Ann: Appendix 4D & Half Year Accounts, page-9

Page 13 of report, an interesting description of the financial position of the company. DNA expect a refinance with Megabank and I assume they knocked back OCP, if they even made an offer. I would also assume Megabank would be waiting for the outcome of lease arbitration before approving a refinance.

Going concern

At 31 December 2018, the consolidated entity recorded a net current liability of A$11.5 million. The consolidated entity recorded a net profit after tax of A$1.45 million before impairment (net loss after tax of A$36.8 million after impairment charge of A$38.2 million), and net operating cash inflows of A$2.47 million for the six months ended on that date.

Notwithstanding the net current liability position, management have prepared the 31 December 2018 financial report on a going concern basis. It is management’s estimate that the consolidated entity will be able to generate sufficient operating cash inflows to cover the net current liability and therefore, will be able to pay its debts as and when they become due and payable.

The consolidated entity met all of its obligations to repay principal and interest under its loans during the period and up to the date of this report. The consolidated entity also remains in compliance with its loan covenants. As such, the continual financing from Mega Bank in regard to the existing loan and thus the going concern basis have not been affected. Management has also commenced discussions with Mega Bank to restructure the current loan. As at 31 December 2018, approximately A$54.8 million remains unpaid under the loan. Management believes on reasonable grounds that the tenure of the loan will be extended to threeyears from early 2019. This will reduce the principal repayments under the loan from approximately US$17 million (A$24 million) per year, to approximately US$8 million (A$11 million) per year.

The net current liability primarily arises due to the fact that it includes management fee of A$19 million for the 2017 financial year claimed by the Thai vendor of the Star Vegas business. This claim is disputed, and having considered legal advice, the Board considers that the claim is not payable. The claims are unresolved as at 31 December 2018 (note 11) and as a result the amountcontinued to be recognised as a liability in accordance with the relevant accounting standards. Without the management fee payable, the consolidated entity’s net current assets would total approximately A$7.5 million