REEF CASINO TRUST — AGM Information 2012

May 22, 2012

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TRUST CHAIRMAN’S AND REEF HOTEL CASINO CEO’s ADDRESS TO THE ANNUAL GENERAL MEETING

23 MAY 2012

Chairman’s address

A warm welcome to all unit holders and observers to the Reef Casino Trust’s 2012 annual general meeting. Following my address, our CEO, Allan Tan, will deliver his report on last year’s results as well as the present year’s progress. I hope you find both these addresses informative and that you will take away with you a good understanding about your investment in the Reef Casino Trust.

In my letter of 23rd April 2012 inviting you to attend this annual general meeting, I provided details of the special benefits which are available to all unit holders attending this afternoon’s AGM. I hope many of you have availed yourselves of these special benefits. Due to construction work on a new adventure attraction in the Wildlife Dome , unfortunately, entry is not possible during the time of the AGM. In lieu of this, a special discount of $5 is available for unit holders to take photos with the Dome's animals.

Those of you who have not previously provided an email address were also sent a form to advise us of your email address, with a chance to win an Apple iPad. If you haven’t already done so, please do update or provide your email details, and if you do so before 5pm tonight, you have a chance to win that iPad. Having your email address helps us to more effectively communicate with you, distribute annual reports and distributions.

REEF CASINO TRUST ABN 90 324 877

Managed by Reef Corporate Services Limited - ABN 66 057 599 621
Level 1 Mercure Hotel, 85-87 North Quay, Brisbane  QLD  4000, PO Box 12072 George Street, Brisbane QLD 4003
Telephone : 07 3211 3000 Facsimile :  07 3211 4777

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New Directors

In August 2011, the board welcomed Simon McGrath as a non-executive director of Reef Corporate Services Limited, responsible entity of the Trust. Simon is the Chief Operating Officer of Accor Australia and had been an alternate director of Reef Corporate Services Limited since March 2010. Simon replaced Louise Daley who retired from the board having relocated to Singapore to take up a new position with Accor.

In February of this year, the board welcomed Dr Karl Stoss as a non-executive director of Reef Corporate Services Limited. Dr Stoss is Chairman of the Managing Board of Casinos Austria Group. He replaces Paul Herzfeld who retired from the board following his retirement from the Casinos Austria group.

The Financial Year Just Ended

Higher profits despite challenging conditions

The Trust reported higher profits in 2011 despite challenging and uncertain economic conditions in Far North Queensland. Trading conditions were particularly difficult in the first half of 2011. Natural disasters such as Cyclone Yasi, Queensland Floods and the Japanese earthquake all impacted negatively on Cairns’ tourism. In the second half year, trading conditions improved, but was still marked by considerable economic uncertainties arising from the economic and financial crisis being experienced in Europe and elsewhere in the world.

Trust distributable profit of $11.6 million

On 21[st] February this year, the Trust announced a net distributable profit to unit holders of $11.6 million for the financial year ended 31 December 2011, 52% higher than 2010. Distributable profit is determined as net profit for the year, which was $5.8 million, plus distributions to unitholders which have been treated as finance costs in accordance with IFRS, which was also $5.8 million.

The extra gaming tax introduced by the previous Queensland government for electronic gaming machines which came into effect on 1 July 2009 meant that the Reef Hotel Casino had an extra tax burden of $2.8 million in 2011.

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Trust project development costs of about $350K were booked in the last quarter of 2011 – otherwise Trust operating expenses were well controlled.

Trust distribution for 2011 of 20 cents per unit

A total distribution of 20 cents per unit (or a total of $10 mil) was declared for the 2011 financial year, compared to the distributable earnings per unit of 23.4 cents (or a total of $11.6 mil). 3.4 cents per unit (or a total of $1.6 mil) has been transferred to the undistributed income account which now stands at 13.23 cents per unit, or $6.6 million.

Trust losses were used up during the 2011 financial year, so a portion of the distributions paid for the 2011 year were paid on a “tax deferred” basis. This means the balance may be taxable in the hands of the unitholders, however this will depend on the unitholders’ individual tax circumstances. An annual tax statement will soon be sent to unitholders outlining the taxation details of distributions paid for the 2011 year.

Independent valuation of Trust property

In accordance with the requirements of the Trust Constitution to obtain an independent valuation of The Reef Hotel Casino complex at least once every 3 years, such an independent valuation of The Reef Hotel Casino complex was commissioned as at 31 December 2011.

The independent valuer, Jones Lang LaSalle Hotels, valued The Reef Hotel Casino complex at $125 million as at 31 December 2011. As the complex is measured at cost, this latest independent valuation is shown only as a note to the financial statements. This latest valuation of $125 million (it was $143 million as at 30 June 2009) reflects the current economic and market uncertainties in Australia and globally.

We will continue to obtain an independent valuation of The Reef Hotel Casino complex at least once every 3 years in accordance with the requirements of the Trust Constitution.

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Other key financial points

The Trust’s cash flows remain positive and the balance sheet remains healthy. The Trust’s interest only loan facility remains unchanged at $16.5 million with the term extending to December 2015. As at 31 December 2011, the Trust had drawn down $10.25 million. The Trust remains well funded and has an overdraft facility of $2 million which has never been used.

I will now call upon Allan Tan, the CEO of the Reef Hotel Casino to deliver his address.

CEO’s address

Thank you Chairman. Good afternoon unitholders, ladies and gentlemen

There are 2 parts to my address. Firstly, I would like to highlight the key aspects of our strategy and performance at the Reef Hotel Casino in 2011.

Secondly, I would like to provide brief update on our performance so far this year and an update on our current business outlook for the rest of this year.

Strategy and performance highlights in 2011

Strategy

Our key priority was to protect the Reef Hotel Casino’s operational bottom line. My teams approach to operating costs remained careful, prudent and conservative and focussed on cost saving opportunities wherever possible. Still we operated our hotel to 5 star standards and our casino to international standards.

Against the challenging trading conditions which continued in 2011, particularly in the first half year, my team positioned the complex for a return to profit growth in 2011 and hopefully beyond. Our strategy has been successful with 2011 rental payments to the Trust 22.4% higher than in 2010.

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We targeted marketing and promotional activities to known local and regional casino patrons via the Reef Club, the casino’s loyalty club. This worked particularly well in the first half year when in-bound tourism was soft because of the string of natural disasters. Our casino consolidated its premium player market during a difficult time by extra focus on the markets closest to us.

Complex performance in 2011

The addition of Café China, the best Chinese restaurant in Cairns, as a tenant to our complex in mid 2010, assisted in our hotel profitability in 2011, besides being an important part of our casino’s China strategy.

We continued to see a steady increase in the number of Chinese visitors to Cairns, particularly in the second half year, following the spate of natural disasters in Queensland and in Japan. Chinese tourists generally have a higher propensity to play in our casino.

Casino visitations were down by 3% during 2011, because of the natural disasters mentioned earlier. These natural disasters caused a drop in tourist numbers, including mainland Chinese, Japanese and domestic tourists. The ongoing economic and financial uncertainties arising from the Euro zone, and the relatively high Australian dollar also contributed to the softer number of visitors.

In our casino, grind, or main floor table games revenues were up 6.1%, while electronic machine revenues were up 7% reflecting higher spending by patrons. Premium play revenues were up 35.9% in part due to a higher than “theoretical” win rate. Overall, casino rentals paid to the Trust were up 23.3%.

In our hotel, accommodation revenues were up 7.6%, mainly due to a better average room rate being achieved. Our Pullman Reef Hotel Casino continues to lead the 5 star market in Cairns in terms of revenue per available room. Food and beverage revenues were also higher with better profit margins being achieved. Overall, hotel rentals paid to the Trust were up 22.4%.

Capital investment in complex

At last year’s Annual General Meeting, I flagged the commencement of a ‘mini project’ to be run over 18 months. This ‘mini project’ was designed to improve

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the profitability of the Reef Hotel Casino over the next 2 to 3 years, commencing in 2012/13. This includes capital works to enhance the attractiveness of the Reef Hotel Casino complex as the premier entertainment venue in Cairns.

We named the project ‘Project L2’ because the main parts of the project are located on level 2 of our complex. You are today sitting in our newly renovated Michaelmas Cay Ballroom and Conference area. This was completed in the last quarter of last year. The lighting up of the big trees in Anzac Park which adjoins the complex was completed earlier this year. A complete renovation of level 2 of the casino, our Casino Sports Arena, commenced in January this year and is expected to be finished in the middle of this year. A special re launch event of the complex, the Reef Casino Festival is planned for August this year.

Besides ongoing operational performance, our strategy is to also maximise the value of our assets – namely the complex building and the casino license. We will therefore, continue to maintain the complex to a high standard and invest selectively to add to profit and asset value.

Responsible gaming and regulatory compliance

The Reef Hotel Casino remains committed to ensuring we have appropriate programs and practices in place to assist patrons who may be experiencing difficulties with their gaming and customer liaison officers are on site to assist patrons when required.

The Reef Hotel Casino will continue to maintain dialogue and meet with government agencies, gambling help services and the broader community to keep responsible gaming practices balanced and effective.

I am pleased to report that we discharged our responsibilities in this area very satisfactorily.

We also take our regulatory compliance obligations seriously and I am also pleased to report that in this regard we continue to discharge our responsibilities in this area very satisfactorily.

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Update so far this year

- Mandatory pre commitment for gaming machines

Earlier this year, the Federal Government broke its agreement with independent MP Andrew Wilkie to introduce legislation into Parliament for gaming machines to have mandatory pre-commitment systems. Instead, the Federal Government intends to trial this system in the ACT and the timetable for any new legislation is unclear. It appears that the threat of mandatory pre-commitment has subsided somewhat.

Trading conditions and results so far this year

The first half year is the low season in Cairns. The local economy remains weak including tourism in general. The casino’s level 2 gaming floor has been temporarily closed since 1 January of this year for renovations. However, the China tourist market continues to grow. Overall, trading conditions were challenging but manageable.

So far in the first 4½ months of this year, the Reef Hotel Casino’s revenues are tracking just below the same period last year, but the first half could finish up close to that of last year.

2012 strategy and outlook

Overall, my view is that the local economy will remain flat. Any growth is likely to be slow for the rest of the year. Tourism is likely to remain soft which means trading conditions are likely to remain challenging for 2012. My team has a strategy and action plan in place and is briefly as follows :

1. Project L2 – We are set to open our new casino level 2, the Casino Sports Arena in July of this year. With the largest indoors high tech screen in Queensland, plus gaming and a new bar on offer, our new Casino Sports Arena is designed to increase our share of the locals gaming market.

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A special event, the Reef Casino Festival will relaunch the complex as the premier entertainment venue in Cairns and also showcase our new facilities in our hotel and casino.

1. Marketing and promotions – Our marketing and promotions strategy will focus on known local and regional players using our loyalty or rewards program. Our casino’s current program, the Reef Club will be revamped to improve its appeal and therefore its effectiveness.

Our China strategy will target the increasing number of Chinese tourists coming to Cairns. Cairns is a favoured destination in Australia because of the Great Barrier Reef. We want them to visit 2 reefs when in Cairns – The Great Barrier Reef during the day, and The Reef Hotel Casino in the evening. We will remain anticipatory in terms of our delivery of products and service.

1. Prudent cost management will continue.

2. Regulatory compliance – A high level of regulatory compliance and responsible serving of gaming and alcohol will continue.

Over the mid to longer term, the growth in China tourism would present profitable opportunities for the Reef Hotel Casino. As the local economy improves over time, we will also be well placed to capitalise on this.

Ladies and gentlemen, this concludes my address and I would now hand back to the chairman.

Chairman’s address continues

Thank you Allan.

Ladies and gentlemen, let me now continue.

Trust Outlook and Summary

Your board correctly endorsed Allan’s strategy for 2011 to improve the Trust’s profitability compared to 2010. That strategy has been successful and has at its core the achievement of success by ensuring that the Reef Hotel Casino remains

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the best entertainment venue in Cairns and Far North Queensland. This overall strategy will continue in 2012.

The Trust's results will reflect the performance of the Reef Hotel Casino. Keep in mind that casino level 2 has been closed throughout the first half year for renovations. While the Trust's results for this year to mid May are tracking below the results for the same period last year, the first half results could come close to that of last year as we enter the high season in Cairns.

We will update unitholders about the Trust’s likely first half year results in mid June when we release our unit distribution announcement. At this stage, even though Cairns’ economy is still soft, we expect to distribute 100% of distributable profits for the first half. As to a top up distribution from the undistributed income account – we will determine this in mid June of this year.

I share Allan’s view that 2012 will again present as a challenging year. On the one hand, consumer sentiment in Australia remains very weak whilst there are global headwinds in the form of a continuing weak US economy and the debt crisis in Europe. The Australian economy is likely to grow slowly in 2012. On the other hand, there are some positive signs that Cairns’ and the Far North Queensland region are slowly recovering from the global financial crisis and that tourism is generally improving following the natural disasters of early 2011. The growth in the China tourist market is particularly encouraging.

Conclusion

As I have stated in the annual report, if a new global financial turmoil in 2012 occurs, this may affect our results in 2012. However, the Trust successfully managed the last global financial crisis and is in a sound financial position as I already mentioned. We remain positive about the future.

I would like to thank my fellow directors, the partners of the operator, Casinos Austria International and Accor, the management team and the staff of the Trust and the Reef Hotel Casino and last but not least you, our unit holders for your support during this past financial year.

Ladies and gentlemen, that concludes my address to the meeting. Thank You.

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