independent directors, Mr Andrew Phillips and Mr Issaraya Intrapaiboon were appointed to the Board, as two
Australian-based, non-executive directors. Mr Paul Porntat Amatavivadhana was also appointed as non-executive Chairman, while Mr Lee Bug Huy
was appointed Chief Executive Officer effective 3 September 2020. As part of this process, Chairman Mel Ashton and non-executive director Simon
Vertullo resigned from the Board.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the consolidated entity's
operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.
Likely developments and expected results of operations
The company operates leisure and entertainment businesses across the Asia Pacific region.
Our largest business is the Star Vegas Resort & Club, a successful casino and hotel complex in Poipet, Cambodia, on the border with Thailand.
Star Vegas was established in 1999, and is the largest and highest quality of the Poipet casino hotels. The property has more than 100 gaming
tables, more than 800 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 is now a 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.
Star Vegas is anticipated to remain closed until the Cambodian border with Thailand reopens and its visitors who are mostly from Thailand will
resume their patronage. While Aristo has resumed operations since May 2020, its operations will continue to be managed tightly whilst visitation
from Chinese tourists remains low over the coming months due to the continuing closed borders between Vietnam and China. Donaco will continue
to monitor the COVID-19 situation closely and implement measures to keep visitors and staff as safe as possible.
Donaco is ready to resume full casino operations once the COVID-19 situation improves and international borders reopen. The strong underlying
earnings result for the first half of the 2020 financial year provides the Board with confidence that Donaco is pivoted for stabilisation of the
business. Donaco's operational and financial performance in FY2021 will be closely aligned to the global COVID-19 condition. There will be a
continual focus on maintaining a tight control over operating costs, and appointment of the new Chief Executive Officer will be imminent to lead
the business going forward.
Except as noted above, information on likely developments in the operations of the consolidated entity and the expected results of operations have
not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.
Environmental regulations
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.
7
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Qualifications:
Experience and expertise:
Stuart James McGregor
Independent Non-Executive Chairman (removed 29 November 2019)
B.Com, LLB, MBA
Over the last 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.
EBOS Group Limited (ASX:EBO) (appointed in July 2013)
None
Member of the Audit & Risk Management Committee and the Nominations,
Remunerations & Corporate Governance Committee
None
None
Norman Mel Ashton
Non-Executive Chairman (appointed 9 December 2019, resigned 2
September 2020)
Mr Ashton is a listed company director with over 37 years' experience
across the hospitality, property, banking and finance, and mining and
resources sectors. A chartered accountant, Mr Ashton has senior leadership
experience in restructuring and insolvency having worked with KPMG and
as one of the Founding Partners of PPB.
Aurora Labs Ltd (ASX: A3D)
None
Member of the Audit & Risk Management Committee
None
None
Joey Lim Keong Yew
Non-Executive Director (removed 18 July 2019)
B. Computer Science
Mr J Lim was the Managing Director and Chief Executive Officer of Donaco
International Limited, from 1 February 2013 to 14 March 2019. 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:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
None
None
None
37,653,572 ordinary shares
None
8
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Information on directors (continued)
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Experience and expertise:
Benedict Paul Reichel
Executive Director, Group General Counsel,
Company Secretary (resigned 29 November 2019)
BA, LLB (Hons), LLM (Hons)
Mr Reichel is an executive and company director in the gaming, media, and
technolog(cid:92) sectors, with more than twent(cid:92) (cid:92)ears(cid:182) 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.
None
None
None
1,276,415 ordinary shares
None
Benjamin Lim Keong Hoe
Non-Executive Director (removed 18 July 2019)
B. International Business
Mr B Lim was a director of Donaco Singapore Pte Ltd from 1 February 2013
to 18 July 2019, and is a major shareholder of Genting Development Sdn
Bhd, a substantial property development business in Malaysia. He has a
Bachelors Degree in International Business with Design Management from
Regent Business School, United Kingdom.
None
None
Member of the Audit & Risk Management Committee and the Nominations,
Remuneration & Corporate Governance Committee.
20,000 ordinary shares
None
David John Green
Non-Executive Director (removed 29 November 2019)
B.Com, LLB (Hons), LLM, MBA (Hons)
Mr Green has extensive experience in the gaming industry, particularly in
Asia, and specific experience in Cambodia and Vietnam. His experience
spans both regulations and operations, as well as board positions, and he
specialises in governance matters. Mr Green is both a qualified lawyer and
qualified accountant and is a former partner and director of the Gaming
Practice of PricewaterhouseCoopers (Macau) Limitada. He has worked with
the Macau SAR Government in relation to the liberalisation and regulation
of the casino industry, and also consulted the Royal Government of
Cambodia on the drafting of the proposed Law on the Management of
Integrated Resorts and Commercial Gaming.
None
Silver Heritage Group Limited (ASX:SVH)
Chair of the Audit & Risk Management Committee and the Nominations,
Remuneration & Corporate Governance Committee
None
None
Yan Ho Leo Chan
Executive Director (effective 11 February 2020) (appointed Non-Executive
Director 12 August 2019)
Mr Chan is a representative from Argyle Street Management Limited
(ASM), an institutional investor. ASM was founded in Hong Kong SAR in
2002 and currently manages approximately US$1.7 billion. Mr Chan is an
Executive Director of ASM, and has more than 13 years' experience in
making and managing investments throughout Asia. He holds a Bachelor of
Economics and Finance from the University of Hong Kong.
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
None
None
None
None
None
9
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Information on directors (continued)
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Experience and expertise:
Kurkye Wong
Executive Director (effective 11 February 2020) (appointed Non-Executive
Director 12 August 2019)
Mr Wong is a representative from Argyle Street Management Limited
(ASM), an institutional investor. ASM was founded in Hong Kong SAR in
2002 and currently manages approximately US$1.7 billion. Mr Wong is
Vice President of ASM, and has previously worked at KPMG and FTI
Consulting in Hong Kong. He holds a Bachelor of Business from the
Queensland University of Technology, a Juris Doctor from the Chinese
University of Hong Kong, and a Master's Degree in Financial Engineering
from Stanford University.
None
None
None
None
None
Yugo Kinoshita
Non-Executive Director (appointed 14 August 2019, removed 29 November
2019)
Mr Kinoshita is the Global Chief Executive Officer of Aruze Gaming
America, Inc, a global entertainment company that designs, develops,
manufactures, distributes and services slot machines and other gaming
devices for the world-wide casino market. Mr Kinoshita's professional
experience includes senior marketing and advertising roles at Nike Japan
and Dentsu Inc. in Tokyo. He holds a Masters of Business Administration
from Babson College in Massachusetts, USA, and a Bachelor of Human
Science from Waseda University in Tokyo, Japan.
None
None
None
None
None
Roderick John Sutton
Non-Executive Director (appointed 29 November 2019)
Mr Sutton has over 25 years' experience in business advisory and
management. He is currently a Special Advisor to the Asia Pacific region of
FTI Consulting, a professional services and consulting business listed on
the New York Stock Exchange. Upon joining FTI Consulting in 2020, Rod
was appointed as its Chairman of Asia Pacific. In that role he had oversight
of all elements of the Asia Pacific business including FTI Consulting's
numerous client-facing activities, regional and global strategy, vetting of
acquisition opportunities, and management of all support functions.
None
None
Chair of the Audit & Risk Management Committee (effective 19 December
2019 and re-appointed 2 September 2020)
None
None
Simon Vertullo
Non-Executive Director (appointed 9 December 2019, resigned 2
September 2020)
Mr Vertullo is an experienced chartered accountant with broad financial,
transactional and operational expertise, having worked extensively with
listed and large privately-owned companies throughout Australia, Asia and
the United Kingdom. He has experience in senior finance executive roles
with a focus on managing performance, risk and turnarounds and has
previously worked with the leading restructuring practices of KordaMentha
and KPMG.
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
None
None
Member of the Audit & Risk Management Committee
None
None
10
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Information on directors (continued)
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
Name:
Title:
Experience and expertise:
Lee Bug Huy (Techatut Sukcharoenkraisri)
Executive Director (appointed 3 August 2020)
Mr Huy is Vice President at the Casino at Star Vegas Casino & Resorts Co,
Ltd where he has been responsible for developing the model for the slot
machine business. He has significant experience in gaming and casino
management and has previously acted as an executive director of the
Company (preivously appointed on 1 July 2015) Mr Huy holds a BSc
majoring in Chemical Engineering.
None
Chief Executive Officer (effective 3 September 2020)
260,451,476 ordinary shares
None
Paul Porntat Amatavivadhana
Non-Executive Chairman (effective 3 September 2020) (appointed Non-
Executive Director 3 August 2020)
Mr Amatavivadhana is a founding principal and 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. Mr Amatavivadhana has
also previously acted as non-executive director of the Company (previously
appointed 1 July 2015). Mr Amatavivadhana holds a MSc in Management
Science and a BA in Finance and Banking.
Sansiri Plc (BKK: SIRI)
None
None
3,555,405 ordinary shares
None
Andrew Guy Phillips
Independent non-executive director (appointed 2 September 2020)
Mr Phillips brings over 25 years' experience working in senior financial and
commercial management positions with both publicly listed companies and
multinationals based in Australia and New Zealand. He has a thorough
knowledge of international finance and corporate services and has an
extensive network of contacts throughout Asia and the Americas.
Lithium Power International Ltd (ASX: LPI)
Southern Cross Exploration NL (ASX: SXX)
None
None
None
None
Mr Issaraya Intrapaiboon
Non-executive director (appointed 2 September 2020)
Mr Intrapaiboon has over 20 years' experience in engineering, operation,
maintenance and planning within the water section. He is currently the
Manager Treatment Plants for Unitywater, Australian provider of essential
water supply and sewage treatment services, bringing in-depth capability
in leading large teams and managing an operational budget of $20+
million.
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in Options:
None
None
None
None
None
'Other current directorships' and 'Former directorships (last 3 years)' quoted above are directorships for listed entities only, and exclude
directorships of all other types of entities, unless otherwise stated.
11
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Company secretary
The company secretary is Ms Marika Jane White who was appointed on 12 February 2020. Ms White is the executive director of Emerson Corporate
Services which offers a full range of compliance and company secretarial services to companies, funds and family offices.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the year ended 30 June 2020,
and the number of meetings attended by each director were:
Stuart James McGregor
Norman Mel Ashton
Benedict Paul Reichel
David John Green
Yan Yo Leo Chan
Kurkye Wong
Yugo Kinoshita
Roderick John Sutton
Simon Vertullo
Full board
Audit & Risk
Management
Committee
Nominations,
Remuneration &
Corporate
Governance
Committee
Attended
Held
Attended
Held
Attended
Held
6
12
6
6
18
18
5
13
12
6
12
6
6
18
18
5
13
12
2
2
-
2
-
-
-
3
2
2
2
-
2
-
-
-
3
2
1
-
-
1
-
-
-
-
-
1
-
-
1
-
-
-
-
-
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the
requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity,
directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
(cid:322)
Executive Summary
Principles used to determine the nature and amount of remuneration
(cid:322)
(cid:322) Details of remuneration
(cid:322) Share-based compensation
(cid:322) Additional disclosures relating to key management personnel
Executive Summary
Donaco uses a simple framework for executive remuneration, consisting of three elements:
1.
2.
3.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits (if any)
Short-term incentives, which are paid in cash, but onl(cid:92) if executives satisf(cid:92) applicable ke(cid:92) performance indicators ((cid:179)KPIs(cid:180))
Long-term incentives, under which executives may receive annual grants of restricted shares purchased on market, but only if applicable
KPIs are satisfied. The shares vest over a three-year period.
For short-term incentives in FY20, the following KPIs applied:
1.
2.
3.
4.
Achievement of the budgeted earnings before interest, tax, depreciation and amortisation (EBITDA) target for the Donaco Group (30%)
Achievement of the budgeted revenue target for the Star Vegas property, in Thai Baht terms (25%)
Achievement of the budgeted revenue target for the Aristo property, in Chinese Renminbi terms (25%)
Achievement of a personal KPI relating to the executive(cid:182)s individual areas of responsibilit(cid:92) (20%)
The first three KPIs were not satisfied. Two executives did satisfy or partially satisfy their personal KPI, and thus are entitled to be paid up to 20%
of their potential incentive. Accordingly, two executives forfeited 80% to 90%, and the others forfeited 100%, of their potential incentive.
For long-term incentives in FY20, the following KPI was required to be satisfied:
1.
Achievement of the budgeted earnings before interest, tax, depreciation and amortisation (EBITDA) target for the Donaco Group
This KPI was not satisfied, and accordingly no long-term incentives were awarded.
Shareholders should note that share price movements per se are not an applicable KPI. Share prices are affected by many factors beyond the
control of management. However all of the applicable KPIs should, if achieved, have a positive impact on Donaco(cid:182)s performance, which would
normally be reflected in the share price, subject to any external factors. Accordingly, the remuneration framework focuses executives on matters
that they can control, which are expected to provide benefits to shareholders through a higher share price.
In addition, the award of restricted shares under the long term incentive plan aligns the interests of executives with shareholders. Executives
benefit directly if the share price increases, and also suffer directly if the share prices decreases.
12
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Remuneration report (audited) (continued)
Principles used to determine the nature and amount of remuneration
Introduction
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 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.
Board Oversight
The Board has an established Nominations, Remuneration and Corporate Governance Committee (the (cid:179)Remuneration Committee(cid:180)). It is primaril(cid:92)
responsible for setting the overall remuneration policy and guidelines for the Company, and its functions include:
(cid:322)
(cid:322)
(cid:322)
(cid:322)
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.
Due to recent changes in the composition of the Board, all matters in respect of nomination and remuneration are currently being addressed at the
Board level.
Remuneration Framework
In consultation with external remuneration consultants when necessary (refer to the section 'Use of Remuneration Consultants' below), the
Remuneration Committee has structured an executive remuneration framework that is market competitive and complementary to the reward
strategy of the consolidated entity. The framework is designed to satisfy the following key criteria for good reward governance practices:
(cid:322)
(cid:322)
(cid:322)
(cid:322)
aligned to shareholders(cid:182) interests
competitiveness and reasonableness
performance linkage/alignment of executive compensation
transparency
(cid:322)
(cid:322)
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
(cid:322)
The remuneration framework is also aligned to program participants' interests, in that it:
(cid:322)
(cid:322)
(cid:322)
rewards capability and experience
reflects competitive reward for contribution to growth in shareholders wealth
provides a clear structure for earning rewards
All remuneration paid to directors and executives is valued at cost to the Company and expensed.
In accordance with best practice corporate governance, the structures of remuneration for non-executive directors and for executives are separate.
13
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Remuneration report (audited) (continued)
Principles used to determine the nature and amount of remuneration (continued)
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 Remuneration Committee. The Remuneration 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 or shares.
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 entit(cid:92)'s remuneration polic(cid:92) is to ensure that executive remuneration packages properl(cid:92) reflect a person(cid:182)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.
The executive remuneration and reward framework has three components:
(cid:322)
(cid:322)
(cid:322)
fixed remuneration, consisting of base salary and non-monetary benefits, together with other statutory forms of remuneration such as
superannuation and long service leave
short-term incentives, paid in cash
long term incentives, currently consisting of restricted shares purchased on market
The combination of these components comprises the executive's total remuneration.
Fixed remuneration
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits (if any), is determined by considering the scope of the
executive(cid:182)s responsibilit(cid:92), 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.
Fixed remuneration is reviewed annually by the Remuneration 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 objective of the fixed remuneration component is to attract and retain high quality executives, and to recognise market relativities and
statutory requirements.
Short term incentives
The short term incentive (STI) framework provides senior executives with the opportunity to earn an annual cash bonus, up to a maximum
amount of 50% of base salary. Clear key performance indicators (KPIs) have been established by the Remuneration Committee. Achievement of
these KPIs gives the executive an opportunity to earn a fixed percentage of their maximum STI, subject to final review and approval by the Board.
14
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Remuneration report (audited) (continued)
Principles used to determine the nature and amount of remuneration (continued)
For FY20, the KPIs applied and the applicable percentage of STI were:
1.
2.
3.
Achievement of the budgeted earnings before interest, tax, depreciation and amortisation (EBITDA) target for the Donaco Group. The
applicable EBITDA target was AUD64.3m. (This KPI is worth 30% of the potential incentive)
Achievement of the budgeted revenue target for the Star Vegas property, in Thai Baht terms. The applicable revenue target was THB1.65
billion. (25%)
Achievement of the budgeted revenue target for the Aristo property, in Chinese Renminbi terms. The applicable revenue target was
RMB136.9 million. (25%)
4. Achievement of a personal KPI relating to the executive(cid:182)s individual areas of responsibilit(cid:92). (20%)
The objective of these KPIs is clearly designed to focus on financial criteria, including top line revenue growth, while maintaining a focus on
disciplined cost control, as expressed through the EBITDA target for the Group. In addition, executives also maintained a focus on key non-
financial criteria, relating to the personal KPI applicable to the individual executive(cid:182)s area of responsibilit(cid:92).
During FY20, the first three KPIs were not satisfied. Two executives did satisfy or partially satisfy their personal KPI, and thus are entitled to be
paid up to 20% of their potential incentive. Accordingly, two executives forfeited 80% to 90%, and the others forfeited 100%, of their potential
incentive.
Long term incentives
The long-term incentive ('LTI') program currently consists of restricted shares purchased on market. This plan was adopted in FY17 to replace the
former option plan, which was thought to be excessively complex, and could potentially result in significant dilution of shareholders.
The objective of the LTI component is to focus on sustainable shareholder value creation, as expressed through share price growth.
Under the LTI plan, the Board has actively sought to align senior executive remuneration with shareholder interests. Shares are purchased on
market and held in an employee share trust (the Trust). The shares will vest to the employees 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 the 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 is a maximum of A$1,000,000. The number of shares to be purchased each year will
depend on the share price at the time that purchases take place.
The scheme is 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.
LTI awards are made on an annual basis, subject to achievement of applicable KPIs. This ensures that at any given time, the executives have at
risk a number of LTI awards, with different vesting periods and amounts. This helps to smooth out both the risk and the cash flow for the
Company and for executives.
The LTI scheme allows for an award of a maximum of 50% of base salary in the form of restricted shares, subject to achievement of applicable
KPIs which are set annually. For FY18, the applicable KPI related to the achievement of the budgeted EBITDA target for the Group.
During FY20 and FY19, the Trust did not purchase any shares on market. The applicable KPI was not satisfied in both years, and accordingly no
awards of shares were made.
Relationship between remuneration policy and company performance
As detailed above, Donaco(cid:182)s remuneration polic(cid:92) is directl(cid:92) linked to compan(cid:92) performance, particularl(cid:92) in relation to top-line revenue growth and
cost control, to ultimately create long-term shareholder value. STI and LTI awards are dependent on defined KPIs being met, which are primarily
financial in nature, and are at the discretion of the Remuneration Committee.
15
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Remuneration report (audited) (continued)
Principles used to determine the nature and amount of remuneration (continued)
Over the six-year period since FY15, Revenue and EBITDA have increased at an average annual growth rate of 21.25% and 79.94% respectively,
driven by Star Vegas becoming part of the Group at the beginning of FY16.
Donaco(cid:182)s share price has been declining in recent (cid:92)ears, reflecting lower earnings brought on b(cid:92) the Star Vegas vendor(cid:182)s breaches of the non-
compete agreement, and market concerns over the resulting legal disputes, and in FY20 as a result of the COVID-19 pandemic.
The Nominations, Remuneration and Corporate Governance Committee considers that the remuneration framework has an appropriate mix of fixed
and performance based remuneration. Since performance during FY20 did not meet expectations, executives forfeited all or the majority of their
short term incentive, and also forfeited all of their long term incentive.
The Committee also considers that the remuneration framework in place will assist to increase shareholder wealth if maintained over the coming
years, subject to any adjustments that are necessary or desirable to reflect the Company's circumstances.
Use of remuneration consultants
There were no remuneration consultants engaged during the financial years ended 30 June 2020 and 30 June 2019.
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:
Joey Lim Keong Yew - Non-Executive Director (removed 18 July 2019)
(cid:322) Stuart James McGregor - Non-Executive Director and Chairman (removed 29 November 2019)
(cid:322) Norman Mel Ashton - Non-Executive Chairman (appointed 9 December 2019, resigned 2 September 2020)
(cid:322)
(cid:322) Benedict Paul Reichel - Executive Director, General Counsel and Company Secretary (resigned 29 November 2019)
(cid:322) Benjamin Lim Keong Hoe - Non-Executive Director (removed 18 July 2019)
(cid:322) David John Green - Non-Executive Director (removed 29 November 2019)
(cid:322)
(cid:322) Kurkye Wong - Executive Director (effective 11 February 2020) (appointed Non-Executive Director 12 August 2019)
(cid:322)
(cid:322) Roderick John Sutton - Non-Executive Director (appointed 29 November 2019)
(cid:322) Simon Vertullo - Non-Executive Director (appointed 9 December 2019, resigned 2 September 2020)
Yugo Kinoshita - Non-Executive Director (appointed 14 August 2019, removed 29 November 2019)
Yan Ho Leo Chan - Executive Director (effective 11 February 2020) (appointed Non-Executive Director 12 August 2019)
And the following persons:
Paul Arbuckle - Chief Executive Officer (terminated 4 August 2020)
(cid:322)
(cid:322) Chong Kwong Yang - Chief Financial Officer (resigned 30 December 2019)
(cid:322) Gordon Lo - Chief Financial Officer (appointed 1 January 2020)
16
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Remuneration report (audited) (continued)
Short-term benefits
Cash salary
and fees
$
Termination
payment
$
Post
employment
benefits
Bonus
$
Super
$
Long-term
benefits
Leave
entitlements
$
Share-based
payments1
Equity-
settled
$
Total
$
86,758
67,097
6,314
35,398
70,057
71,670
73,059
-
-
-
-
-
-
-
5,243
200,047
126,313
126,313
-
527,879
-
-
413,608
-
162,333
184,153
1,628,363
208,776
-
736,655
-
-
-
-
-
-
-
-
33,270
-
-
-
13,750
-
47,020
8,242
-
-
-
-
-
6,941
-
16,667
-
-
21,003
17,751
1,728
72,332
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,115
62,394
-
-
95,000
67,097
6,314
35,398
70,057
71,670
80,000
16,358
840,257
126,313
126,313
-
434,611
4,250
-
77,759
406,860
185,881
2,562,129
2020
Non-Executive
Directors:
Stuart McGregor
Norman Ashton
Lim Keong Hoe
Yugo Kinoshita
Roderick Sutton
Simon Vertullo
David Green
Executive
Directors:
Lim Keong Yew
Benedict Reichel
Kurkye Wong
Yan Ho Leo Chan
Other Key
Management
Personnel:
Paul Arbuckle
Chong Kwong
Yang
Gordon Lo
1These amounts relate to shares acquired by an employee share trust which will vest to employees over the vesting period of three years. These
shares were either forfeited or subject to accelerated vesting during the year. None remains unvested as at 30 June 2020.
The bonuses set out above were paid during FY20, but relate to performance during FY19. The KPIs applicable were set out in the FY19 annual
report.
No bonus amounts were accrued to directors and key management personnel in FY20 for performance during FY20.
2019
Non-Executive Directors:
Stuart McGregor
Lim Keong Hoe
Robert Hines
David Green
Executive Directors:
Lim Keong Yew
Benedict Reichel
Other Key Management Personnel:
Paul Arbuckle
Chong Kwong Yang
Short-term benefits
Post
employment
benefits
Cash salary
and fees
$
Bonus
$
Super
$
Long-term
benefits
Leave
entitlements
$
Share-based
payments
Equity-
settled
$
162,734
233,086
68,650
20,282
325,007
332,700
18,950
252,000
1,413,409
-
-
-
-
-
33,270
-
25,200
58,470
15,460
-
6,522
1,927
-
25,000
-
23,940
72,849
-
-
-
-
-
-
-
-
-
-
-
-
-
86,563
62,054
-
47,002
195,619
Total
$
178,194
233,086
75,172
22,209
411,570
453,024
18,950
348,142
1,740,347
17
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Remuneration report (audited) (continued)
Details of remuneration (continued)
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Stuart McGregor
Lim Keong Hoe
Norman Ashton
Yugo Kinoshita
Roderick Sutton
Simon Vertullo
David Green
Executive Directors:
Lim Keong Yew
Benedict Reichel
Kurkye Wong
Yan Ho Leo Chan
Other Key Management
Personnel:
Paul Arbuckle
Chong Kwong Yang
Gordon Lo
Fixed remuneration
2020
2019
At risk - STI
At risk - LTI
2020
2019
2020
2019
100%
100%
100%
100%
100%
100%
100%
32%
89%
100%
100%
100%
96%
100%
100%
100%
n/a
n/a
n/a
n/a
100%
79%
79%
n/a
n/a
100%
79%
n/a
0%
0%
0%
0%
0%
0%
0%
0%
4%
0%
0%
0%
3%
0%
0%
0%
n/a
n/a
n/a
n/a
0%
0%
7%
n/a
n/a
0%
7%
n/a
0%
0%
0%
0%
0%
0%
0%
68%
7%
0%
0%
0%
1%
0%
0%
0%
n/a
n/a
n/a
n/a
0%
21%
14%
n/a
n/a
0%
14%
n/a
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
Benedict Reichel
Other Key Management Personnel:
Chong Kwong Yang
Gordon Lo
Paul Arbuckle
Cash bonus paid/payable
2020
2019
Cash bonus forfeited
2019
2020
20%
20%
80%
80%
20%
n/a
n/a
20%
n/a
n/a
80%
n/a
n/a
80%
n/a
n/a
In relation to performance during FY20, the proportions of the cash bonus paid/payable or forfeited are as follows:
Name
Executive Directors:
Benedict Reichel
Other Key Management Personnel:
Chong Kwong Yang
Gordon Lo
Paul Arbuckle
Cash bonus
paid/payable
Cash bonus
forfeited
2021
2021
0%
0%
0%
0%
100%
100%
100%
100%
Criteria for performance-based remuneration
The short-term incentive ('STI') program is designed to align the targets of executives with the targets of the consolidated entity. STI payments
are granted to executives based on specific annual targets and key performance indicators ('KPIs') being achieved. The Board, advised by the
Nominations, Remuneration and Corporate Governance Committee, applied these criteria in determining the award of performance-based
remuneration during the year.
Performance-based bonuses were paid in October 2019. $47,020 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.
For performance during FY20, 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, and a personal KPI
for each executive.
18
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Remuneration report (audited) (continued)
Details of remuneration (continued)
There were no share options granted or forfeited during the year (2019: nil).
The number of the shares granted or forfeited is as follows:
Name
Executive Directors:
Lim Keong Yew (removed 18 July 2019)
Other Key Management Personnel:
Goh Kwey Biaw (retired 31 March 2018)
Chong Kwong Yang (resigned 30 December 2019)
Service Agreements
Shares granted
Shares forfeited
2020
2019
2020
2019
-
-
-
-
-
-
261,624
-
-
100,024
300,320
-
Remuneration and other terms of employment for the Chief Executive Officer, 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
guilt(cid:92) of serious misconduct or wilful neglect of duties. Otherwise, the compan(cid:92) ma(cid:92) terminate the contracts b(cid:92) giving six months(cid:182) notice or pa(cid:92)ing
six months(cid:182) salar(cid:92). In the case of Mr Ben Reichel, a termination benefit of twelve months' salar(cid:92) is pa(cid:92)able, in accordance with the Corporations
Act 2001 (Cth).
Share-based compensation
Shares
There were no shares granted as part of compensation during the year ended 30 June 2020.
Options
There were no options issued as part of compensation during the year ended 30 June 2020.
There were no options over ordinary shares granted to or vested by directors and other key management personnel as part of compensation
during the year ended 30 June 2020.
19
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 J(cid:88)(cid:81)e 2020
Rem(cid:88)(cid:81)e(cid:85)a(cid:87)i(cid:82)(cid:81) (cid:85)e(cid:83)(cid:82)(cid:85)(cid:87) (a(cid:88)di(cid:87)ed) (c(cid:82)(cid:81)(cid:87)i(cid:81)(cid:88)ed)
Addi(cid:87)i(cid:82)(cid:81)al di(cid:86)cl(cid:82)(cid:86)(cid:88)(cid:85)e(cid:86) (cid:85)ela(cid:87)i(cid:81)g (cid:87)(cid:82) ke(cid:92) ma(cid:81)ageme(cid:81)(cid:87) (cid:83)e(cid:85)(cid:86)(cid:82)(cid:81)(cid:81)el
Shareholding
(cid:55)(cid:75)(cid:72) (cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85) (cid:82)(cid:73) (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86) (cid:76)(cid:81) (cid:87)(cid:75)(cid:72) (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92) (cid:75)(cid:72)(cid:79)(cid:71) (cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74) (cid:87)(cid:75)(cid:72) (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79) (cid:92)(cid:72)(cid:68)(cid:85) (cid:69)(cid:92) (cid:72)(cid:68)(cid:70)(cid:75) (cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85) (cid:68)(cid:81)(cid:71) (cid:82)(cid:87)(cid:75)(cid:72)(cid:85) (cid:80)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:86) (cid:82)(cid:73) (cid:78)(cid:72)(cid:92) (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87) (cid:83)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:81)(cid:72)(cid:79) (cid:82)(cid:73) (cid:87)(cid:75)(cid:72)
(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71) (cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:92), (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74) (cid:87)(cid:75)(cid:72)(cid:76)(cid:85) (cid:83)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92) (cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71) (cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:72)(cid:86), (cid:76)(cid:86) (cid:86)(cid:72)(cid:87) (cid:82)(cid:88)(cid:87) (cid:69)(cid:72)(cid:79)(cid:82)(cid:90):
Ordinar(cid:92) shares
(cid:54)(cid:87)(cid:88)(cid:68)(cid:85)(cid:87) M(cid:70)G(cid:85)(cid:72)(cid:74)(cid:82)(cid:85)1
L(cid:76)(cid:80) K(cid:72)(cid:82)(cid:81)(cid:74) (cid:60)(cid:72)(cid:90)1
B(cid:72)(cid:81)(cid:72)(cid:71)(cid:76)(cid:70)(cid:87) (cid:53)(cid:72)(cid:76)(cid:70)(cid:75)(cid:72)(cid:79)1
L(cid:76)(cid:80) K(cid:72)(cid:82)(cid:81)(cid:74) H(cid:82)(cid:72)1
D(cid:68)(cid:89)(cid:76)(cid:71) G(cid:85)(cid:72)(cid:72)(cid:81)1
P(cid:68)(cid:88)(cid:79) A(cid:85)(cid:69)(cid:88)(cid:70)(cid:78)(cid:79)(cid:72)
C(cid:75)(cid:82)(cid:81)(cid:74) K(cid:90)(cid:82)(cid:81)(cid:74) (cid:60)(cid:68)(cid:81)(cid:74)1
(cid:60)(cid:68)(cid:81) H(cid:82) L(cid:72)(cid:82) C(cid:75)(cid:68)(cid:81)
K(cid:88)(cid:85)(cid:78)(cid:92)(cid:72) (cid:58)(cid:82)(cid:81)(cid:74)
(cid:60)(cid:88)(cid:74)(cid:82) K(cid:76)(cid:81)(cid:82)(cid:86)(cid:75)(cid:76)(cid:87)(cid:68)1
(cid:53)(cid:82)(cid:71)(cid:72)(cid:85)(cid:76)(cid:70)(cid:78) (cid:54)(cid:88)(cid:87)(cid:87)(cid:82)(cid:81)
(cid:54)(cid:76)(cid:80)(cid:82)(cid:81) (cid:57)(cid:72)(cid:85)(cid:87)(cid:88)(cid:79)(cid:79)(cid:82)
N(cid:82)(cid:85)(cid:80)(cid:68)(cid:81) A(cid:86)(cid:75)(cid:87)(cid:82)(cid:81)
G(cid:82)(cid:85)(cid:71)(cid:82)(cid:81) L(cid:82)
B(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72) (cid:68)(cid:87)
(cid:87)(cid:75)(cid:72) (cid:86)(cid:87)(cid:68)(cid:85)(cid:87) (cid:82)(cid:73)
(cid:87)(cid:75)(cid:72) (cid:92)(cid:72)(cid:68)(cid:85)
496,735
165,519,375
1,106,924
98,385,803
71,000
-
297,000
-
-
-
-
-
-
-
(cid:53)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:72)(cid:71)
(cid:68)(cid:86) (cid:83)(cid:68)(cid:85)(cid:87) (cid:82)(cid:73)
(cid:85)(cid:72)(cid:80)(cid:88)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
A(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) /
(D(cid:76)(cid:86)(cid:83)(cid:82)(cid:86)(cid:68)(cid:79)(cid:86))
O(cid:87)(cid:75)(cid:72)(cid:85) (cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)
(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)
(cid:87)(cid:75)(cid:72) (cid:92)(cid:72)(cid:68)(cid:85)
B(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72) (cid:68)(cid:87)
(cid:87)(cid:75)(cid:72) (cid:72)(cid:81)(cid:71) (cid:82)(cid:73)
(cid:87)(cid:75)(cid:72) (cid:92)(cid:72)(cid:68)(cid:85)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(496,735)
(29,500,070)
169,491
(136,019,305)
(1,276,415)
(70)
(98,385,733)
-
166,667
-
-
-
-
-
-
-
-
(71,000)
-
(297,000)
-
-
-
-
-
-
-
-
-
-
-
-
166,667
-
-
-
-
-
-
-
-
1N(cid:82) (cid:79)(cid:82)(cid:81)(cid:74)(cid:72)(cid:85) (cid:80)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85) (cid:82)(cid:73) (cid:78)(cid:72)(cid:92) (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87) (cid:83)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:81)(cid:72)(cid:79) (cid:68)(cid:86) (cid:68)(cid:87) 30 J(cid:88)(cid:81)(cid:72) 2020.
Option holding
(cid:55)(cid:75)(cid:72)(cid:85)(cid:72) (cid:90)(cid:72)(cid:85)(cid:72) (cid:81)(cid:82) (cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) (cid:82)(cid:89)(cid:72)(cid:85) (cid:82)(cid:85)(cid:71)(cid:76)(cid:81)(cid:68)(cid:85)(cid:92) (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86) (cid:76)(cid:81) (cid:87)(cid:75)(cid:72) (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92) (cid:75)(cid:72)(cid:79)(cid:71) (cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74) (cid:87)(cid:75)(cid:72) (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79) (cid:92)(cid:72)(cid:68)(cid:85).
T(cid:85)a(cid:81)(cid:86)ac(cid:87)i(cid:82)(cid:81)(cid:86) (cid:90)i(cid:87)h (cid:85)ela(cid:87)ed (cid:83)a(cid:85)(cid:87)ie(cid:86) a(cid:81)d ke(cid:92) ma(cid:81)ageme(cid:81)(cid:87) (cid:83)e(cid:85)(cid:86)(cid:82)(cid:81)(cid:81)el
(cid:55)(cid:75)(cid:72) (cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74) (cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) (cid:82)(cid:70)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71) (cid:90)(cid:76)(cid:87)(cid:75) (cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71) (cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:72)(cid:86) (cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74) 2020:
(cid:53)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79) (cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:72)(cid:71) (cid:73)(cid:85)(cid:82)(cid:80) /((cid:83)(cid:68)(cid:76)(cid:71) (cid:87)(cid:82)) A(cid:85)(cid:87)(cid:72) M(cid:82)(cid:69)(cid:76)(cid:79)(cid:72) (cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92) P(cid:87)(cid:72) L(cid:87)(cid:71) ((cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:92) (cid:82)(cid:73) I(cid:86)(cid:72)(cid:81)(cid:87)(cid:85)(cid:76)(cid:70) L(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71))
7,448
(13,974)
C(cid:82)(cid:81)(cid:86)(cid:82)lida(cid:87)ed
2020
$
2019
$
(cid:55)(cid:75)(cid:72) (cid:68)(cid:69)(cid:82)(cid:89)(cid:72) (cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) (cid:82)(cid:70)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71) (cid:68)(cid:87) (cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79) (cid:85)(cid:68)(cid:87)(cid:72)(cid:86).
Thi(cid:86) c(cid:82)(cid:81)cl(cid:88)de(cid:86) (cid:87)he (cid:85)em(cid:88)(cid:81)e(cid:85)a(cid:87)i(cid:82)(cid:81) (cid:85)e(cid:83)(cid:82)(cid:85)(cid:87), (cid:90)hich ha(cid:86) bee(cid:81) a(cid:88)di(cid:87)ed.
20
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Shares under option
There were no unissued ordinary shares of Donaco International Limited under option at the date of this report.
Shares issued on the exercise of options
There were no ordinary shares of Donaco International Limited issued, during the year ended 30 June 2020 and up to the date of this report, on
the exercise of options granted (2019: nil).
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related
entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to
intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of
those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note
30 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.
The directors are of the opinion that the services as disclosed in note 30 to the financial statements do not compromise the external auditor's
independence requirements of the Corporations Act 2001 for the following reasons:
(cid:322)
(cid:322)
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.
Auditor
Crowe Sydney continues in office in accordance with section 327 of the Corporations Act 2001 .
Officers of the company who are former partners of Crowe Sydney
There are no officers of the company who are former partners of Crowe Sydney.
21
DONACO INTERNATIONAL LIMITED
ABN 28 007 424 777
30 June 2020
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.
This report is made in accordance with a resolution of directors, pursuant to section 298 (2) (1) of the Corporation Act 2001 .
On behalf of the directors
f-An
Mr Porntat Amatavivadhana
Non-Executive Chairman
30 October 2020
Sydney
22
Crowe Sydney
ABN 97 895 683 573
Level 15 1 O’Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowe.com.au
30 October 2020
The Board of Directors
Level 18
420 George Street
Sydney NSW 2000
Australia
Dear Board Members
Donaco International Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the Directors of Donaco International Limited.
As lead audit partner for the audit of the financial report of Donaco International Limited for the
financial year ended 30 June 2020, I declare that to the best of my knowledge and belief, that there
have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(i)
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
Crowe Sydney
Suwarti Asmono
Partner
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an
equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership
is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately
owned organisation and/or its subsidiaries.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Sydney, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation.
© 2020 Findex (Aust) Pty Ltd.
23
DONACO INTERNATIONAL LIMITED
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2020
Revenue from continuing operations
4
53,485,035
86,263,580
Consolidated
Note
2020
$
2019
Restated
$
Total income
Expenses
Food and beverages
Employee benefits expense
Depreciation and amortisation expense
Impairment expense
Legal and compliance
Marketing and promotions
Professional & consultants
Property costs
Telecommunications and hosting
Gaming costs
Other expenses
Finance costs
Total expenses
5
5
53,485,035
86,263,580
(3,439,366)
(21,497,734)
(10,220,516)
(50,512,420)
(3,081,011)
(3,989,770)
(1,751,603)
(5,547,611)
(376,710)
(1,510,817)
(3,951,634)
(3,993,946)
(109,873,138)
(4,704,645)
(24,375,795)
(10,127,357)
(204,106,259)
(3,442,915)
(5,465,129)
(1,016,974)
(5,703,812)
(343,163)
(2,094,285)
(12,548,253)
(6,517,906)
(280,446,493)
Loss before income tax expense from continuing operations
(56,388,103)
(194,182,913)
Income tax expense
6
(2,485,516)
(3,611,734)
Loss after income tax expense for the year
(58,873,619)
(197,794,647)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive loss for the year, net of tax
Total comprehensive loss for the year
Loss for the year is attributable to:
Non-controlling interest
Owners of Donaco International Limited
Total comprehensive loss for the year is attributable to:
Non-controlling interest
Owners of Donaco International Limited
Loss per share for loss attributable to
the owners of Donaco International Limited
Basic loss per share
Diluted loss per share
5,210,790
19,368,661
5,210,790
19,368,661
(53,662,829)
(178,425,986)
11,815
(58,885,434)
(58,873,619)
219,956
(198,014,603)
(197,794,647)
11,815
(53,674,644)
(53,662,829)
219,956
(178,645,942)
(178,425,986)
37
37
Cents
Cents
(7.15)
(7.15)
(24.04)
(24.04)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
24
DONACO INTERNATIONAL LIMITED
Statement of financial position
As at 30 June 2020
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 (including licences)
Construction in progress
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Income tax payable
Employee benefits
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Equity attributable to the owners of Donaco International Limited
Non-controlling interest
Total equity
Consolidated
Note
2020
$
2019
Restated
$
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
24
25
26
12,630,359
1,280,432
670,810
4,366
545,350
15,131,317
165,809,709
29,941,540
495,712
15,163
4,288
196,266,412
26,568,268
2,777,446
1,149,324
38,800
1,005,918
31,539,756
167,960,128
77,572,736
505,527
-
2,147
246,040,538
211,397,729
277,580,294
42,079,915
27,325,224
154,296
196,371
69,755,806
2,801,338
907,064
-
3,708,402
47,401,964
16,563,907
1,764,696
690,488
66,421,055
123,760
19,379,454
55,594
19,558,808
73,464,208
85,979,863
137,933,521
191,600,431
358,372,299
47,679,518
(270,150,057)
135,901,760
2,031,761
358,656,945
42,188,163
(211,264,623)
189,580,485
2,019,946
137,933,521
191,600,431
The above statement of financial position should be read in conjunction with the accompanying notes.
25
DONACO INTERNATIONAL LIMITED
Statement of changes in equity
For the year ended 30 June 2020
Consolidated
Note
Issued
capital
$
Accumulated Non-controlling
Reserves
$
losses
Restated
$
interest
$
Total
equity
Restated
$
Balance at 1 July 2018
358,656,945
22,540,464
(13,250,020)
1,799,990
369,747,379
Loss after income tax expense
for the year
Other comprehensive income for
the year, net of tax
Total comprehensive loss for
the year
Transactions with owners in their
capacity as owners:
Share-based payments
-
-
-
-
-
(198,014,603)
219,956
(197,794,647)
19,368,661
-
-
19,368,661
19,368,661
(198,014,603)
219,956
(178,425,986)
279,038
-
-
279,038
Balance at 30 June 2019
358,656,945
42,188,163
(211,264,623)
2,019,946
191,600,431
Balance at 1 July 2019
358,656,945
42,188,163
(211,264,623)
2,019,946
191,600,431
Loss after income tax expense
for the year
Other comprehensive income for
the year, net of tax
Total comprehensive loss for
the year
Transactions with owners in their
capacity as owners:
Shares forfeited
Share-based payments
-
-
-
-
(58,885,434)
11,815
(58,873,619)
5,210,790
-
-
5,210,790
5,210,790
(58,885,434)
11,815
(53,662,829)
24, 25
25
(284,646)
-
284,646
(4,081)
-
-
-
-
-
(4,081)
Balance at 30 June 2020
358,372,299
47,679,518
(270,150,057)
2,031,761
137,933,521
The above statement of changes in equity should be read in conjunction with the accompanying notes.
26
DONACO INTERNATIONAL LIMITED
Statement of cash flows
For the year ended 30 June 2020
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Lease interest paid
Interest and other finance costs paid
Government levies, gaming taxes and GST
Net cash flows from operating activities
Cash flow from investing activities
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash flows from investing activities
Cash flow from financing activities
Repayment of borrowings
Payments for principal elements of lease
Net cash flows from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents, beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
Note
2020
Consolidated
$
58,161,494
(47,990,245)
10,171,249
27,332
(248,251)
(2,755,002)
(10,407,250)
(3,211,922)
2019
Restated
$
91,107,609
(49,644,963)
41,462,646
79,946
-
(5,728,909)
(10,166,853)
25,646,830
(1,079,402)
52,564
(1,026,838)
(5,649,675)
-
(5,649,675)
(9,654,712)
(45,521)
(9,700,233)
(13,938,993)
26,568,268
1,084
12,630,359
(39,749,023)
-
(39,749,023)
(19,751,868)
47,075,589
(755,453)
26,568,268
36(a)
36(b)
7
The above statement of cash flows should be read in conjunction with the accompanying notes.
27
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
Going concern
At 30 June 2020, the consolidated entity recorded net current liabilities of A$54.6 million. The consolidated entity recorded a net loss after tax of
A$8.4 million before impairment (net loss after tax of A$58.9 million after impairment charge of A$50.5 million), and net operating cash outflows
of A$3.2 million for the year ended on that date.
The net current liabilities primarily arise due to the inclusion of a management fee of A$23 million (as at 30 June 2020 spot rate) claimed by the
vendor of the Star Vegas business, as well as the A$25 million (as at 30 June 2020 spot rate) loan from Mega Bank that is due for repayment by
28 June 2021. As of 2 March 2020, the consolidated entity and the vendor have reached settlement agreements over all litigation matters (see
note 39). Pursuant to the settlement agreements, US$18 million (AU$26.2 million at 30 June 2020 spot rate) is payable by the consolidated entity
in respect of unpaid management fees plus interest. As part of the settlement agreements, Donaco is entitled to receive US$38 million (AU$55.4
million at 30 June 2020 spot rate) to remove the non-competition and non-solicitation clauses previously agreed in the Share Sale Agreement over
the Star Vegas business. Donaco will also be required to pay any outstanding rent and an additional lease payment of US$20 million (AU$29.2
million at 30 June 2020 spot rate) to the Landlord. Under the terms of the settlement agreements the US$18 million (AU$26.2 million at 30 June
2020 spot rate) of unpaid management fees will partially offset the US$38 million receivable (AU$55.4 million at 30 June 2020 spot rate). The net
amount receivable of US$20 million (AU$29.2 million at 30 June 2020 spot rate) will be used to offset the additional lease payment due of the
same amount. No net cash flow will therefore arise from the settlement. As part of its loan facility agreement with Mega Bank, Donaco is required
to obtain consent from Mega Bank to fulfil parts of the settlement agreements. All settlement parties have agreed to defer the settlement
payments and additional lease payment whilst awaiting Mega Bank's consent which has not been provided to date.
In light of the impact to the consolidated entity as result of the COVID-19 global pandemic, Mega Bank has agreed to defer the US$5 million
(AU$7.3 million as at 30 June 2020 spot rate) principal repayment that was due in June 2020 under the loan facility agreement to December 2020.
Mega Bank has also granted a waiver on all June 2020 covenants under the loan facility agreement until 31 December 2020, including the
requirements to hold minimum cash and cash equivalents as well as to meet interest cover ratio and debt to EBITDA. As of the date of this report,
the consolidated entity has successfully completed an entitlement offer that has raised approximately A$14.4 million. Under the agreement
reached with Mega Bank, the proceeds of this capital injection will be used to settle the deferred principal repayment. There remains a funding
shortfall between the capital raised of A$14.4 million and the loan balance of A$25 million (as at 30 June 2020 spot rate) that is due for repayment
by June 2021. Donaco will need to raise additional capital or debt in order to meet working capital requirements as well as the loan covenants
under the Mega Bank loan facility by 31 December 2020. It is not certain that Mega Bank will agree to further deferral of repayments and/or
waiver of the covenants under the loan facility agreement. Failure to raise capital could have a material adverse effect on Donaco's activities and
financial position.
While there has been a tentative resumption of casino operations since the Vietnamese and Cambodian governments lifted temporary closure
orders in May and July 2020 respectively, patronage numbers at these casinos are still expected to remain low as international borders with
Vietnam and Cambodia remain closed and the majority of the visitors to these casinos are foreign patrons. It is therefore uncertain as to when
these businesses may be fully operational given the current COVID-19 environment. It is expected that there will be a direct impact on the
profitability of these casinos, however the extent of this effect is unknown. The Board of Directors acknowledges that there is significant
uncertainty over Donaco's ability to meet its working capital requirements and the loan covenants under the Mega Bank loan facility. In the event
that Donaco is unable to negotiate a deferral of repayments and/or waiver of the covenants under the loan agreement with Mega Bank and/or
there is an extended period before the resumption of normal casino operations, then this could have a material impact on the consolidated entity
continuing as a going concern.
New, revised or amending Accounting Standards and Interpretations adopted
The following standard became applicable for the current reporting period and the consolidated entity had to change its accounting policies as a
result of adoption:
AASB 16 Leases
AASB 16 Leases primarily affects the accounting by lessees and results 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 virtually all lease contracts. An optional exemption exists for short-term and low-value leases.
The consolidated entity has applied AASB 16 for the first time in the current period using the simplified transition approach. Under this approach,
the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application. No
restatement of comparative information was therefore required to be made.
On adoption of AASB 16, the consolidated entity recognised right-of-use assets and lease liabilities relating to the commercial property leases in
Cambodia and Vietnam, which had previously been classified as 'operating leases' under the principles of AASB 117 Leases . Under the modified
transition approach, the right-of-use assets were recognised based on the amount equal to the lease liabilities. No adjustment is therefore required
to retained earnings. The lease liabilities were recognised based on the present value of the remaining lease payments, discounted using the
incremental borrowing rate as at the date of initial application (see note 23). The incremental borrowing rates used for determination of the
remaining lease payments were 6.53% and 9.5% for Cambodia and Vietnam respectively.
In applying AASB 16 for the first time, the consolidated entity has used the following practical expedients permitted by the standard:
(cid:194) accounting for operating leases with a remaining lease term of less than 12 months as at 1 Jul(cid:92) 2019 as short-term leases; and
(cid:194) accounting for operating leases for which the underl(cid:92)ing asset has a limited value as at 1 Jul(cid:92) 2019 as short-term leases.
28
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 1. Significant accounting policies (continued)
New, revised or amending Accounting Standards and Interpretations adopted (continued)
AASB 16 Leases (continued)
Measurement of lease liability
Operating lease commitments disclosed as at 30 June 2019 (note 31)
Discounted using the lessees' incremental borrowing rates as of the date of initial application
Lease liability recognised as at 1 July 2019
Of which are:
Current
Non-current
2020
$
9,028,273
3,284,846
3,284,846
44,668
3,240,178
3,284,846
Interpretation 23 Uncertainty over income tax treatments
Interpretation 23 explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a
tax treatment. An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that treatment will be
accepted by the tax authority.
This amendment did not have any impact on the amounts recognised in prior periods and is not expected to significantly affect the current or
future periods.
The consolidated entity also elected to early adopt the following standard:
AASB 2020-4 Amendments to Australian Accounting Standards - COVID-19-Related Rent Concessions
As a result of the COVID-19 pandemic, rent concessions have been granted to lessees. The AASB has issued AASB 2020-4 as a result of the
issuance of amendments to IFRS 16 Leases by the IASB in June 2020. This standard amends AASB 16 Leases to provide a practical expedient that
permits lessees not to assess whether rent concessions that occur as a direct consequence of the COVID-19 pandemic and meet specified
conditions are lease modifications and, instead, to account for those rent concessions as if they were not lease modifications. This standard applies
to annual periods beginning on or after 1 June 2020, however is available for early adoption.
The consolidated entity has elected to early adopt AASB 2020-4. The consolidated entity has applied such practical expedient to all of its COVID-19-
related rent concessions. Total COVID-19-related rent concessions of US$4,000 (AU$5,828 converted at the spot rate) have been recognised in the
consolidated statement of profit and loss and other comprehensive income.
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 2020. These standards are not expected to have a material
impact on the entity in the current or future reporting periods and on foreseeable future transactions.
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
judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement 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 33.
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 2020 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.
29
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 1. Significant accounting policies (continued)
Principles of consolidation (continued)
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of
control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of
the non-controlling interest acquired is recognised directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive
income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity
are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest
in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the
consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports
provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and
assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Donaco International Limited's functional and presentation currency.
DNA Star Vegas Co Ltd, a subsidiary within the Group, has casino and hotel operations in Cambodia. Its functional currency is Thai Baht.
Donaco Singapore Pte Ltd has an interest in the Lao Cai International Hotel Joint Venture Company which operates a casino and hotel in Vietnam.
The functional currency of the Joint Venture Company is Vietnamese Dong.
The subsidiaries of Donaco that operate in the aforementioned foreign countries are consolidated into the Hong Kong group (Star Vegas Group)
and the Singapore Group (Aristo Group). At this level, the presentation currency is US Dollar.
Subsequently, these consolidated groups are consolidated with the Australian operations and converted to Australian dollars.
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.
Goodwill, casino licence and fair value adjustments arising from the acquisition of a foreign operation are treated as assets and liabilities of the
foreign operations and translated at the closing rate.
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 control of the good or service is transferred to the customer, and only to the extent that it is highly probable that a
significant reversal will not occur. Revenue is measured at the fair value of the consideration received or receivable.
Casino revenue
Revenue at the playing tables is recognised upon the differences between chips at the closing and chips at the opening of each table plus chips
transferred from the playing table to the cage, less chips transferred from the cage to the playing table. Revenue is recognised on a net basis after
commission and profit sharing is paid to junket operators.
Revenue from slot machines represents the amount received over the exchange counter less the amount returned to customers and profit-sharing
paid.
Sale of goods
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 provided to
the customer.
Complimentary goods or services
For gaming transactions that include complimentary goods or services being provided to customers, the consolidated entity allocates revenue from
the gaming transaction to the good or service provided based on the standalone selling price which is the arm's length price for that good or
service available to the public.
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.
Government grants and incentives
Government grants and incentives are recognised at their fair value where there is reasonable assurance that the grants and incentives will be
received and the consolidated entity will comply with all the attached conditions.
30
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 1. Significant accounting policies (continued)
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:
(cid:322)
(cid:322)
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not
a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal
can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts
will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are
reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously
unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities
and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different
taxable entities which intend to settle simultaneously.
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 cycle; it is held primarily for
the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement
of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any
allowance for expected credit losses. 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 uncollectible are written off by reducing the
carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the
Group will not be able to collect all amounts due according to the original terms of the receivables.
The amount of impairment loss is determined using the simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance. The expected loss rates used in measuring the expected credit losses are based on historical loss rates, adjusted to reflect current
and forward-looking information on macroeconomic factors affecting the ability of the debtors to settle the receivables. These factors include
significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or
delinquency in payments are considered indicators that the trade receivables are impaired.
The amount of the impairment loss is recognised in the consolidated statement of profit or loss and other comprehensive income. When a trade
receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent year, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the consolidated statement of
comprehensive income.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
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.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is
recognised. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognised as an expense in the
period of the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable
value, is recognised in the statement of profit or loss and other comprehensive income, in the period in which the reversal occurs.
31
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 1. Significant accounting policies (continued)
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
Leasehold improvements
Machinery and equipment
Motor vehicles
Office equipment and other
Furniture and fittings
Consumables
25-50 years
2-5 years
5-15 years
5-6 years
3-8 years
3-8 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
As stated in 'New, revised or amending Accounting Standards and Interpretations adopted ', the consolidated entity has changed its accounting
policy for leases.
Until 30 June 2019, leases in which a significant portion of the risks and rewards of ownership were not transferred to the consolidated entity as
lessee were classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to
the consolidated statement of comprehensive income on a straight-line basis over the year of the lease.
From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the lease asset is available
for use by the consolidated entity. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of fixed payments, less any lease incentives receivable.
The lease payments are discounted using the consolidated entity's incremental borrowing rates.
Right-of-use assets are measured at cost comprising the following:
- the amount of the initial measurement of lease liability; and
- any lease payments made at or before the commencement date, less any lease incentives received.
Right-of-use assets are depreciated over the lease term on a straight-line basis.
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 licencing 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 licencing 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 consider casino licenses 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 it might be impaired, and is carried at cost less accumulated
impairment losses. Impairment losses on casino licenses are recognised in the profit or loss.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently
if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment
losses on goodwill are taken to profit or loss and are not subsequently reversed.
Prepaid construction costs
Amounts recognised as prepaid construction costs relate to tranche payments made to third party developers in connection with the construction
of the new Lao Cai Casino. Tranche payments are made in advance of construction work being performed in accordance with the terms of the
contractor agreements, however once associated works have been completed an amount equal to the tranche payment is transferred from prepaid
construction costs to construction in progress. Once recognised as part of construction in progress the amounts are then carried on the Statement
of Financial Position at cost, until such time as the asset is completed and ready for its intended use. Work in progress is not depreciated, but
tested for impairment annually. Once ready for its intended use an amount equal to the cost of the completed asset will be transferred to property
plant and equipment and accounted for in accordance with the consolidated entit(cid:92)(cid:182)s accounting polic(cid:92) for propert(cid:92) plant and equipment.
32
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 1. Significant accounting policies (continued)
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or
more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the
estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset
belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are
unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually
paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently
measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are
classified as non-current.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they
are incurred including:
- interest on short term and long term borrowings.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be 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.
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 are measured at fair value on grant date. Fair value is independently determined using an amended Black-
Scholes Merton 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 are recognised as an expense with a corresponding increase in equity over the vesting period. The
cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that
are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount
calculated at each reporting date less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest
irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is
recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as
at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any
remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised
immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a
modification.
33
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 1. Significant accounting policies (continued)
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 consist 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).
The directors consider that the carrying amount of all 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.
Where the consolidated entit(cid:92) purchases the compan(cid:92)(cid:182)s equit(cid:92) instruments, for example as the result of a share bu(cid:92)-back or a share-based
payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity
attributable to the owners of Donaco International Limited as treasury shares until the shares are cancelled or reissued. Where such ordinary
shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income
tax effects, is included in equity attributable to the owners of Donaco International Limited.
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.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Donaco International Limited, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect
of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to
have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax
authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to,
the tax authority is included in other receivables or other payables in the statement of financial position.
Cash flows are presented gross of GST and similar taxes. 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.
34
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements, 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
judgements and estimates will seldom equal the related actual results. The judgements, 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 Merton 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.
The casino licence is stated at cost less impairment losses, if any. The licence issued by the royal government of Cambodia is renewable annually
and deemed to be with indefinite useful life, and therefore should not be amortised. Its useful life is reviewed at each reporting period to
determine whether events and circumstances continue to exist to support indefinite useful life assessment. Impairment testing by comparing its
recoverable amount with its carrying amount is performed annually. In the event that the expected future economic benefits are no longer
probable of being recovered, the licences are written down to their recoverable amount.
Goodwill and other indefinite life intangible assets
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other
indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 1. The recoverable amounts
of cash-generating units have been determined based on the higher of value-in-use calculations and fair value less costs of disposal. 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 judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the
ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for anticipated tax
audit issues based on the consolidated entity's current understanding of the tax law. Where the final tax outcome of these matters is different from
the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
Employee share trust and option trust
The consolidated entit(cid:92) has engaged an external unrelated third part(cid:92) to form trusts to administer the Group(cid:182)s emplo(cid:92)ee 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 entit(cid:92) had control over the trusts, management considered the trust(cid:182)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.
Allowance for expected credit losses
The consolidated entity reviews the collectability of trade receivables on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. An allowance for expected credit losses 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. The amount of expected credit loss
is determined using the simplified approach which uses a lifetime expected loss allowance. The expected loss rates used in measuring the expected
credit losses are based on historical loss rates, adjusted to reflect current and forward-looking information on macroeconomic factors affecting the
ability of the debtors to settle the receivables. These factors include significant financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivables are
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.
Estimating incremental borrowing rate for leases
The incremental borrowing rate is used to measure lease liabilities, if the consolidated entity is unable to readily determine the interest rate
implicit in the lease. The incremental borrowing rate is the rate of interest that the lessee would have to pay to borrow over a similar term, and
with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The
incremental borrowing rate therefore reflects what the lessee would have had to pay, which requires estimation when no observable rates are
available or when they need to be adjusted to reflect the terms and conditions of the lease.
Lease term
As part of the settlement agreements, an amended perpetual lease agreement has been executed as of 2 March 2020 in relation to the DNA Star
Vegas lease of the land in Poi Pet, Cambodia (see note 23). This amended lease agreement grants Donaco security of tenure over the Star Vegas
casino until 15 June 2115. However as the settlement agreements require consent from Mega Bank which have yet to be provided, the
consolidated entity has determined that the the lease liability was to be calculated as at 30 June 2020 over the remaining 45 years of the original
lease.
35
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 3. Operating segments
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 six countries: Australia, Cambodia, Vietnam, Singapore, Malaysia
and Hong Kong. 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
Casino Operations - Cambodia
Corporate Operations
Intersegment transactions
Comprises the Aristo International Hotel operating in Vietnam. These operations include hotel
accommodation and gaming and leisure facilities.
Comprises the Star Vegas Resort and Club, operating in Cambodia. These operations include
hotel accommodation and gaming and leisure facilities.
Comprises the development and implementation of corporate strategy, commercial
negotiations, corporate finance, treasury, management accounting, corporate governance and
investor relations functions.
Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.
Operating segment information for continuing operations
Consolidated - 2020
Revenue
Sales to external customers
Government grants and incentives
Interest
Total revenue
EBITDA
Depreciation and amortisation
Impairment of assets
Interest revenue
Non-recurring items
Net exchange losses
Non-controlling interest
Finance costs
Profit / (loss) before income tax expense
Income tax expense
Loss after income tax expense attributable
to the owners of Donaco International Limited
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Casino
Operations
Vietnam
$
Casino
Operations
Cambodia
$
Corporate
Operations
$
Total
$
13,712,137
-
15,495
13,727,632
4,857,953
(3,760,731)
-
15,495
-
(159,250)
(11,815)
(611,703)
329,949
39,707,837
-
-
39,707,837
11,014,690
(6,419,583)
(50,512,420)
-
-
-
-
(186,666)
(46,103,979)
-
37,818
11,748
49,566
(5,492,608)
(40,202)
-
11,748
(1,991,054)
81,805
-
(3,195,577)
(10,625,888)
75,602,754
131,001,733
4,793,242
9,050,088
34,861,363
29,552,757
53,419,974
37,818
27,243
53,485,035
10,380,035
(10,220,516)
(50,512,420)
27,243
(1,991,054)
(77,445)
(11,815)
(3,993,946)
(56,399,918)
(2,485,516)
(58,885,434)
211,397,729
211,397,729
73,464,208
73,464,208
36
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 3. Operating segments (continued)
Consolidated - 2019
Revenue
Sales to external customers
Interest
Total revenue
EBITDA
Depreciation and amortisation
Impairment of assets
Interest revenue
Non-recurring items
Net exchange losses
Non-controlling interest
Finance costs
Profit/(loss) before income tax expense
Income tax expense
Loss after income tax expense attributable
to the owners of Donaco International Limited
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Total liabilities
Geographical information
Australia
Vietnam
Cambodia
Major customers
Casino
Operations
Vietnam
Restated
$
Casino
Operations
Cambodia
Corporate
Operations
$
$
Total
Restated
$
56
30,877
30,933
86,184,228
79,352
86,263,580
21,509,789
48,475
21,558,264
10,846,782
(4,488,371)
(4,021,910)
48,475
-
(508,705)
(219,956)
(890,933)
765,382
64,674,383
-
64,674,383
26,414,045
(5,553,091)
(200,084,349)
-
-
-
-
-
(179,223,395)
(7,703,194)
(85,895)
-
30,877
(2,509,106)
(50,565)
-
(5,626,973)
(15,944,856)
83,092,896
187,064,234
7,423,164
18,147,888
11,786,631
56,045,344
Sales to external customers
Geographical non-current
assets
2020
$
-
13,712,137
39,707,837
53,419,974
2019
$
56
21,509,789
64,674,383
86,184,228
2020
$
2,432,487
67,952,564
125,881,361
196,266,412
2019
$
2,651,283
69,241,051
174,148,204
246,040,538
29,557,633
(10,127,357)
(204,106,259)
79,352
(2,509,106)
(559,270)
(219,956)
(6,517,906)
(194,402,869)
(3,611,734)
(198,014,603)
277,580,294
277,580,294
85,979,863
85,979,863
There was no single external customer that contributed 10% or more of the consolidated entity's revenue during the current and previous financial
years.
Note 4. Revenue
From continuing operations
Sales revenue
Casino
- Gaming revenue
- Non-gaming revenue
Corporate operations
Government grants and incentives
Interest
Revenue from continuing operations
Consolidated
2020
$
2019
$
40,706,856
12,713,118
-
37,818
27,243
53,485,035
67,868,793
18,315,379
56
-
79,352
86,263,580
Gaming revenue represents net house takings arising from casino operations.
Non-gaming revenue represents house revenue from room rental, food and beverage sales and other related services recognised when the
services are rendered.
37
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 4. Revenue (continued)
Disaggregation of revenue
The consolidated entity derives revenue from the transfer of goods and services over time and at a point in time in the following operating
segments:
Consolidated - 30 June 2020
Revenue
Gaming revenue
Non-gaming revenue
Government grants and incentives
Interest
Total revenue
Timing of revenue recognition
At a point in time
Over time
Consolidated - 30 June 2019
Revenue
Gaming revenue
Non-gaming revenue
Corporate operations
Interest
Total revenue
Timing of revenue recognition
At a point in time
Over time
Casino
Operations
Vietnam
$
Casino
Operations
Cambodia
$
Corporate
Operations
$
Total
$
8,089,850
5,622,287
-
15,495
13,727,632
32,617,006
7,090,831
-
-
39,707,837
9,708,737
4,018,895
13,727,632
37,667,019
2,040,818
39,707,837
-
-
37,818
11,748
49,566
-
49,566
49,566
40,706,856
12,713,118
37,818
27,243
53,485,035
47,375,756
6,109,279
53,485,035
Casino
Operations
Vietnam
$
Casino
Operations
Cambodia
$
Corporate
Operations
$
Total
$
12,271,369
9,238,420
-
48,475
21,558,264
55,597,424
9,076,959
-
-
64,674,383
14,832,468
6,725,796
21,558,264
61,560,438
3,113,945
64,674,383
-
-
56
30,877
30,933
-
30,933
30,933
67,868,793
18,315,379
56
79,352
86,263,580
76,392,906
9,870,674
86,263,580
Note 5. Expenses
Loss before income tax from continuing operations includes the following specific
expenses:
Depreciation
Land, buildings and structures
Right-of-use asset (see note 23)
Furniture and fittings
Machinery and equipment
Office equipment and other
Motor vehicles
Consumables
Amortisation
Land right
Total depreciation and amortisation
Impairment of assets
Casino licence (see note 13)
Interactive gaming (see note 12)
Trade and other receivables (see note 8)
Consolidated
2020
$
2019
Restated
$
5,226,958
123,032
68,188
3,710,466
568,714
187,929
332,854
10,218,141
4,748,917
-
86,623
1,879,130
2,164,874
257,772
987,800
10,125,116
2,375
2,241
10,220,516
10,127,357
50,326,357
-
186,063
50,512,420
186,644,711
3,674,155
13,787,393
204,106,259
38
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 6. Income tax expense
Income tax expense
Current tax
Deferred tax
Aggregate income tax expense
Income tax expense is attributable to:
Profit from continuing operations
Aggregate income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense from continuing operations
Profits tax using:
Australian corporation tax at the statutory tax rate of 30% (2019: 30%)
Tax effect of difference in overseas corporation tax at the statutory tax rate of 20% (2019: 20%)
Tax effect amounts which are not deductible in calculating taxable income
Losses not brought to account
Tax exempt profits from Cambodian operations (note (a))
Obligation payments in Cambodia (note (a))
Adjustment for investment spending in Vietnam
Income tax expense
(a)
Income tax in profit or loss
Consolidated
2020
$
2019
Restated
$
2,500,938
(15,422)
2,485,516
3,611,734
-
3,611,734
2,485,516
2,485,516
3,611,734
3,611,734
(56,388,103)
(194,182,913)
(16,916,431)
(58,254,874)
5,173,110
11,657,159
982,322
(738,224)
2,362,161
(34,581)
2,094,972
51,588,818
7,598,241
(1,998,176)
3,002,735
(419,982)
2,485,516
3,611,734
Income tax includes obligation payments totalling $2,362,161 (2019: $3,002,735) payable to the Ministry of Economy and Finance of
Cambodia ((cid:179)MOEF(cid:180)).
As at the date of this report, the Casino Law in respect of casino taxes in Cambodia is yet to be introduced. The MOEF levies an Obligatory
Tax Payment, payable on a monthly basis. The Obligatory Tax Payment is comprised of a fixed gaming tax and a fixed non-gaming tax
payment. In addition, an annual casino licence fee of USD30,000 is paid.
In respect of gaming activities, DNA Star Vegas Co., Ltd (DNA Star Vegas) has to pay the obligatory payment which is a fixed gaming tax
and with the payment of this fixed gaming tax, DNA Star Vegas will be exempted from all categories of taxes on gaming activities including
advance profits tax, minimum tax and advance tax on distribution of dividends.
As for non-gaming obligatory payment, it is considered as a composite of various other taxes such as salary tax, fringe benefit tax,
withholding tax, value-added tax, patent tax, tax on rental of moveable and unmoveable assets, minimum tax, advance profit tax,
advertising tax and specific tax on entertainment services.
Monthly payments for the obligatory payment are due on the first week of the following month. DNA Star Vegas has made the obligatory
payment in a timely manner.
In the event of late payment within 7 days from the due date, there will be a penalty of 2% on the late payment and interest of 2% per
month. In addition, after 15 days when official government notice is issued to DNA Star Vegas for the late payment, an additional penalty of
25% will be imposed. In the case where DNA Star Vegas does not comply with the abovementioned requirements, the MOEF will not issue
the casino licences to DNA Star Vegas in the successive years.
Certain amendments to the Law of Investment ("LOI") and Law of Taxation ("LOT") were promulgated in March 2003. Under the
amendments made to the LOT, distribution of dividends to non-residents will be subject to a withholding tax on the distribution of net of 20%
corporate tax, at a rate of 14%, resulting in a net distribution tax of 31.2%. These amendments are not applicable to DNA Star Vegas as they
will be regulated by the Casino Law which is yet to be enacted.
(b)
The parent entity has not brought to account tax losses with a tax effect of $955,546 (2019: $1,063,184).
39
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 7. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Cash in transit
Short-term deposit
Note 8. Current assets - trade and other receivables
Trade receivables
Other receivables
Interest receivable on bank deposits
Tax related receivables
Consolidated
2020
$
2019
Restated
$
9,463,849
3,166,510
-
-
12,630,359
20,308,499
5,695,441
151,842
412,486
26,568,268
Consolidated
2020
$
2019
$
610,883
644,547
-
25,002
1,280,432
1,788,448
974,210
89
14,699
2,777,446
Impairment of receivables
The consolidated entity has recognised a loss of $186,063 in respect of impairment of receivables for the year ended 30 June 2020 (2019 restated:
$13,787,393).
Consolidated
2020
$
2019
$
Note 9. Current assets - inventories
Food and beverage - at cost
670,810
1,149,324
Note 10. Current assets - prepaid construction costs
Prepaid construction costs
4,366
38,800
Amounts recognised as prepaid construction costs relate to tranche payments made to third party developers in connection with the construction
of the new Aristo Casino. Tranche payments are made in advance of construction work being performed in accordance with the terms of the
contractor agreements, however once associated works have been completed an amount equal to the tranche payment is transferred from prepaid
construction costs to non-current construction in progress.
Note 11. Current assets - other
Bonds and security deposits
Prepayments
Other current assets
Consolidated
2020
$
2019
$
354,792
123,530
67,028
545,350
505,586
447,620
52,712
1,005,918
40
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 12. Non-current assets - property, plant and equipment
Leasehold buildings and structures - at cost
Less: Accumulated depreciation for leasehold buildings and structures
Right-of-use asset - at cost (see note 23)
Less: Accumulated depreciation for right-of-use asset
Furniture and fittings - at cost
Less: Accumulated depreciation for furniture and fittings
Machinery and equipment - at cost
Less: Accumulated depreciation for machinery and equipment
Motor vehicles - at cost
Less: Accumulated depreciation for motor vehicles
Office equipment and other - at cost
Less: Accumulated depreciation for office equipment and other
Consumables
Interactive gaming - at cost
Less: Accumulated impairment
Consolidated
2020
$
2019
$
177,939,404
(29,513,287)
148,426,117
174,655,552
(24,420,906)
150,234,646
3,549,358
(120,711)
3,428,647
5,695,362
(5,649,274)
46,088
47,906,102
(35,586,636)
12,319,466
2,344,341
(2,087,510)
256,831
3,808,247
(2,833,645)
974,602
-
-
-
5,594,200
(5,505,540)
88,660
46,433,136
(31,448,420)
14,984,716
2,569,132
(1,969,042)
600,090
3,820,296
(2,321,067)
1,499,229
357,958
357,958
552,787
552,787
3,887,606
(3,887,606)
-
3,804,363
(3,804,363)
-
165,809,709
167,960,128
41
DONACO INTERNATIONAL LIMITED
Notes to financial statements
For the year ended 30 June 2020
N(cid:82)(cid:87)e 12. N(cid:82)(cid:81)-c(cid:88)(cid:85)(cid:85)e(cid:81)(cid:87) a(cid:86)(cid:86)e(cid:87)(cid:86) (cid:177) P(cid:85)(cid:82)(cid:83)e(cid:85)(cid:87)(cid:92), (cid:83)la(cid:81)(cid:87) a(cid:81)d e(cid:84)(cid:88)i(cid:83)(cid:80)e(cid:81)(cid:87) (c(cid:82)(cid:81)(cid:87)i(cid:81)(cid:88)ed)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
$
$
$
$
$
$
$
Leasehold
buildings
Furniture and
fittings
Machinery and
equipment
Motor
vehicles
Office equipment
and other
Consumables
Right-of-use
asset
Balance at 1 July 2018
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2019
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2020
142,455,067
2,506,055
-
10,022,441
(4,748,917)
150,234,646
70,239
(3)
3,348,193
(5,226,958)
148,426,117
151,801
9,020
-
14,462
(86,623)
88,660
23,142
-
2,474
(68,188)
46,088
15,495,600
189,100
-
1,179,146
(1,879,130)
14,984,716
894,520
(241,414)
392,110
(3,710,466)
12,319,466
769,852
33,475
-
54,535
(257,772)
600,090
-
(163,798)
8,468
(187,929)
256,831
1,869,074
1,880,136
(38,358)
(46,749)
(2,164,874)
1,430,844
68,929
-
40,814
(987,800)
1,499,229
18,912
(14,686)
39,861
(568,714)
974,602
552,787
118,690
-
19,335
(332,854)
357,958
-
-
-
-
-
-
3,549,435
-
2,244
(123,032)
3,428,647
Total
$
162,172,238
4,686,715
(38,358)
11,264,649
(10,125,116)
167,960,128
4,674,938
(419,901)
3,812,685
(10,218,141)
165,809,709
Consumables represent low value, high turnover items that are depreciated in accordance with company policy and local legislation.
42
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 13. Non-current assets - intangibles
Goodwill - at cost
Land right - at cost
Less: Accumulated amortisation for land right
Casino licence
Less: Accumulated Impairment
Consolidated
2020
$
2019
$
2,426,187
2,426,187
74,477
(45,866)
28,611
72,737
(42,610)
30,127
435,515,568
(408,028,826)
27,486,742
424,607,676
(349,491,254)
75,116,422
29,941,540
77,572,736
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2018
Impairment of assets
Exchange differences
Amortisation expense
Balance at 30 June 2019
Impairment of assets
Exchange differences
Amortisation expense
Balance at 30 June 2020
Goodwill
$
Land right
$
Casino licence
$
Total
$
2,426,187
-
-
-
2,426,187
-
-
-
31,187
-
1,181
(2,241)
30,127
-
859
(2,375)
251,606,947
(186,644,711)
10,154,186
-
254,064,321
(186,644,711)
10,155,367
(2,241)
75,116,422
(50,326,357)
2,696,677
-
77,572,736
(50,326,357)
2,697,536
(2,375)
2,426,187
28,611
27,486,742
29,941,540
Impairment testing of goodwill
Goodwill is monitored by the Chief Operating Decision Maker ('CODM') at the cash generating unit level. CODM reviews business performance
based on geography and type of business. It has identified two reportable cash generating units, Lao Cai and DNA Star Vegas. A business-level
summary of the goodwill allocation is presented below:
Lao Cai International Hotel JVC
Total goodwill
Lao Cai - Goodwill
Consolidated
2020
$
2,426,187
2,426,187
2019
$
2,426,187
2,426,187
The recoverable amount of the cash generating unit of Lao Cai 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 FY20 based on the growth in revenue from Aristo(cid:182)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 (cid:92)ears are based on past performance and management(cid:182)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.
43
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 13. Non-current assets - intangibles (continued)
Lao Cai - Goodwill (continued)
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.
No impairment has been recognised for the year ended 30 June 2020 (2019: nil).
DNA Star Vegas - Casino Licence
The casino licence relates to the licence to operate the DNA Star Vegas casino acquired on 1 July 2015. 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.
The recoverable amount of the cash-generating unit of DNA Star Vegas has been determined based on its value in use. Independent valuations of
the 100% equity interest in DNA Star Vegas Company Limited were undertaken as at 31 December 2019 and as at 30 June 2020. As at 31
December 2019, adjustments were made to determine the value in use of the cash-generating unit which was reasonably determined to be
$160,544,041 (US$112,480,937 converted at the spot rate). Based on the valuation undertaken as at 30 June 2020, the value in use was
determined to be $115,413,396 (US$79,207,601 converted at the spot rate).
The valuation as at 30 June 2020 was determined using budgeted gross margin based on past performance and its expectations for the future and
are considered to be reasonably achievable. The valuation is based on a 5-year cash flow forecast period. The valuation uses a contraction rate of
61.2% in the first year, followed by a growth rate of 52.9% in the second year and a growth rate of 3% in subsequent years. The discount rate
used of 16.94% reflects specific risks relating to the relevant segments and the countries in which they operate. The discount rate has been
decreased compared to the prior period rate used of 18.6%. The valuation was determined using a foreign exchange rate between Thai Baht and
US Dollar of 30.913 THB:1 USD. Capital expenditure of THB6 million (AU$0.28 million at the spot rate) for each year over the forecast period was
included in the valuation.
Based on the valuation, the Directors determined an impairment loss of $50,326,357 needed to be recognised as at 30 June 2020 (2019:
$186,644,711).
Apart from the impairment loss, the movement in the historical cost of the casino license is due to foreign exchange translation as the licence is
denominated in foreign currency.
Land right
Intangible asset of $28,611 (2019: $30,127) 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.
Note 14. Non-current assets - construction in progress
Consolidated
2020
$
2019
$
Property construction works in progress - at cost
495,712
505,527
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2018
Additions
Exchange differences
Transfers out
Balance at 30 June 2019
Additions
Disposals
Exchange differences
Balance at 30 June 2020
Construction
works in
progress
$
591,787
2,395,152
48,003
(2,529,415)
505,527
29,580
(53,018)
13,623
495,712
Construction relates to costs incurred for the construction of the new 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 entit(cid:92)(cid:182)s accounting polic(cid:92) for each asset class.
44
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 15. Non-current assets - other
Other debtors
Note 16. Current liabilities - trade and other payables
Trade payables (note 28)
Deposits received
Floating chips (note 28)
Interest payable
Other payables and accrued expenses
Lease liability - current (note 23)
Consolidated
2020
$
2019
$
4,288
2,147
Consolidated
2020
$
2019
Restated
$
7,822,565
74,839
4,759,231
17,315
28,593,374
812,591
42,079,915
7,168,624
93,559
11,469,683
45,233
28,624,865
-
47,401,964
Refer to note 28 for further information on financial instruments.
Floating chips
The number of floating chips is determined as the difference between the number of chips in use and the actual chips counted by the casino as at
reporting date.
Note 17. Current liabilities - borrowings
Joint Stock Commercial Ocean Bank
Mega International Commercial Bank Co Ltd
Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)
Refer to note 28 for further information on financial instruments.
Total secured liabilities
The total secured current liabilities are as follows:
Joint Stock Commercial Ocean Bank
Mega International Commercial Bank Co Ltd
Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)
Consolidated
2020
$
2019
$
1,390,924
24,990,986
943,314
27,325,224
2,998,803
13,565,104
-
16,563,907
1,390,924
24,990,986
943,314
27,325,224
2,998,803
13,565,104
-
16,563,907
The loan from Mega International Commercial Bank Co Ltd was restructured and refinanced under new binding agreements effective June 2019.
Under the new refinancing terms, future principal repayments have been reduced to US$5 million (AU$7 million at spot rate), with final settlement
in June 2021.
In light of the impact to the consolidated entity as result of the COVID-19 global pandemic, Mega Bank has agreed to defer the US$5 million (AU$7
million at spot rate) principal repayment that was due in June 2020 under the loan facility agreement to December 2020. Mega Bank has also
granted a waiver on all June 2020 covenants under the loan facility agreement until 31 December 2020, including the requirements to hold
minimum cash and cash equivalents as well as to meet interest cover ratio and debt to EBITDA.
Assets pledged as security
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 (carrying value $123,347,846, 2019: $123,347,846);
iii. A pledge of the shares in DNA Star Vegas Co. Ltd owned by Donaco Hong Kong Limited (carrying value $124,046,749, 2019: $165,735,942);
iv. A pledge of the debt service reserve account maintained by Donaco Hong Kong Limited;
v. A security assignment of contractual rights held by the parent entity under the purchase agreement for DNA Star Vegas;
vi. A security agreement over the assets of DNA Star Vegas; and
vii. A hypothec agreement over the land and buildings of DNA Star Vegas.
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 2020 under this arrangement were $2,297,988 (2019: $4,498,205).
Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn down at any time.
45
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 17. Current liabilities - borrowings (continued)
Joint Stock Commercial Bank for Foreign Trade of Vietnam
The loan from the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) was drawn down on 20 February 2020. The borrowing
is guaranteed over properties held by Lao Cai International Hotel Joint Venture Company Ltd and is for a term of 9 months. Total borrowings as at
30 June 2020 is $943,314 (2019: nil).
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
2020
$
2019
$
28,232,288
35,943,361
28,232,288
35,943,361
-
-
Note 18. Current liabilities - income tax
Provision for income tax
154,296
1,764,696
Note 19. Current liabilities - employee benefits
Annual leave
Accrued salaries, wages and other benefits
Note 20. Non-current liabilities - trade and other payables
Other payables - non current
Lease liability - non-current (note 23)
Note 21. Non-current liabilities - borrowings
Joint Stock Commercial Ocean Bank
Mega International Commercial Bank Co Ltd
Refer to note 28 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
Mega International Commercial Bank Co Ltd
Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)
2,388
193,983
196,371
200,407
490,081
690,488
40,277
2,761,061
2,801,338
123,760
-
123,760
907,064
-
907,064
1,499,402
17,880,052
19,379,454
2,297,988
24,990,986
943,314
28,232,288
4,498,205
31,445,156
-
35,943,361
Note 22. Non-current liabilities - employee benefits
Long service leave
-
55,594
46
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 23. Leases
On 15 June 2015, DNA Star Vegas Co., Ltd entered into a lease of 50 years, with rent payable monthly. The lease is in relation to land of
approximately 232,189 square meters located in Poi Pet, Cambodia. The remaining lease term as at 30 June 2020 is 45 years. Under the terms of
the lease agreement, the lease renews automatically for a further 50 years to the extent allowable under Cambodian laws. However, following an
application undertaken by the Landlord of DNA Star Vegas, an award was made on 21 August 2019 in the Cambodian arbitration proceedings
entitling the Landlord to terminate the lease for the land occupied by DNA Star Vegas. In response, the Company had filed an appeal with the
Appeal Court and sought to enter into settlement negotiations with the Landlord to preserve the lease. The dispute between the Landlord of DNA
Star Vegas and the company is now resolved, following the settlement of all litigation matters between the Thai vendor (including the Landlord)
and Donaco. As part of the settlement agreements, an amended perpetual lease agreement has been executed as of 2 March 2020 in relation to
the DNA Star Vegas lease, which grants Donaco security of tenure over the Star Vegas casino until 15 June 2115. This follows an additional lease
payment of US$20 million to the Landlord. Further details of the settlement agreements are disclosed in note 39.
The settlement agreements require consent from Mega Bank to be finalised, which has not yet been provided. In any case, it is noted that all legal
actions will now cease. See notes 1 and 39 for further information regarding the settlement of the legal actions.
Pending the outstanding consent from Mega Bank and completion of the settlement agreements, the lease liability and right-of-use asset have
been calculated as at 30 June 2020 over the remaining 45 years of the original lease.
Lao Cai International Hotel Joint Venture Company Limited has a non-cancellable operating lease commitment over a 50-year term in respect of its
casino premises in Lao Cai, Vietnam. The lease commenced 8 April 2011 and the remaining lease term as at 30 June 2020 is approximately 41
years.
On adoption of AASB 16 Leases , the company has applied the new rules retrospectively from 1 July 2019. The property leases previously
recognised as operating leases are recognised as right-of-use assets and corresponding liabilities as of the date of application. Each lease payment
is allocated between the liability and finance cost. The finance cost is charged to the statement of comprehensive income over the lease period.
The right-of-use asset is depreciated over the lease term on a straight-line basis.
(i) Amounts recognised in the statement of financial position
The statement of financial position shows the following amounts relating to leases:
Right-of-use assets (recognised as part of property, plant and equipment)
Properties
Lease liability (recognised as part of trade and other payables)
Properties - current
Properties - non-current
Consolidated
2020
$
3,428,647
3,428,647
812,591
2,761,061
3,573,652
2019
$
-
-
-
-
-
The lease liability has been measured at the present value of the remaining lease payments over the term of the lease. For the lease in relation to
the land in Cambodia, the lease payments were discounted using an incremental borrowing rate of 6.53%, while the lease payments for the lease
in Vietnam were discounted using a discount rate of 9.5%.
(i) Amounts recognised in the statement of comprehensive income
The statement of comprehensive income shows the following amounts relating to leases:
Depreciation of right-of-use asset (recognised as part of depreciation expense)
Interest expense (included in finance cost)
The total cash outflow for leases in 2020 was $293,772.
Consolidated
2020
$
2019
$
123,032
248,251
-
-
47
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 24. Equity - issued capital
Ordinary shares - fully paid
822,930,805
823,592,773
358,372,299
358,656,945
Consolidated
2020
Shares
2019
Shares
2020
$
2019
$
Details
Balance
Balance
Employee shares forfeited
Balance
Ordinary shares
Date
Shares
$
30 June 2018
823,592,773
358,656,945
30 June 2019
31 December 2019
30 June 2020
823,592,773
(661,968)
822,930,805
358,656,945
(284,646)
358,372,299
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.
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.
In light of the impact to the consolidated entity as result of the COVID-19 global pandemic, in addition to deferring the principal repayment of
US$5 million (AU$7 million at spot rate) that was due in June 2020 under the loan facility agreement to December 2020, Mega Bank has also
granted a waiver on all June 2020 covenants under the loan facility agreement until 31 December 2020, including the requirements to hold
minimum cash and cash equivalents as well as to meet interest cover ratio and debt to EBITDA. There were therefore no events of default during
the financial year.
The capital risk management policy remains unchanged from the 2019 financial statements.
Treasury shares are shares in Donaco International Limited that are held by Smartequity EIS Pty Ltd for the purpose of issuing shares under the
employee share scheme. Shares issued to employees are recognised on a first-in-first-out basis.
Details
Opening balance 1 July 2018
Balance 30 June 2019
Shares forfeited 31 December 2019
Balance 30 June 2020
Number of
shares
595,224
595,224
661,968
1,257,192
$
233,470
233,470
284,646
518,116
48
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 25. Equity - reserves
Revaluation surplus reserve
Foreign currency reserve
Employee share option reserve
Consolidated
Balance at 1 July 2018
Foreign currency translation
Share-based payments
Balance at 30 June 2019
Foreign currency translation
Shares forfeited
Share-based payments
Consolidated
2020
$
2019
$
1,855,327
42,454,937
3,369,254
47,679,518
1,855,327
37,244,147
3,088,689
42,188,163
Revaluation
surplus
reserve
$
Share-based
payment
reserve
$
Foreign
currency
reserve
$
1,855,327
-
-
1,855,327
-
-
-
2,809,651
-
279,038
3,088,689
-
284,646
(4,081)
17,875,486
19,368,661
-
37,244,147
5,210,790
-
-
Total
$
22,540,464
19,368,661
279,038
42,188,163
5,210,790
284,646
(4,081)
Balance at 30 June 2020
1,855,327
3,369,254
42,454,937
47,679,518
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.
Share-based payment
The reserve is used to recognise:
(cid:322)
●
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.
Note 26. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax expense for the year
Consolidated
2020
$
2019
Restated
$
(211,264,623)
(58,885,434)
(13,250,020)
(198,014,603)
Accumulated losses at the end of the financial year
(270,150,057)
(211,264,623)
Note 27. Equity - dividends
The dividend policy that was announced on 29 August 2017 stated that the consolidated entity intends to pay out 10-30% of net profit after tax as
dividends to shareholders, with the intention to provide regular half-yearly dividend payments, subject to the consolidated entity's then current
working capital requirements and growth plans. Shareholders should note that the payment of dividends is not guaranteed.
No dividends were paid for the year ended 30 June 2020 (2019: nil).
Franking credit balance
Franking credits available for subsequent reporting periods after payment of tax liability
based on a tax rate of 30% (2019: 30%)
Consolidated
2020
$
2019
$
471,682
471,682
49
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 28. Financial instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate risk), credit
risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to
measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and
other price risks and ageing analysis for credit risk.
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
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, in which the functional currencies are Vietnamese Dong and Thai Baht.
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
sensitivit(cid:92) of the consolidated entit(cid:92)(cid:182)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
THB
VND
CNY
MYR
SGD
HKD
Average exchange rate
2019
2020
Reporting date exchange rate
2020
2019
1.4895
0.0480
0.0001
0.2119
0.3542
1.0770
0.1911
1.3975
0.0433
0.0001
0.2048
0.3387
1.0235
0.1782
1.4571
0.0471
0.0001
0.2061
0.3404
1.0443
0.1880
1.4259
0.0464
0.0001
0.2076
0.3443
1.0535
0.1826
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
CNY
MYR
THB
SGD
EUR
HKD
Assets
2020
2019
Restated
2020
2019
Restated
Liabilities
798,847
6,352,003
25,657
-
60,593
-
38,249
7,275,349
1,445,796
10,571,643
179,733
25,409
141,515
3,238
45,174
12,412,508
(5,563,524)
(4,335,573)
(3,522)
-
(17,639)
-
(64,031)
(9,984,289)
(3,706,561)
(10,507,445)
(100,428)
-
(18,029)
-
(69,290)
(14,401,753)
50
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 28. Financial instruments (continued)
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
% Change
USD
CNY
MYR
THB
SGD
EUR
HKD
5%
5%
5%
5%
5%
5%
5%
AUD strengthened
Effect on
profit after
tax
2020
Effect on
profit after
tax
2019
Restated
238,234
(100,822)
(1,107)
-
(2,148)
-
1,289
135,446
113,038
(3,210)
(3,965)
(1,270)
(6,174)
(162)
1,206
99,463
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:
Consolidated
Bank loans
Cash at bank
Fixed deposits
Net exposure to cash flow interest rate risk
2020
2019
Weighted
average
interest rate
%
7.66%
0.10%
n/a
Weighted
average
interest rate
%
8.62%
0.54%
5.50%
Balance
$
(28,232,288)
3,166,510
-
(25,065,778)
Balance
$
(35,943,361)
5,695,441
412,486
(29,835,434)
An analysis by remaining contractual maturities is shown in 'liquidity and interest rate risk management' below.
An assessment of the sensitivit(cid:92) of the consolidated entit(cid:92)(cid:182)s exposure to interest rate movements was performed, and was found to be not
significant for the purposes of this disclosure.
51
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 28. Financial instruments (continued)
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 da(cid:92)-to-da(cid:92) and week-to-week basis. Furthermore, the consolidated entit(cid:92)(cid:182)s long term liquidit(cid:92) needs are identified in its annual Board approved
budget, and updated on a quarterly basis through revised forecasts.
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.
Consolidated - 2020
%
$
Weighted
average
interest rate 1 year or less
Between 1 and
2 years
$
Between 2 and
5 years
$
Over 5 years
$
Non-derivatives
Non-interest bearing
Trade payables
Floating chips
Interest bearing - variable
Bank loans
Total non-derivatives
-
-
7,822,565
4,759,231
-
-
7.66%
27,325,224
39,907,020
907,064
907,064
-
-
-
-
-
-
-
-
Weighted
average
interest rate 1 year or loss
Consolidated - 2019
%
$
Restated
Between 1 and
2 years
$
Between 2 and
5 years
$
Over 5 years
$
Total
contractual
maturities
$
7,822,565
4,759,231
28,232,288
40,814,084
Total
contractual
maturities
$
Restated
Non-derivatives
Non-interest bearing
Trade payables
Floating chips
Interest-bearing - variable
Bank loans
Total non-derivatives
-
-
7,168,624
11,469,683
-
-
8.62%
16,563,907
35,202,214
19,379,454
19,379,454
-
-
-
-
-
-
-
-
7,168,624
11,469,683
35,943,361
54,581,668
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.
52
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 29. Key management personnel disclosures
Directors
The following persons were directors of Donaco International Limited during the financial year:
Stuart James McGregor
Joey Lim Keong Yew
Benedict Paul Reichel
Benjamin Lim Keong Hoe
David John Green
Kurkye Wong
Yan Ho Leo Chan
Yugo Kinoshita
Roderick John Sutton
Simon Vertullo
Norman Mel Ashton
Non-Executive Director (removed 29 November 2019)
Non-Executive Director (removed 18 July 2019)
Executive Director and Company Secretary (resigned 29 November 2019)
Non-Executive Director (removed 18 July 2019)
Non-Executive Director (removed 29 November 2019)
Executive Director (effective 11 February 2020) (appointed Non-Executive Director 12 August 2019)
Executive Director (effective 11 February 2020) (appointed Non-Executive Director 12 August 2019)
Non-Executive Director (appointed 14 August 2019, removed 29 November 2019)
Non-Executive Director (appointed 29 November 2019)
Non-Executive Director (appointed 9 December 2019, resigned 2 September 2020)
Non-Executive Director (appointed 9 December 2019, resigned 2 September 2020)
Other key management personnel
The following persons also had the authority and responsibility for planning, directing and controlling the major activities of the consolidated
entity, directly or indirectly, during the financial year:
Paul Arbuckle
Chong Kwong Yang
Gordon Lo
Chief Executive Officer (terminated 4 August 2020)
Chief Financial Officer (resigned 30 December 2019)
Chief Financial Officer (appointed 1 January 2020)
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 30. Remuneration of auditors
Consolidated
2020
$
2,412,038
72,332
77,759
2,562,129
2019
$
1,471,879
72,849
195,619
1,740,347
During the financial year the following fees were paid or payable for services provided by Crowe the auditor of the company, and unrelated firms:
Audit services - Crowe Sydney
Audit or review of the financial statements
Audit services - related firms
Audit or review of the financial statements
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
Consolidated
2020
$
2019
$
123,000
123,000
206,969
1,145
208,114
123,000
123,000
203,653
1,069
204,722
79,182
74,292
2,657
2,493
81,839
76,785
53
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 31. Commitments
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property, plant and equipment
Lease commitments - operating (as lessee)
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
Consolidated
2020
$
2019
$
-
-
-
-
-
-
79,741
79,741
389,837
824,044
7,814,392
9,028,273
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.
On adoption of AASB 16 Leases, the consolidated entity has applied the new rules retrospectively from 1 July 2019. The property leases previously
recognised as operating leases are recognised as right-of-use assets with corresponding lease liabilities as of the date of application (see note 23).
Lease commitments - operating (as lessor)
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2020
$
2019
$
7,520
-
7,520
2,191,608
3,887,003
6,078,611
The consolidated entity leases out its premises in the DNA Star Vegas Casino under non-cancellable operating leases. The leases have remaining
lease periods of less than one year as at 30 June 2020.
Note 32. Related party transactions
Parent entity
Donaco International Limited is the legal parent entity. Donaco International Limited is listed on the Australian Securities Exchange (ASX: DNA).
Subsidiaries
Interests in subsidiaries are set out in note 34.
Key management personnel
Disclosures relating to key management personnel are set out in note 29 and the remuneration report included in the directors' report.
Transactions with related parties
The following transactions occurred with related parties during 2020:
Consolidated
2020
$
2019
$
Rental received from /(paid to) Arte Mobile Technology Pte Ltd (subsidiary of Isentric Limited)
7,448
(13,974)
The above transactions occurred at commercial rates.
There were no other payables or receivables from related parties at the current or previous reporting date.
54
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 32. Related party transactions (continued)
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.
Note 33. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit 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
Parent
2020
$
2019
$
(54,222,285)
(173,848,343)
(54,222,285)
(173,848,343)
32,074,451
28,622,170
162,451,492
208,760,764
60,439,010
52,466,322
60,439,010
52,521,917
406,335,385
3,369,254
406,620,031
3,088,688
(307,692,157)
(253,469,872)
102,012,482
156,238,847
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
As at 30 June 2020, 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.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment at as 30 June 2020 and 30 June 2019.
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.
(cid:322)
(cid:322) Dividends received from subsidiaries are recognised as other income by the parent entity.
55
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 34. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting
policy described in note 1:
Name
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
Donaco Holdings (Hong Kong) Pte Ltd *
DNA Star Vegas Co. Limited **
Donaco Investment (S) Pte Ltd *
* Subsidiary of Donaco Singapore Pte Ltd
** Subsidiary of Donaco Hong Kong Limited
The principal activities of each subsidiary are:
Ownership interest
Principal place of business /
Country of incorporation
Australia
Singapore
British Virgin Islands
Malaysia
Vietnam
Hong Kong
Hong Kong
Cambodia
Singapore
2020
%
100%
100%
100%
100%
95%
100%
100%
100%
100%
2019
%
100%
100%
100%
100%
95%
100%
100%
100%
100%
Donaco Australia Pty Ltd - Dormant (previously operated New Zealand games service, discontinued in January 2015).
Donaco Singapore Pte Ltd - Holding company for Vietnamese casino operations.
Donaco Holdings Ltd - Cost centre for corporate operations.
Donaco Holdings Sdn Bhd - Cost centre for corporate operations.
Donaco Holdings (Hong Kong) Pte Ltd - Cost centre for corporate operations and marketing activities.
Lao Cai International Hotel Joint Venture Company - Operates Vietnamese casino operations.
Donaco Hong Kong Limited - Holding company for Cambodian casino operations.
DNA Star Vegas Co. Limited - Operates Cambodian casino operations.
Donaco Investment (S) Pte Ltd - Investment company.
56
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 34. Interests in subsidiaries (continued)
Summarised financial information
Summarised financial information of the subsidiary with non-controlling interests that are material to the consolidated entity are set out below:
Lao Cai International Hotel Joint Venture Company
Summarised statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Summarised statement of profit or loss and other comprehensive income
Revenue
Expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense
Statement of cash flows
Net cash (used in) / from operating activities
Net cash from / (used in) investing activities
Net cash used in financing activities
Net decrease in cash and cash equivalents
Other financial information
Profit attributable to non-controlling interests
Accumulated non-controlling interests at the end of reporting period
Note 35. Events after the reporting period
Resumption of casino operations
2020
$
2019
Restated
$
7,650,189
67,952,564
13,851,845
69,241,051
75,602,753
83,092,896
17,200,461
24,124,464
3,065,414
5,258,106
20,265,875
29,382,570
55,336,878
53,710,326
13,727,632
21,558,264
(13,385,867)
(20,572,927)
341,765
(123,334)
985,337
(608,126)
218,431
377,211
(1,202,711)
7,787,914
46,195
(570,287)
(6,104,935)
(10,831,838)
(7,261,451)
(3,614,211)
11,815
2,031,761
219,956
2,019,946
On 29 July 2020 it was confirmed that the Government of Cambodia lifted the temporary closure of casino operations. Casino operations may
resume, contingent on receiving approval from the Ministry of Health (MOH) and implementing certain preventative measures against COVID-19.
The casino partially reopened as of 25 September 2020, however is still operating on a limited scale for patrons based in Cambodia as the
Cambodia-Thailand border remains closed.
The Company notes that Thailand has extended its state of emergency due to COVID-19 until 31 October 2020, which will likely impact the border
reopening date. As the majority of Star Vegas' visitors are from Thailand, Donaco expects patronage numbers will remain low at Star Vegas until
the border between Thailand and Cambodia is reopened.
Casino operations at the Aristo International Hotel in Lao Cai, Vietnam has been lifted since May 2020, however as the border with China remains
closed, patronage at the casino is expected to remain low as most of Aristo's patrons are Chinese residents.
The Company is optimistic that the COVID-19 situation will continue to improve in the region in which both casinos operate and the reopening of
both casinos is a positive step towards the resumption of normal operations.
57
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 35. Events after the reporting period (continued)
Entitlement issue
The COVID-19 pandemic continues to disrupt casino operations in Vietnam and Cambodia and prevent resumption of normal business activities.
While both casinos have since reopened, international borders between Vietnam and China, and Cambodia and Thailand, remain closed which
adversely affects patronage at these casinos. Cost-cutting measures such as pay cuts and redundancies remain in place. To meet the company's
urgent need of capital due to the impact of COVID-19 on its operations as well as the requirement to make repayments under the company's loan
facility with Mega Bank, the company issued a pro-rata, non-renounceable fully underwritten entitlement offer on 3 July 2020 of 1 new share in the
company for every 2 shares held by eligible shareholders at a price of $0.035 for 411,796,609 new shares, to raise approximately AUD14.4 million
(before costs). The offer was subsequently completed on 27 July 2020, with a total of 113,692,949 of new shares applied for by shareholders and
the remaining 298,103,660 new shares acquired by Mr Lee Bug Tong and Mr Lee Bug Huy. Post completion of the entitlement offer and associated
underwriting, Mr Lee Bug Huy and Mr Lee Bug Tong hold a relevant interest in the Company of 42.12%, an increase from their previous interest of
17.99%.
The funds raised will be used to make principal repayments to Mega Bank and also to meet the working capital needs of the casino operations and
other corporate, administration and transaction costs.
Appointment of new directors
Following the completion of the underwriting agreement as part of the entitlement offer noted above, Mr Lee Bug Huy and Mr Paul Porntat
Amatavivadhana have been appointed as non-executive directors to the Board of the company effective from 3 August 2020.
On 2 September 2020, two additional independent directors, Mr Andrew Phillips and Mr Issaraya Intrapaiboon were appointed to the Board, as two
Australian-based, non-executive directors. Mr Paul Porntat Amatavivadhana was also appointed as non-executive Chairman, while Mr Lee Bug Huy
was appointed Chief Executive Officer effective 3 September 2020. As part of this process, Chairman Mel Ashton and non-executive director Simon
Vertullo resigned from the Board.
The Directors are not aware of any other events subsequent to the reporting period that may have a material impact on the financial statements.
Note 36. Net cash flows from operating activities
a) Reconciliation of loss after income tax to net cash from operating activities
Loss after income tax expense for the year
(58,873,619)
(197,794,647)
Consolidated
2020
$
2019
Restated
$
Adjustments for:
Depreciation and amortisation
Impairment of assets
Share-based payments
Non cash finance costs
Change in operating assets and liabilities:
Decrease / (increase) in trade and other receivables
Decrease in inventories
Decrease in other operating assets
Increase in deferred tax assets
(Decrease) / increase in trade and other payables
Decrease in provision for income tax
Decrease in provisions for employee benefits
Net cash (used in) / from operating activities
b) Change in liabilities arising from financing activities
Borrowings at beginning of the year (note 21)
Proceeds from loan borrowings
Repayments
Foreign exchange adjustments
Other non-cash movements
Borrowings at end of the year (note 21)
10,220,516
10,127,357
50,512,420
204,106,259
(4,081)
978,452
279,038
1,390,685
1,310,951
(6,019,808)
478,514
492,861
(15,163)
248,020
1,219,842
-
(6,152,662)
12,891,441
(1,610,400)
(549,711)
(243,706)
(557,651)
(3,211,922)
25,646,830
2020
$
35,943,361
1,655,244
(11,309,956)
965,187
978,452
28,232,288
58
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 37. Loss per share
Loss per share for loss from continuing operations
Loss after income tax
Non-controlling interest
Consolidated
2020
$
2019
Restated
$
(58,873,619)
(197,794,647)
(11,815)
(219,956)
Loss after income tax attributable to the owners of Donaco International Limited
(58,885,434)
(198,014,603)
Weighted average number of ordinary shares used in calculating basic loss per share
Adjustments for calculation of diluted loss per share:
Options over ordinary shares
Weighted average number of ordinary shares used in calculating diluted loss per share
Basic loss per share
Diluted loss per share
Note 38. Share-based payments
Employee shares
Numbers
Numbers
823,263,598
823,592,773
-
823,263,598
-
823,592,773
Cents
Cents
Restated
(7.15)
(7.15)
(24.04)
(24.04)
Share allocation FY18
Under the employee share scheme, 1,781,429 shares were issued to employees on 3 October 2017, held by an employee share trust. These
shares were issued at 41.99 cents per share and will vest over the three-year vesting period commencing on 1 July 2017.
During the year, the shares issued under this employee share scheme were either forfeited or were subject to accelerated vesting on termination
of the respective employees. There are therefore no further unvested shares as at 30 June 2020.
Employee options
No options were granted or outstanding at any time during the year ended 30 June 2020.
59
DONACO INTERNATIONAL LIMITED
Notes to financial statements
30 June 2020
Note 39. Contingent assets and liabilities
Court Proceedings
As of 2 March 2020 the Company has settled the various proceedings in Singapore, Australia, Thailand and Cambodia with Somboon
Sukcharoenkraisri, Lee Bug Tong, Lee Bug Huy, Lee Hoe Property Co., Ltd, Paramax Co., Ltd and related persons (together, the Thai Vendors)
arising from Donaco's acquisition of the Star Vegas business.
The settlement agreements include the following terms:
An amended Perpetual Lease Agreement for the Star Vegas casino was executed, granting Donaco security of tenure over the Star Vegas
casino until 15 June 2115.
Donaco will receive US$38 million to remove the non-competition and non-solicitation clauses in the Share Sale Agreement relating to the
Star Vegas business. The Share Sale Agreement will also be amended to acknowledge the existence of the competing casino constructed
near the Star Vegas casino;
Donaco will pay US$18 million to settle the claims for unpaid management fees plus interest (to be offset against the US$38 million owed per
above). The management agreement will also be terminated;
Donaco will pay any outstanding rent and an additional lease payment of US$20 million in respect of the Star Vegas lease to Lee Hoe
Property. Following this additional lease payment, the lease agreement shall resume and continue as perpetual, with US$20,000 per month
for 5 years from the effective settlement date, US$30,000 per month starting from the 6th year to the end of the 10th year, and from the
11th year onwards, the monthly rent will increase 3% every 3 years. In addition for the five financial years commencing 1 July 2020, there is
an entitlement to share 25% of the Star Vegas business EBITDA in excess of US$16 million of the EBITDA of the relevant financial year;
The Thai vendors have agreed not to dispose of their shares in Donaco International for a period of six months from the date of settlement;
andAll legal actions and mutual releases will now cease.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Under the loan facility agreement, Donaco is required to obtain consent from Mega Bank to fulfil parts of the settlement agreement. All settlement
parties have agreed to defer the settlement payments and additional lease payment whilst awaiting Mega Bank's consent. The US$38 million
receivable for the clause removal and the $US20 million payable as additional lease payment have not been recognised as at 30 June 2020 as the
consent has not been provided and the settlement remains incomplete.
In any case, no net cash flow will arise from the settlement and it has been agreed that all legal actions will now cease.
Note 40. Correction of prior year error
During the year, Donaco identified that inappropriate adjustments to cash in transit, uncollectable customer and junket balance receivables had
been recognised in the financial statements for the year ended 30 June 2019. These adjustments were offset against trade and other payables.
Accordingly, there were misstatements to the cash and cash equivalents and trade and other payables, and an understatement of impairment
expense. Each of the affected financial statement line items have been restated as follows:
Statement of financial position (extract)
$
$
30 June 2019
Change
30 June 2019
Restated
$
Decrease in cash and cash equivalents
Increase in trade and other payables
Net assets
27,377,908
44,189,694
195,622,341
(809,640)
3,212,270
(4,021,910)
26,568,268
47,401,964
191,600,431
Decrease in retained profits
(207,242,713)
(4,021,910)
(211,264,623)
Total equity
195,622,341
(4,021,910)
191,600,431
Statement of profit or loss and other comprehensive income (extract)
Increase in impairment expense
(200,084,349)
(4,021,910)
(204,106,259)
Loss before income tax expense from continuing operations
(190,161,003)
(4,021,910)
(194,182,913)
Loss after income tax expense for the year
(193,772,737)
(4,021,910)
(197,794,647)
Total comprehensive loss for the year
(174,404,076)
(4,021,910)
(178,425,986)
Loss after income tax expense for the year is attributable to:
Owners of Donaco International Limited
(193,992,693)
(4,021,910)
(198,014,603)
Total comprehensive loss from continuing operations for the year is attributable to:
Owners of Donaco International Limited
(174,624,032)
(4,021,910)
(178,645,942)
60
DONACO IN(cid:55)ERNA(cid:55)IONAL LIMI(cid:55)ED
D(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)' (cid:71)(cid:72)(cid:70)(cid:79)(cid:68)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)
30 J(cid:88)(cid:81)(cid:72) 2020
I(cid:81) (cid:87)(cid:75)e d(cid:76)(cid:85)ec(cid:87)(cid:82)(cid:85)(cid:86)' (cid:82)(cid:83)(cid:76)(cid:81)(cid:76)(cid:82)(cid:81):
(cid:322)
(cid:322)
(cid:322)
(cid:322)
(cid:87)(cid:75)e a(cid:87)(cid:87)ac(cid:75)ed f(cid:76)(cid:81)a(cid:81)c(cid:76)a(cid:79) (cid:86)(cid:87)a(cid:87)e(cid:80)e(cid:81)(cid:87)(cid:86) a(cid:81)d (cid:81)(cid:82)(cid:87)e(cid:86) c(cid:82)(cid:80)(cid:83)(cid:79)(cid:92) (cid:90)(cid:76)(cid:87)(cid:75) (cid:87)(cid:75)e C(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)a(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) Ac(cid:87) 2001 , (cid:87)(cid:75)e Acc(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74) S(cid:87)a(cid:81)da(cid:85)d(cid:86), (cid:87)(cid:75)e
C(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)a(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) Re(cid:74)(cid:88)(cid:79)a(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) 2001 a(cid:81)d (cid:82)(cid:87)(cid:75)e(cid:85) (cid:80)a(cid:81)da(cid:87)(cid:82)(cid:85)(cid:92) (cid:83)(cid:85)(cid:82)fe(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)a(cid:79) (cid:85)e(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74) (cid:85)e(cid:84)(cid:88)(cid:76)(cid:85)e(cid:80)e(cid:81)(cid:87)(cid:86);
(cid:87)(cid:75)e a(cid:87)(cid:87)ac(cid:75)ed f(cid:76)(cid:81)a(cid:81)c(cid:76)a(cid:79) (cid:86)(cid:87)a(cid:87)e(cid:80)e(cid:81)(cid:87)(cid:86) a(cid:81)d (cid:81)(cid:82)(cid:87)e(cid:86) c(cid:82)(cid:80)(cid:83)(cid:79)(cid:92) (cid:90)(cid:76)(cid:87)(cid:75) I(cid:81)(cid:87)e(cid:85)(cid:81)a(cid:87)(cid:76)(cid:82)(cid:81)a(cid:79) F(cid:76)(cid:81)a(cid:81)c(cid:76)a(cid:79) Re(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74) S(cid:87)a(cid:81)da(cid:85)d(cid:86) a(cid:86) (cid:76)(cid:86)(cid:86)(cid:88)ed b(cid:92) (cid:87)(cid:75)e
I(cid:81)(cid:87)e(cid:85)(cid:81)a(cid:87)(cid:76)(cid:82)(cid:81)a(cid:79) Acc(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74) S(cid:87)a(cid:81)da(cid:85)d(cid:86) B(cid:82)a(cid:85)d a(cid:86) de(cid:86)c(cid:85)(cid:76)bed (cid:76)(cid:81) (cid:81)(cid:82)(cid:87)e 1 (cid:87)(cid:82) (cid:87)(cid:75)e f(cid:76)(cid:81)a(cid:81)c(cid:76)a(cid:79) (cid:86)(cid:87)a(cid:87)e(cid:80)e(cid:81)(cid:87)(cid:86);
(cid:87)(cid:75)e a(cid:87)(cid:87)ac(cid:75)ed f(cid:76)(cid:81)a(cid:81)c(cid:76)a(cid:79) (cid:86)(cid:87)a(cid:87)e(cid:80)e(cid:81)(cid:87)(cid:86) a(cid:81)d (cid:81)(cid:82)(cid:87)e(cid:86) (cid:74)(cid:76)(cid:89)e a (cid:87)(cid:85)(cid:88)e a(cid:81)d fa(cid:76)(cid:85) (cid:89)(cid:76)e(cid:90) (cid:82)f (cid:87)(cid:75)e c(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)da(cid:87)ed e(cid:81)(cid:87)(cid:76)(cid:87)(cid:92)'(cid:86) f(cid:76)(cid:81)a(cid:81)c(cid:76)a(cid:79) (cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81) a(cid:86) a(cid:87) 30
J(cid:88)(cid:81)e 2020 a(cid:81)d (cid:82)f (cid:76)(cid:87)(cid:86) (cid:83)e(cid:85)f(cid:82)(cid:85)(cid:80)a(cid:81)ce f(cid:82)(cid:85) (cid:87)(cid:75)e f(cid:76)(cid:81)a(cid:81)c(cid:76)a(cid:79) (cid:92)ea(cid:85) e(cid:81)ded (cid:82)(cid:81) (cid:87)(cid:75)a(cid:87) da(cid:87)e; a(cid:81)d
(cid:87)(cid:75)e(cid:85)e a(cid:85)e (cid:85)ea(cid:86)(cid:82)(cid:81)ab(cid:79)e (cid:74)(cid:85)(cid:82)(cid:88)(cid:81)d(cid:86) (cid:87)(cid:82) be(cid:79)(cid:76)e(cid:89)e (cid:87)(cid:75)a(cid:87) (cid:87)(cid:75)e c(cid:82)(cid:80)(cid:83)a(cid:81)(cid:92) (cid:90)(cid:76)(cid:79)(cid:79) be ab(cid:79)e (cid:87)(cid:82) (cid:83)a(cid:92) (cid:76)(cid:87)(cid:86) deb(cid:87)(cid:86) a(cid:86) a(cid:81)d (cid:90)(cid:75)e(cid:81) (cid:87)(cid:75)e(cid:92) bec(cid:82)(cid:80)e d(cid:88)e a(cid:81)d
(cid:83)a(cid:92)ab(cid:79)e.
T(cid:75)e d(cid:76)(cid:85)ec(cid:87)(cid:82)(cid:85)(cid:86) (cid:75)a(cid:89)e bee(cid:81) (cid:74)(cid:76)(cid:89)e(cid:81) (cid:87)(cid:75)e dec(cid:79)a(cid:85)a(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) (cid:85)e(cid:84)(cid:88)(cid:76)(cid:85)ed b(cid:92) (cid:86)ec(cid:87)(cid:76)(cid:82)(cid:81) 295A (cid:82)f (cid:87)(cid:75)e C(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)a(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) Ac(cid:87) 2001 .
S(cid:76)(cid:74)(cid:81)ed (cid:76)(cid:81) acc(cid:82)(cid:85)da(cid:81)ce (cid:90)(cid:76)(cid:87)(cid:75) a (cid:85)e(cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81) (cid:82)f d(cid:76)(cid:85)ec(cid:87)(cid:82)(cid:85)(cid:86) (cid:80)ade (cid:83)(cid:88)(cid:85)(cid:86)(cid:88)a(cid:81)(cid:87) (cid:87)(cid:82) (cid:86)ec(cid:87)(cid:76)(cid:82)(cid:81) 295(5)(a) (cid:82)f (cid:87)(cid:75)e C(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)a(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) Ac(cid:87) 2001 .
O(cid:81) be(cid:75)a(cid:79)f (cid:82)f (cid:87)(cid:75)e d(cid:76)(cid:85)ec(cid:87)(cid:82)(cid:85)(cid:86)
I.Air
M(cid:85) P(cid:82)(cid:85)(cid:81)(cid:87)a(cid:87) A(cid:80)a(cid:87)a(cid:89)(cid:76)(cid:89)ad(cid:75)a(cid:81)a
C(cid:75)a(cid:76)(cid:85)(cid:80)a(cid:81)
30 Oc(cid:87)(cid:82)be(cid:85) 2020
S(cid:92)d(cid:81)e(cid:92)
61
Crowe Sydney
ABN 97 895 683 573
Level 15 1 O’Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowe.com.au
Independent Auditor’s Report to the Members of Donaco
International Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Donaco International Limited (the Company) and its
subsidiaries (the consolidated entity), which comprises the consolidated statement of financial position
as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of consolidated entity is in accordance with the
Corporations Act 2001, including:
(a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of
its financial performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the consolidated entity in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an
equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership
is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately
owned organisation and/or its subsidiaries.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Sydney, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation.
© 2020 Findex (Aust) Pty Ltd.
62
Independent Auditor’s Report
Donaco International Limited
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the consolidated entity’s
current liabilities exceeded its current assets by $54,624,489 as at 30 June 2020. The consolidated
entity recorded a net loss after tax of $58,873,619 and net operating cash outflows of $3,211,922 for
the year ended on that date. As stated in Note 1, the directors have prepared the 30 June 2020
financial report on a going basis and have been taking actions to address these financial positions.
Should the events or actions set forth in Note 1 not eventuate, it may result in a material uncertainty
that may cast significant doubt on the consolidated entity’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Impairment assessment of intangible assets (Note 13)
Key Audit Matter
How we addressed the key audit matter
The consolidated entity recorded a casino licence
asset of $27.5 million as at 30 June 2020. The
licence is classified as an intangible asset with
indefinite useful life and is subject to annual
impairment assessment.
Impairment of $50.3 million was recognised in the
statement of profit or loss and other comprehensive
income for the year based on impairment
assessments performed as at 31 December 2019
and 30 June 2020.
The impairment assessment of the intangible asset
is a key audit matter because of the complexity and
subjectivity involved, including key assumptions
made.
Our audit procedures included, amongst others, the
following:
• Assessed management’s determination of the
cash generating unit (“CGU”) and the CGU’s
carrying value.
• Assessed reasonableness of cash flow forecasts
by comparing the base year in the forecast
calculation to the current period’s actual results.
• Assessed the appropriateness of the currency
used in the model. The cash flow forecast is
calculated in the Thai Baht (THB) and translated to
the US Dollar (USD) at the valuation date, and
subsequently translated into the Australian Dollar
(AUD).
• Together with our valuation specialists, assessed
reasonableness of the key assumptions used,
being revenue growth rate, discount rate, and
terminal growth rate.
• Together with our valuation specialists, tested the
mathematical accuracy and components of the
model that supports the impairment assessment.
• Checked the sensitivity of the impairment
assessment by focusing on the discount rate.
• Evaluated the adequacy of the judgments and
sources of estimation uncertainty disclosures in the
consolidated financial report.
© 2020 Findex (Aust) Pty Ltd
www.crowe.com.au
63
Independent Auditor’s Report
Donaco International Limited
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the consolidated entity’s Annual Report for the year ended 30 June 2020, but
does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
consolidated entity to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the consolidated entity or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
© 2020 Findex (Aust) Pty Ltd
www.crowe.com.au
64
Independent Auditor’s Report
Donaco International Limited
• Obtain an understanding of internal control relevant to the audit 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 consolidated entity’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the consolidated entity’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the
consolidated entity to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the consolidated entity to express an opinion on the consolidated entity
financial report. The auditor is responsible for the direction, supervision and performance of the
consolidated entity audit. The auditor remains solely responsible for the audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during the audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in the auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in the auditor’s report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included in pages 12 to 20 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the remuneration report of Donaco International Limited for the year ended 30 June
2020 complies with section 300A of the Corporations Act 2001.
© 2020 Findex (Aust) Pty Ltd
www.crowe.com.au
65
Independent Auditor’s Report
Donaco International Limited
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
Crowe Sydney
Suwarti Asmono
Partner
30 October 2020
Sydney
© 2020 Findex (Aust) Pty Ltd
www.crowe.com.au
66
DONACO INTERNATIONAL LIMITED
Independent auditor's report to the members of Donaco International Limited
67
DONACO INTERNATIONAL LIMITED
Shareholder information
30 June 2020
The shareholder information set out below was applicable as at 26 October 2020.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Equity security holders
Number
of holders
of ordinary
shares
323
374
231
621
292
1,841
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary Shares
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ON NUT ROAD LIMITED
TECHATUT SUKCHAROENKRAISRI
BHUVASITH CHAIARUNROJH
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MR TECK LEE PATRICK TAN
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MONEX BOOM SECURITIES (HK) LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
BNP PARIBAS NOMS PTY LTD
TA SECURITIES HOLDINGS BERHAD
LAZARUS SECURITIES PTY LTD
MR MACIEJ TOMCZAK
BNP PARIBAS NOMS PTY LTD
MR TIMOTHY JOHN EAKIN
BNP PARIBAS NOMS(NZ) LTD
HATIM TAIY PTY LIMITED
MR HUY DINH TRAN
Unquoted equity securities
Employee options
Warrants
Number held
271,112,551
158,574,603
149,051,830
149,051,830
92,441,521
77,916,452
38,232,459
30,614,059
22,305,587
18,247,274
13,918,946
13,314,968
9,421,736
7,958,276
7,446,843
7,269,716
6,711,532
6,000,000
5,645,000
5,616,500
3,900,000
1,094,751,683
% of total
shares issued
21.95%
12.84%
12.07%
12.07%
7.48%
6.31%
3.09%
2.48%
1.81%
1.48%
1.13%
1.08%
0.76%
0.64%
0.60%
0.59%
0.54%
0.49%
0.46%
0.45%
0.32%
88.62%
Number
on issue
-
-
68
DONACO INTERNATIONAL LIMITED
Shareholder information
30 June 2020
Substantial holders
Substantial holders in the company are set out below:
Ordinary Shares
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ON NUT ROAD LIMITED
BHUVASITH CHAIARUNROJH
TECHATUT SUKCHAROENKRAISRI
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
Voting rights
Number held
271,112,551
158,574,603
149,051,830
149,051,830
92,441,521
77,916,452
% of total
shares issued
21.95%
12.84%
12.07%
12.07%
7.48%
6.31%
The voting rights attached to ordinary shares and options are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Options
There are no voting rights attached to options. Upon exercise of the option, the issued shares will confer full voting rights.
Warrants
There are no voting rights attached to warrants. Upon conversion of the warrant, the issued shares will confer full voting rights.
There are no other classes of equity securities.
69
DONACO INTERNATIONAL LIMITED
Corporate directory
30 June 2020
Directors
Stuart James McGregor - Non-Executive Chairman (removed 29 November 2019)
Norman Mel Ashton - Non-Executive Chairman (appointed 9 December 2019, resigned 2
September 2020)
Paul Porntat Amatavivadhana - Non-Executive Chairman (effective 2 September 2020)
(appointed Non-Executive Director 3 August 2020)
Joey Lim Keong Yew - Non-Executive Director (removed 18 July 2019)
Benedict Paul Reichel - Executive Director (resigned 29 November 2019)
Benjamin Lim Keong Hoe - Non-Executive Director (removed 18 July 2019)
David John Green - Non-Executive Director (removed 29 November 2019)
Yan Ho Leo Chan - Executive Director (effective 11 February 2020) (appointed Non-Executive
Director 12 August 2019)
Kurkye Wong - Executive Director (effective 11 February 2020) (appointed Non-Executive
Director 12 August 2019)
Yugo Kinoshita - Non-Executive Director (appointed 14 August 2019, removed 29 November
2019)
Roderick John Sutton - Non-Executive Director (appointed 29 November 2019)
Simon Vertullo - Non-Executive Director (appointed 9 December 2019, resigned 2 September
2020)
Lee Bug Huy - Non-Executive Director (appointed 3 August 2020)
Andrew Phillips - Non-Executive Director (appointed 2 September 2020)
Issaraya Intrapaiboon - Non-Executive Director (appointed 2 September 2020)
Company secretary
Marika Jane White (appointed 12 February 2020)
Notice of annual general meeting
The Annual General Meeting of Donaco International Limited will be held on
____November 2020 at
Level 5
126 Phillip Street
Sydney NSW 2001
Commencing at 2:30pm (Sydney time)
Registered office
Principal place of business
Share register
Auditor
Stock exchange listing
Level 18
420 George Street
Sydney NSW 2000
Australia
Level 18
420 George Street
Sydney NSW 2000
Australia
Automic
Level 5
126 Phillip Street
Sydney NSW 2001
+61 2 9698 5414
Crowe Sydney
Level 15
1 O'Connell St
Sydney NSW 2000
Donaco
International
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".
70