Aquis Entertainment Turns a Profit; Shares Soar

Aquis Entertainment are the owners of the Canberra Casino

Investors in Aquis Entertainment have seen the value of their share explode this week. The Australian Securities Exchange (ASX) listed company’s share rocketed from $0.04 to $0.49 but nobody knows why.

Aquis Entertainment is the owner of the Canberra Casino, the only licensed casino in the Australian Capital Territory. It floated on the ASX in 2011 and slowly lost more than 80% of its value.

Shares in Aquis went crazy between February 16-25, increasing by almost 2,000%. Shares in the company change hands in small amount, but investors bought millions of them between these dates, which resulted in the temporary suspension of trading. Aquis’ CEO Allison Gaullaugher responded:

“The Company is not aware of any information concerning it that has not been announced to market and which could be an explanation for the recent trading in the Company’s securities.”

Aquis Turns Finally a Profit

It is easy to see why Aquis shares have such little value when you look at the company’s financial reports. The company lost $29,854,202 between 2014 and 2019, making losses in each of those six years.

  • $3,956,569 loss in 2019
  • $3,396,832 loss in 2018
  • $13,811,804 loss in 2017
  • $7,680,683 loss in 2016
  • $616,310 loss in 2015
  • $392,004 loss in 2014

Aquis turned in a $798,201 profit for the 2020 financial year. Total revenue fell from $24,801,353 to $18,933,182 but expenses also fell, doing so by more than $10.2 million.

The company is liable for fewer casino taxes but its staffing and licensing costs are where Aquis saved the most money.

Employee benefit expenses fell from $15,655,937 to $8,251,025. This is a direct result of the enforced COVID-19 closures and the government’s job retention scheme. Other operating expenses fell from $6,389,903 to $3,896,394. This included the waiving of the $972,196 casino licence fee for 2020.

Aquis received $4,793,250 from the government’s JobKeeper scheme. It paid $1,812,004 direct to employees and receive $2,981,246 as reimbursements for wages already paid. Furthermore, the company saved a small fortune on reduced marketing and promotions, too. Its utility bills, and legal and accounting costs fall by significant amounts during 2020.

Having $7,259,495 in available cash looks good on paper but only tells part of a story. Aquis has $34,155,393 in outstanding loans; its facility limit is $36,450,000. The reports reveal the huge debt is owed to the owner and Chairman Tony Fung.

Failed Sale, Rejected Development and No Pokies Allowed

Aquis almost sold Canberra Casino to Blue Whale Entertainment in a $32 million deal. Blue Whale agreed to pay $4 million cash and $24 million of the $37 million owed to Fung at the time. Blue Whale had three years to purchase Fung’s shares, leaving them controlling 87% of the company.

The sale fell through in December 2019 continuing the bad luck surrounding the casino.

The ACT Government rejected Aquis’ bid for a $307m redevelopment of its casino precinct in 2018. Aquis had grand plans, including six-star luxury villas, seven new restaurants, and a five-star hotel.

Negotiations broke down over the ACT’s restriction of pokies at Casino Canberra. Pokies are not allowed in the casino, but Aquis wanted 500 of them. The ACT government agreed, in principle, to allow 200 machines but placed restrictions on the casino. It ruled any pokies and their licences had to be purchased from owners of existing machines.

How Long Billionaire Fung Bankroll the Company?

Tony Fung is the majority shareholder and chairman of Aquis. He owns 447 hectares worth of properties on the Gold Coast. He boosted this figure in 2015 after paying $7 million for the Aurora penthouse in Surfers Paradise.

The property tycoon had his heart set on Aquis’ resort development but was prepared to walk away when the government rejected his plans. How long Fung will continue bankrolling the flagging company is anyone’s guess. Canberra Casino will never make any meaningful profit while pokies are banned and there are no hotel facilities. Men like Fung do not like losing money. Do not be surprised if he cuts his ties, and losses, sooner rather than later.