Donaco International : Quarterly Activities Report & Appendix 4C - 31 December 2021

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31 January 2022

Donaco bolsters balance sheet with Thailand reopening on the horizon

Summary

• Star Vegas remained temporarily closed and Aristo remained open on a limited basis due to COVID-19 related restrictions.
• Settlement of the Loan Facility with main lender Mega Bank, with final payment made to Mega Bank in December 2021.
• Strong vaccination rate in Thailand has led to scheduled easing of travel restrictions in February 2022, the strongest indication of Thai/Cambodia border reopening yet.
• Group EBITDA of negative A$1.2 million and revenue of $0.4 million, stemming from operational inactivity due to COVID-19 restrictions.
• Cash burn of approx. A$405,646 per month, in line with the targeted range.
• Sapa airport, with a capacity of 1.5m passengers per year, under construction near Aristo casino.
• Cash position of A$4.4m as at 31 December 2021.

Donaco International Limited ("Donaco" or "the Company") provides the following trading update for the three- month period ending 31 December 2021.

During the quarter Donaco continued its focus on preserving and strengthening its balance sheet, as well as increasing its cost efficiencies amid the ongoing COVID-19 pandemic and its subsequent effects on the Company's casinos. As a result of government-mandated restrictions, the Star Vegas casino in Cambodia has remained temporarily closed since 27 April 2021, until further notice, and the Aristo casino in Vietnam has been operating on a limited basis since May 2020.

The ongoing restrictions have heavily reduced visitation numbers, affecting revenue and EBITDA, and resulting in Group revenue of A$0.4 million (Dec Quarter 2020: A$6.0m) and property-level EBITDA negative of A$0.6m (Dec Quarter 2020: A$3.6m).

However, the ability for Donaco to achieve long-term growth is strong, as the COVID situation in the regions where Donaco operates improves in line with the ramp up in vaccinations.

Donaco International Limited ACN 007 424 777

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For example, in Thailand the fully vaccinated rate has increased from approximately less than 30% to over 65% during the December quarter, and in Vietnam the fully vaccinated rate increased from around 10% to 70% during the December quarter.

As a result, post-December quarter on 20 January 2022 the Thai Government announced that from 1 February 2022 quarantine-free travel vaccinated arrivals will commence.

In tandem with this, Donaco has bolstered its balance sheet after settlement of the Loan Facility with main lender Mega Bank, with final payment made to Mega Bank in December 2021. The Company has also maintained a key focus on maximising cost efficiencies during this period.

In the June 2020 quarter trading update (see ASX announcement dated 31 July 2020) Donaco set a monthly target cash burn rate from maintaining the casino assets and associated corporate costs, amid the effects of COVID-19 impacts, of approximately USD$800,000 to USD$900,000 (A$1.10 million to $A1.24 million).

The December 2021 quarter result was well within the targeted range, with a cash burn of approximately A$480,300 per month during the December quarter.

As at 31 December 2021 Appendix 4C, cash holdings were A$4.4 million.

An amount of A$198,150 was paid to related parties during the quarter, which is associated to salaries and fees to executive and non-executive directors.

Mega Bank Facility

Donaco settled its Loan Facility with main lender Mega International Commercial Bank Co Ltd, known as Mega Bank, on 30 December 2021 as per schedule.

The Company has fully repaid the initially borrowed amount of A$131.54m (equivalent to USD$100m) stipulated in 2015, re-drawn A$26.31m (equivalent to USD$20m) in 2016 and refinanced A$74.98m (equivalent to USD$57m) in 2017 (equivalent to the total of USD$120m borrowings), with the final instalment of USD$1.8m paid in December 2021.

There is no more outstanding loan balance owed to Mega Bank.

Non-Executive Chairman of Donaco, Mr Paul Porntat, commented:

"While COVID-19 continued to impact our operations during the quarter, we enhanced our prudent cost control and balance sheet protection to position us for a bright long-term future.

"We have completely paid off our debt with our largest lender, Mega Bank, as well as maintaining a low cash burn.

"There is also significant positivity on a macroeconomic level, with the Thai Government resuming the 'Test & Go' scheme for international visitors on February 1.

"Additionally, in late October the Vietnamese Government approved the construction of Sapa airport, as the economy seeks to rebound from COVID-19. Sapa airport will be built over the next 3-4 years in Lao Cai, the region where Aristo is located, with capacity of 1.5 million passengers a year.

"Our strategy for the remainder of FY22 will be to build on Donaco's pragmatic initiatives, including the shift towards clientele from the local regions.

"The Donaco Board and Management will continue to take all necessary actions to minimise the impact from the virus on its Star Vegas and Aristo operations; and keeping staff and visitors safe remains top priority.

Donaco International Limited ACN 007 424 777

"I would like to again thank our shareholders for their loyalty and patience during this period."

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Financial Performance

The following update compares in AUD the three months to the end of December 2021 to the three months to the end of December 2020 and is based on unaudited management accounts.

DNA Star Vegas

Star Vegas, situated in Cambodia on the border with Thailand, has been temporarily closed since 27 April, and minimal activity occurred before its closure as outbreaks were increasing.

The business achieved low operating expenses, which decreased to A$0.57m for the period.

DNA Star	December Quarter 2021	September Quarter 2021	December Quarter 2020
Vegas
Rolling Chip	N/A	N/A	AUD 132.75m
VIP Turnover
Net Revenue	AUD 0.02m	AUD 0.05m	AUD 5.57m
Operating	AUD 0.57m	AUD 0.67m	AUD 1.86m
expenses
Property level	(AUD 0.55m)	(AUD 0.62m)	AUD 3.70m
EBITDA
Average daily	N/A	N/A	368 players
visitation
VIP win rate	N/A	N/A	4.76%

Currency Conversions: December Quarter 2021 1.3663AUD/USD; September Quarter 2021 1.3605AUD/USD; December Quarter 2020 1.3837AUD/USD.

Aristo International Hotel

The Aristo business in Vietnam, located on the border with China, has been operating on a limited basis since May 2020, as China, the country from where the vast majority of Aristo's patrons originate, remains closed as part of the restrictions.

Cost-control initiatives remain in place, which led to a reduction in operating expenses to A$0.41m for the period, compared to A$0.56m in the December 2020 quarter.

Aristo
International	December Quarter 2021	September Quarter 2021	December Quarter 2020
Hotel
Rolling Chip VIP	AUD 10.19m	AUD 22.06m	AUD 9.40m
Turnover
Net Revenue	AUD 0.35m	AUD 0.71m	AUD 0.43m
Operating	AUD 0.41m	AUD 0.41m	AUD 0.56m
expenses

Donaco International Limited ACN 007 424 777

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Property level	(AUD 0.07m)	AUD 0.30m	(AUD 0.13m)
EBITDA
Average daily	12 players	12 players	11 players
visitation
VIP win rate	4.91%	5.56%	6.53%

Currency Conversions: December Quarter 2021 1.3663AUD/USD; September Quarter 2021 1.3605AUD/USD; December Quarter 2020 1.3837AUD/USD.

Group Summary

DNA Group	December Quarter 2021	September Quarter 2021	December Quarter 2020*
Rolling Chip VIP	AUD 10.19m	AUD 22.06m	AUD 142.15m
Turnover
Net Revenue	AUD 0.38m	AUD 0.76m	AUD 6.00m
Operating	AUD 0.99m	AUD 1.08m	AUD 2.42m
expenses
Property level	(AUD 0.61m)	(AUD 0.32m)	AUD 3.57m
EBITDA
Corporate Costs	AUD 0.63m	AUD 0.72m	AUD 0.90m
Group EBITDA	(AUD 1.24m)	(AUD 1.04m)	AUD 2.67m

Currency Conversions: December Quarter 2021 1.3663AUD/USD; September Quarter 2021 1.3605AUD/USD; December Quarter 2020 1.3837AUD/USD.

*Numbers based on final audited Appendix 4D 2020

	[ENDS]
Authorised for release by the Board.
For further information contact:
Investors	Media
Porntat Amatavivadhana	Shane Murphy
Donaco International Limited	FTI Consulting
[e-mail]	[phone]
	[e-mail]

Donaco International Limited

c/- Lumina, Level 43

25 Martin Place

Sydney, NSW 2000

[TEL] [phone] [FAX] [phone]

[ABN] 28 007 424 777

Donaco International Limited ACN 007 424 777

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Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

Donaco International Limited
ABN	Quarter ended ("current quarter")
28 007 424 777	31 December 2021

Consolidated statement of cash flows	Current quarter	Year to date (6
			$A'000	months)
				$A'000
1.	Cash flows from operating activities
1.1	Receipts from customers	408	1,745
1.2	Payments for
	(a)	research and development
	(b)	product manufacturing and operating	(491)	(1,228)
		costs
	(c)	advertising and marketing	(3)	(7)
	(d)	leased assets
	(e)	staff costs	(757)	(1,509)
	(f)	administration and corporate costs	(277)	(979)
1.3	Dividends received (see note 3)
1.4	Interest received	-	1
1.5	Interest and other costs of finance paid	(321)	(659)
1.6	Income taxes paid
1.7	Government grants and tax incentives
1.8	Other (provide details if material)
1.9	Net cash from / (used in) operating	(1,441)	(2,636)
	activities
2.	Cash flows from investing activities
2.1	Payments to acquire or for:
	(a)	entities
	(b)	businesses
	(c)	property, plant and equipment	-	(1)
	(d)	investments
	(e)	intellectual property
	(f) other non-current assets

ASX Listing Rules Appendix 4C (17/07/20)	Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.