Ann: AGM Managing Director's Presentation , page-2

Did anyone go to the AGM?


ASX ANNOUNCEMENT 30 November 2009
(Ref: 09/007)
ANNUAL GENERAL MEETING – MANAGING DIRECTOR’S PRESENTATION
Ladies and Gentleman, Mr Chairman, welcome to today’s Annual General Meeting at the
recently refurbished Keighery Hotel.
In respect of the Annual Report, and in particular the Managing Director’s report contained
therein, I have taken both as read. Accordingly, the following short summary is designed to
provide a high level overview only; focusing primarily on the go forward proposition for NLG.
Update on Current Trading
As noted in the Company’s 2009 Annual Report, trading results in the September quarter
(FY2010) were in line with forecast, however the effects of a potential unwinding of the
federal government stimulus package, and the likely continued increase in interest rates, has
flattened revenue attraction across all revenue centres leading into the December quarter.
Notwithstanding above, a number of strategic and specific revenue generating strategies
have been implemented by the NLG management executive in order to ameliorate
stagnating revenue centres.
Update on FY2010 Guidance
NLG management believe that the consolidated revenue guidance provided in the Annual
Report of $197 million for FY2010 remains appropriate, assuming some improvement in
trading conditions throughout the balance of FY2010. On that basis we would at this stage
expect consolidated revenue to come in within 5% either side of that figure.
Relationship with BNZA/NAB
It is wholly appropriate to again acknowledge the strong and invaluable support NLG
receives from the BNZA/NAB; and the close, collaborative working relationship the Company
enjoys with its lender.
To re-iterate previous advice, the senior debt facility term was extended earlier in the year to
31 July 2011; and further, the extended facility also provides for a capex program in FY2010.
The capex program for FY2010 has been designed to improve the offering at approximately
10 hotels; in addition to a sum attributed to the reinvestment into gaming product.
Industry Positioning
In respect of NLG’s contextual relevance to the still largely fragmented hotel industry in
Australia, the NLG portfolio of 36 hotels remains a strategically significant and attractive
platform; and continues to perform well by comparison to proximate competition,
notwithstanding the obvious constraints on capex. The industry is undergoing a further period
of consolidation, and NLG is well positioned to participate in that as the 4th largest pub
portfolio in the country.
Independent recognition for NLG’s mark to market hotel operation performance has come in
the form of the company’s recent nomination in the Australian Liquor Industry Awards, as the
nation’s top hotel operator; the improvements in the September quarter NSW Top 200
gaming rankings with the company securing 3 of the top 10 places, as well as the number
one ranking with the El Cortez Hotel; and the 25 nominations from the Company’s 30 NSW
hotels for the NSW AHA Awards for Excellence to be held in Sydney on 30 November 2009.
Strategic Initiatives & Potential Restructuring Options
It remains uncontroversial that NLG’s gearing and high rent levels are key to any
restructuring solution. In respect of same, the Company continues to actively explore various
restructuring options with well credentialed third parties; and in collaboration with BNZA/NAB.
However the Company’s activities in neither this regard, nor the approaches from third
parties have to date been sufficiently developed to provide useful guidance to the market.
Furthermore, I would like to take this opportunity to re-iterate the advice provided to
shareholders included in our 12 November market announcement, that the approaches
which have been received have involved indicative valuations for NLG equity at levels below
the prevailing share price.
In respect of potential restructuring models, one of the options under consideration has been
the prospective purchase of some or all of the HLG freehold interests in the NLG pubs; and
whilst this remains an option it would obviously require a very substantial recapitalisation of
NLG in order to facilitate such a purchase.
In addition, the Company also continues to explore the potential for supplementary nonstrategic
asset sales, and this activity will continue irrespective of any potential macro
solution being implemented or otherwise.
Having actively explored numerous restructuring options over the last 12-18 months, in what
has been a difficult economic and capital markets climate, the Board’s objective is to now
proceed to secure and implement a macro solution as soon as practicable, ideally before the
end of FY2010.
In closing I would like to record my sincere thanks to the Board of NLG for its continued
support and invaluable guidance; in addition to the board of NLG, I would also like to
highlight my sincere appreciation to the BNZA/NAB for the indefatigable, significant and
imperative support of NLG in its endeavour to return value to all NLG’s stakeholders. Finally,
my unreserved thanks and admiration is extended to the extremely hard working and
passionate NLG staff, who, throughout challenging and often burdensome times over the
past 12 months, have persisted in stepping up to the plate and delivering unwavering
commitment to the many and varied tasks I have requested them to undertake. Their
collective and individual performance in this respect is unparalleled and wholly appreciated.