National Leisure & Gaming (NLG), a hotel and gaming operator, has reduced its expected guidance for earnings before interest, tax, depreciation and amortisation (EBITDA) for 2008 from $18.5 million to $12.6 million.
NLG said there were two predominant reasons behind the EBITDA revision.
Firstly, the contribution of gaming gross profit in the 2008 financial year is expected to be $5.2 million lower than projected.
This is largely due to the detrimental effect on gaming trade from NSW smoking bans in hotels which have not been upgraded to meet new requirements.
Furthermore, the proposed capital works program, which was to include the strategic refurbishment of 19 Sydney western suburbs gaming venues, has been delayed due to building overruns "and an immediate lack of funding".
NLG said funding for the capital works was to have come from operational cash flow reserves and an existing BNZA capital expenditure debt facility.
"Secondly, a number of corporate costs totalling approximately $800,000, the majority of which are non-recurring, have been expensed in the first half of FY08," the company said in a statement.
NLG CEO and Managing Director Andrew Joiliffe said the smoking bans had led to "a demonstrable contraction of gaming revenue … far more than originally anticipated …"
"An incomplete capital works program has left NLG's earnings forecast chronologically 12 months behind the original EBITDA projections".
NLG said it expects that once current rights issue and the resultant reduction of the BNZA facility has been successfully completed, the capital expenditure facility will be reinstituted and the hotel refurbishment program will progress to completion prior to the end of the 2008 financial year.
Shares in NLG were last trading at 8.5 cents.
