Announcement | Direct Broking

FORECAST: SKC: SKYCITY Profit Guidance Confirmed and S&P Rating BBB-

11:19am

SKC
14/07/2008
FORECAST

REL: 1119 HRS Sky City Entertainment Group Limited (NS)

FORECAST: SKC: SKYCITY Profit Guidance Confirmed and S&P Rating BBB-

- Chief Executive Update
- Confirmation of FY08 Profit Guidance
- Standard and Poor's Investment Grade Rating (BBB-, Stable Outlook)
- Debt Profile Update

SKYCITY Entertainment Group Limited is today publishing an update to
shareholders (copy attached) which provides an update from Chief Executive,
Nigel Morrison, on developments at the company since he joined in March.

In particular the update includes three items which represent important
disclosures by the company. These matters are referred to below.

Profit Guidance for FY08 Confirmed at $108m-$110m

SKYCITY advises that it expects to achieve the profit guidance for the
2007/08 financial year, as was advised in conjunction with the company's
interim result announced in February.

The profit guidance advised at that time (February 2008) was for a net
tax-paid profit in the range $108m-$110m (after Cinemas write down).

The company's financial statements and result summary for the year ended 30
June 2008 are scheduled to be released on 25 August 2008.

Standard and Poor's Investment Grade Rating (BBB-) with Stable Outlook

SKYCITY is pleased to report it has received an Investment Grade rating of
BBB- with Stable Outlook from international credit ratings agency Standard
and Poor's.

Standard and Poor's states that "This rating reflects SKYCITY's good quality
casino assets in New Zealand and Australia which underpin sustainability of
earnings and provide the company with the capacity to manage its financial
risk profile at a level supportive of the investment-grade rating. The
rating also recognises the favourable licensing environment for SKYCITY's
casino operations."

A copy of Standard and Poor's press release (dated 14 July 2008) on the
SKYCITY rating is attached.

Debt Profile Update

In February 2008 SKYCITY completed the renegotiation/extension of its $500m
revolving senior debt facility. Of this facility, some $370m remains undrawn
as at this time. The current facility term is to April 2011.

The first required refinancing of company debt relates to $124m of capital
notes in May 2010.

Given the company's current average interest rate of 7.8% and the structure
of the existing debt facilities, SKYCITY advises that it considers its debt
structure to be sound and secure, with the current debt level of $1.0 billion
placing no undue pressure on the organisation.

This view is consistent with the Standard and Poor's investment grade rating
as advised above.

Other Matters, Updates

The Chief Executive's update also provides further information on other
matters and also notes the date of the company's 2008 annual meeting, being
31 October 2008.

After just over four months now as SKYCITY's CEO, I thought it appropriate to
provide you with an update on our strategy and direction and what we have
achieved to date, as well as to share with you a few observations about our
company.

SKYCITY is a leading Australasian casino business with 70% of our revenues
generated through casino gaming. We are a company with a unique collection of
very valuable urban casino licences - these assets rarely become available.
Our objective is to develop the full potential of these assets and we believe
that there is significant opportunity to do so.

To position our company to enhance its performance our immediate focus has
been:

- Redesigning the organisation, aligning our structure with opportunities to
grow revenue and earnings before interest, taxes, depreciation and
amortisation (EBITDA). We have downsized our corporate functions and
increased the responsibility and management control of our operating
divisions, responsible for building revenue and delivering EBITDA.

- Implementing the new organisation structure and the consequent management
changes. As we have announced, in Auckland we have appointed three key
operations managers charged with growing our Auckland businesses:

- Matthew Hardman - Executive Manager Gaming Machines, recently the General
Manager of Gaming Machine Operations at Crown, Melbourne and prior to that
Star City, Sydney.

- Ejaaz Dean - Executive Manager Tables Games, most recently Chief
Operating Officer at Burswood, Perth, and prior to that at Crown and Star
City.

- Simon Jamieson - General Manager Hotels, Conventions, F&B and Sky Tower.

Both Matthew and Ejaaz bring a wealth of casino experience to Auckland each
with over 20 years' experience in the casino industry. Simon joined SKYCITY
in September 2007 as Tourism Manager and brings over 25 years of commercial
and global tourism experience to the business.

- Appointing a new Corporate management team:
- Alistair Ryan as Chief Financial Officer. Alistair joined SKYCITY in 1995
and was previously General Manager Corporate and Company Secretary. Prior to
joining SKYCITY he was a partner in Ernst and Young.

- Peter Treacy as General Counsel and Company Secretary responsible for
government relations, legal, regulatory and compliance functions. Peter has
extensive experience in international financing and corporate transactions,
including eight years as partner with international law firm Linklaters in
London, Hong Kong and Bangkok.

- Grainne Troute as General Manager Group Services and HR. Grainne was
previously Managing Director of HR consultancy Right Management and, prior to
that, Managing Director of McDonald's Restaurants (New Zealand) responsible
for over 5,000 employees.
- Mike Clarke as Chief Information Officer with over 25 years' experience
in the IT industry in Australia and Asia Pacific.
Technology and systems are hugely important to our business and we believe
there are significant opportunities to enhance our business performance
through better integrated technology and systems.

- Completing our business and strategic plans to underpin 2009 as a year of
growth. With these completed our management team is now focused on growing
revenues, driving efficiencies and maximising EBITDA. Our business plans for
all of our operating divisions are predicated on growing revenues and EBITDA
in 2009.

NPAT 2008 Guidance
In February this year we provided guidance that our net profit after tax
would be in the range of $108 million to $110 million.
I have no reason to believe that we will not achieve this guidance.

SKYCITY Debt: "Investment Grade BBB- outlook stable"

In February this year, we completed the renegotiation and extension of our
$500 million revolving senior debt facility.
Of this, some $370 million remains un-drawn. This facility does not come up
for renegotiation until April 2011. Our first required refinancing is that of
our outstanding capital notes of $124 million in May 2010. Our current
effective interest cost is 7.8 %. Given this, we believe our debt structure
is sound and secure and our current level of debt of NZ$1.0 billion places no
undue pressure on our organisation. Standard & Poor's have also concluded
their corporate credit rating of "Investment Grade BBB- with stable outlook."

Focus for 2009
Our shareholders have made it clear to us that they want us to focus on
maximising the performance of the assets we operate. This is what we will be
doing. As we have said previously, we expect to achieve this within an
18-month timeframe. We will retain tight control over capital and not expend
capital unless we are very confident of healthy returns for shareholders.

SKYCITY Auckland
SKYCITY Auckland represents 70% of our Group's EBITDA - it's our flagship
property and will be our main focus. In my opinion, we have not achieved
satisfactory revenue growth from this property in recent years. This will be
our core focus.

We will:
- Continue to enhance the quality of our gaming management.
- Focus on re-establishing SKYCITY Auckland as the centre of Auckland
entertainment.
- Reinvest in our core gaming product.
- Enhance the quality of our gaming systems.
- Provide great value for money for our customers.
- Aim to integrate our non-gaming operations to support our gaming
businesses.

SKYCITY Darwin
Our SKYCITY Darwin property provides strong potential. The Northern Territory
has a growing national and international reputation as an outstanding tourist
destination, and is one of the fastest growing economies in the Australasian
region. We will complete Stage 1 of our expansion later this year adding
further gaming product, new restaurants and bars. With its proximity to the
Asian market, we believe Darwin is a key focus for SKYCITY's international
VIP business development.
The casino celebrated 25 years on Mindil Beach recently, and we were
delighted to have the Northern Territory Government's
support for our Little Mindil tropical resort development. We're committed to
playing an integral role in the Territory's
future success through the continued development of our casino, resort and
entertainment facilities in Darwin.

SKYCITY Adelaide
With the constraining regulatory environment in Adelaide, it is difficult for
our Adelaide casino to perform on a par with other Australian casinos. While
we have made good progress enhancing the margins of this business, in spite
of the introduction of smoking bans in November last year, we are coming to
the view that there is little point investing significant capital in our
Adelaide property unless we can work with the South Australian Government to
improve the business model for the Adelaide casino. This will be a primary
focus for the next year.

SKYCITY Cinemas
We have announced that we are retaining the SKYCITY Cinemas after
negotiations with a potential purchaser progressed to the point of signing,
but ultimately failed to be concluded, with the party unable to achieve a
satisfactory financing arrangement. While our cinema business is non-core,
and represents approximately only three per cent of the SKYCITY Group, we are
confident that opportunities exist to enhance the performance of this
business from that currently being achieved. SKYCITY Cinemas is the largest
cinema operator in New Zealand with a market share of approximately twice
that of the next largest player.

Economic environment
Certainly, the economic environment in New Zealand is now more challenging.
There have been a number of commentators who have linked the anticipated
performance of SKYCITY to that of major airlines suffering in this economic
slowdown and also the recent softening in business experienced by casinos in
Las Vegas. Our view is that our businesses are very different to these. With
our urban-based casinos primarily serving local urban communities, we believe
our businesses will not be impacted the way many tourism-based businesses are
likely to be.

In Australia, South Australia and the Northern Territory appear to be better
placed, both continuing to benefit from the
commodities boom.

2008 Annual Results and Annual Meeting
Our annual results for the 2008 financial year will be announced on Monday 25
August 2008. The 2008 Annual Meeting will be held at the SKYCITY Auckland
Convention Centre on Friday 31 October. Both events will be available to view
via webcast on our investor centre website.

www.skycityentertainment.com
We've recently updated our online investor centre so that you can keep up to
date with our company news as it happens
- please add the website to your favourites and sign up for site updates.
In summary
I believe that SKYCITY has a very healthy future - we have some great assets,
great people, and it is an exciting opportunity
for me, together with our new management team, to help SKYCITY realise its
full potential. I'm confident that we now have
the team and plans in place to take the company to new levels of success in
the future and I look forward to keeping you informed of our progress and
presenting our 2008 results in the near future.

Yours faithfully
Nigel Morrison
Chief Executive Offi cer
End CA:00167371 For:SKC Type:FORECAST Time:2008-07-14:11:19:23

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