Strong First Four Months for SKYCITY

Strong First Four Months for SKYCITY

$50m Capital Investments Providing Momentum

Highlights of the first four months of FY12 ended 31 October 2011
*  Total Shareholder Returns of 31% for the year ended 30 June 2011
*  Strong momentum from the second half of FY11 has continued into FY12
*  Flagship Auckland property Revenue of $179m, up $24m (+15.2%)
*  Group Normalised Revenue of $326m, up 8.8%
*  Recent $50m capital investments in Auckland showing strong returns on invested capital
*  New Federal Street bars and restaurants reinforce SKYCITY as the premier entertainment destination in Auckland

SKYCITY Entertainment Group today announced at its Annual Meeting a positive result for the first four months of FY12, with strong operating momentum following on from the record Normalised Net Profit after Tax of $130.9 million for the year ended 30 June 2011.

FY12 has started well for the Group with the first four months normalised revenues up $26.5 million (+8.8%) over the PCP. The positive result has been partly driven by the Rugby World Cup finals in New Zealand in October, but is mainly due to the recent $50 million revitalisation of the Auckland property and the ongoing strategy to grow International Business.

For the Financial Year ended 30 June 2011, SKYCITY delivered Total Shareholder Returns (TSR) of 31%. This was made up of a 24.2% increase in the SKYCITY share price from NZ$2.89 to $3.59, and cash dividends paid of 9.25 cents in September 2010 and 8.0 cents in March 2011. This ranks SKYCITY as the 3rd best performing NZX listed public company out of the Top 20 NZX public companies, placing us at the 90th percentile delivering upon our objective of being a top quartile TSR performer.

Auckland

Revenues at our flagship Auckland property, including Aucklands share of International Business revenue, were up $23.6 million (+15.2%) from $155.7 million to $179.3 million.

Strong momentum was seen in Aucklands gaming machine revenues, which were up $12 million (+18.1%), primarily due to the refurbished VIP Platinum Room and the successful opening of the new Diamond private gaming room. Pleasingly we saw a return to growth in table games drop (volume), which increased by 10% to $208 million due largely to the new domestic tables VIP facility, EIGHT.

Revenues from the SKYCITY Grand and SKYCITY Hotel, along with our bars and restaurants were up $11 million (+30%), with this mainly due to the RWC finals period in October.

SKYCITY Chief Executive Officer, Nigel Morrison says he is pleased to see that the momentum of the second half of 2011 has carried over into the 2012 financial year to date.

“Between January and September 2011 we completed a transformational $50 million revitalisation of the Auckland property. This included a $30 million investment to significantly enhance the standard and quality of our domestic and international VIP facilities and to deliver a better customer experience for these important guests. This has proven successful and is now driving solid returns on the invested capital.

“In August this year we opened EIGHT, our new VIP two storey facility on top of the SKYCITY Hotel. This is primarily for the use of New Zealand and Australian VIP table games players and includes bars, a buffet and dining area and an extensive outdoor entertaining deck all overlooking the Auckland Harbour. This is a quantum leap from the old Pacific Room previously offered to VIPs and our customers have embraced these new facilities. Since opening, the average number of patrons visiting per day has increased by over 40% and the total drop from these players is up nearly 75%. As a „members only area, we believe that very little of this increase was attributable to the Rugby World Cup. In fact, volumes have continued to improve following the tournaments end.

“The new Horizon Suites and Salons have been very well received by both existing and new international VIP players. We now have a quality product to market internationally and can accommodate four times as many VIP groups as we could 12 months ago.”

Auckland International Business turnover was up nearly 30% on PCP and up by more than 200% against the same period in FY10, with turnover exceeding $1 billion to 31 October 2011.

“While the impact of the Rugby World Cup was less significant than expected, our underlying business performance has been very pleasing and has been buoyed by the revitalisation of our Auckland property, which we believe will have long term benefits.

“Our three new signature restaurants and bars, Depot by Al Brown, The Grill by Sean Connolly and Red Hummingbird by Luke Dallow have all proven extremely successful with Aucklanders and visitors alike. They have introduced new customers to the SKYCITY precinct and reaffirmed SKYCITYs positioning as Aucklands leading entertainment destination.

“We are delighted with the initial success of our three new signature outlets and are keen to do more in Federal Street. We will continue to work closely with the Auckland Council to transform Federal Street from an unattractive traffic thoroughfare to a destinational pedestrian-friendly restaurant, bar and entertainment precinct. This is a priority for us and we see this as an exciting opportunity to develop something great for Auckland.

“As part of the overhaul of our facilities in Auckland, we have also opened a new Fortuna seafood buffet on Level 3 as well as a new sports bar, The Nations Clubrooms, which is now home to the Vodafone Warriors and the SKYCITY Breakers, with whom we have recently signed a three year naming rights sponsorship deal. Congratulations to both the Warriors and the Breakers on their great seasons – lets do it again next year!

“In June 2011, SKYCITY was announced as the Governments preferred developer to build the National Convention Centre in Auckland. We remain focused upon successfully negotiating an outcome which would see SKYCITY investing $350 million to deliver an iconic National Convention Centre. In return, we are seeking to extend our Auckland casino licence, an increase in gaming product to meet demand and provide for future growth and changes to gaming regulations which would increase the efficiency and attractiveness of the product we are able to offer our customers. We are negotiating in good faith with the Government to deliver a „Win-Win-Win; being a win for New Zealand; a win for Auckland and a win for SKYCITY. We anticipate concluding these negotiations in the New Year.”

Hamilton

“Our Hamilton property continues to perform well with revenues of $17.2 million up $1.9 million (+12.7%) on PCP. Of this, we estimate circa $0.8 million is due to Rugby World Cup visitors who were present during the early stages of the tournament.

“In Hamilton, we are working through plans for the development of a $35 million, 4+ star hotel that will feature 135 rooms, built above our existing gaming and entertainment facilities. This development would bring much needed quality hotel accommodation to central Hamilton and significantly improve the facilities that we are able to offer to our customers in a market which continues to demonstrate growth.”

Rugby World Cup 2011

“Rugby World Cup 2011 was anticipated to drive a significant but temporary uplift throughout the hospitality industry; however actual results have been below expectations.

“Overall we estimate that approximately $12 million of revenue growth was attributable to the Rugby World Cup, primarily earned during the finals period in Auckland from our hotels (the SKYCITY Grand, which was the official hotel of the IRB and the SKYCITY Hotel), our new outlets in Federal Street and our other bars and restaurants. Our view is that there was only modest net gaming uplift over the tournament.

“During the finals period in October the atmosphere at the SKYCITY Grand and in Federal Street was electric. The accolades we have received from rugby officials and international fans have been fantastic. Our staff and management did an outstanding job over this very demanding period and we thank them all for their amazing efforts.”

Adelaide

“Adelaide has performed well over the first four months with revenues up over 6%. We are very proud that earlier this month, the Adelaide Casino was awarded the honour of „South Australias Major Tourist Attraction at the South Australian Tourism Awards. This reinforces our standing as a major player in the Adelaide community – and we can do so much more!

“In October, the State Government released its Draft Master Plan for the redevelopment of the Adelaide Riverbank Precinct. The Master Plan includes a significant expansion and redevelopment of the Adelaide Casino facilities which would provide the opportunity for SKYCITY to create a truly integrated entertainment facility, featuring a boutique 5 star hotel, signature restaurants and bars and expanded gaming facilities.

“The South Australian Government has committed A$1 billion to the Riverbank Precinct with an expanded Convention Centre, the redevelopment of the Adelaide Oval and a large pedestrian footbridge which will connect the Adelaide Oval directly with the Adelaide Casino. Adelaide Casino will be positioned in the heart of the „New Adelaide.

“We look forward to working with the Government regarding its proposed future regulatory and operating framework for the casino. Once we understand what this looks like, we will be in a position to finalise our investment plans for Adelaide, ensuring that we continue to deliver good returns for shareholders. There is little doubt we could justify an investment of up to and potentially more than A$250 million under a scenario where we have a level playing field in terms of casino regulation, which would give us the ability to compete with our peers in Melbourne and Sydney and deliver Adelaide a world-class tourism and entertainment facility.”

Darwin

“After a challenging period following the introduction of smoking bans, our gaming revenues are now returning to growth and we continue to believe that our Darwin property has significant potential. Darwins local economy continues to experience challenges with a soft tourism market over the recent dry season and the high Australian dollar encouraging locals to travel abroad. The recent ban on live cattle exports did not help the local Darwin economy either.

“We remain confident in the future of our Darwin facilities and their further growth as major infrastructure projects that are planned for the Northern Territory take off.

“Our Lagoon Resort development, with its massive heated lagoon and sandy beaches, spa and restaurant facilities, is progressing well and remains on time and budget. We plan to be open in mid July 2012 in time for the Northern Territory dry season and major events. Following on from our success in Auckland, the Lagoon Resort will now feature two dedicated private VIP gaming pavilions and adjacent VIP Villas for the exclusive use of international VIP clientele. We are working together with the Northern Territory Government and other industry partners to secure direct international business class flights from Asia to

Darwin. Currently there are none but we are optimistic this will change in the next 12 months.

“Furthermore, we are pleased to advise that the SKYCITY Darwin casino licence has been successfully extended for a further five years to 30 June 2031.”

Outlook for 2012

“We are very pleased with the trends and momentum evident across our businesses for the first four months of this financial year. Whilst the impact of Rugby World Cup was less than expected, we believe the continued momentum in our core businesses across the group will deliver more value to shareholders over the longer term. We expect that our Auckland property will continue to benefit from the capital improvements and continue to deliver growth.

“While the Rugby World Cup may provide some boost to consumer confidence, given the uncertain state of global markets, the timing of a sustained economic recovery in New Zealand still remains somewhat uncertain.

“In Australia, the consumer discretionary environment appears to have softened with the RBA recently lowering interest rates. However, we are pleased with the current trends of our Adelaide and Darwin properties.

“Based upon our current market conditions and trading patterns, we expect our full year normalised Group NPAT for the year ended 30 June 2012 to be in the $140 millions, up from $130.9 million last year.”

ENDS

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