Clouds Gathering Over Donaco: Colossal Drop In Revenue And Arbuckle Resignation

Article by : Eva Reed Aug 13, 2020

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Despite being one of the largest Asian providers, Donaco International has come a very thorny path over the past few years. It seems that the real difficulties are yet to come. According to the financial report, which the operator published on the Australian Securities Exchange (ASX), the situation looks terrible.

According to Donaco, coronavirus pandemic’s situation has negatively affected the financial performance of the brand. This gloomy picture stems from the fact that revenues of one of the largest operators in the Asia-Pacific region decreased by 95% as of June 30.

Moreover, the information that the current general director will leave his post starting on August 4 only adds fuel to the fire. It seems that without an effective manager, Donaco will find it very difficult to get out of this situation. As a reminder, incumbent CEO Paul Arbuckle has served in the position for 6 months. However, back in December of last year, he announced that he was planning to resign.

According to the data, which ended up in the hands of ASX, the operator’s quarterly revenue was $642,000. Meanwhile, the receipt for the same period last year reached $14.45 million. If we pay attention to interest, taxes, depreciation, and amortization indicator (EBITDA), here, Donaco also expected a sharp decline to minus indicators of -2.13 million dollars. Although, this indicator reached +3.41 million dollars just a year ago.

Current developments are due to the rampant coronavirus pandemic. Casino operators around the world are experiencing a similar situation and are recording a drop in profits. According to the official data, profit indicators for June fell dramatically because gambling establishments and hotels were limited since 2020.
The same goes for the issue of the border closure. Since the moment the DNAStar Vegas and Aristo International Hotel closed their doors, the company’s revenue has been rapidly falling every day.

Perhaps the best step that the company’s managers could take was a strategy to reduce operating costs. Currently, the company has at its disposal funds to support its operations in the equivalent of $9 million. That is why management is taking desperate steps to ensure that this amount is sufficient to cover all necessary capital expenditures and monthly charges, reaching up to $900,000.

Every day, it becomes evident that the absence of an experienced specialist in the CEO position can only exacerbate an already unstable and challenging situation. Currently, the incumbent CEO continues to perform his duties while the company is desperately looking for a successor.

According to the official information that the company provided to ASX, the process of selecting a new leader is ongoing. Meanwhile, the supervisory board has already held several consultative meetings with some candidates. Currently, the board of directors has not yet made a final decision on a specific person.

Perhaps the only positive thing is that the company managed to complete the round of securities placement. The ASX received the relevant news on August 3. According to Donaco, this is nothing less than an offering of 1,235,389,382 shares at a par price of $0.025. The total amount of shares that became available to the market amounted to USD 30.88 million. The proceeds from the sale of shares will most likely be used to refill working capital and keep the company on the radar.

As a reminder, Donaco International Limited is one of the most prominent players in the segment of leisure and entertainment in the Asia-Pacific region. Currently, it has more than 100 gaming tables, 1400+ gaming machines, and 385 hotel rooms for receiving visitors.