Nigel Morrison must be in two minds at the moment.
On the one hand we are doing well, on the other he is about to change the look of the company forever.
What is he doing with our money?
I say our money because it is our money.
Shareholders.
Their hand has been pretty much shown in the fact that 1 billion plus has been laid out and the first of the returns from it are about to come in this reporting period of Feb 11 2016.
I was reading the 3 quarters year about revenue and profit in October 2015 (cant remember where but I read it) and I read that Nigel Morrison was "extremely satisfied" with results. That's accountant speak for seriously happy - so were in for a good result.
What well look for is some serious revenue increases in Adelaide, Auckland, Hamilton, Queenstown and perhaps Darwin.
The accompanied figures will be the profits. They must show an increase and a propensity to increase as money is spent (the part I mentioned above - 1 billion).
They should continue to increase from here (with a few ups and downs).
I'm not sure were the additional tables games and slots come into play - they could be there already - so we could just start in the new year.
I have done a few interviews (1, 2, 3) with Nigel Morrison from Sky City Entertainment Group Ltd [SKC.NZX] but Nigel has been raising his profile of late with bold statements to the media and a general interview with Michele Hewitson from the NZ Herald (see below for the full interview)about himself. He has kept a low profile over the last few years, preferring to let results do the talking so the move to raising his own personal profile and the aggressiveness of his previous neutral stance on the politics of gambling have me scratching my head a little. There will be an interview with Auckland Airport CEO Simon Moutter coming up over the next few weeks.
Here is the Michele Hewitson Interview: The idea was to have breakfast with SkyCity chief executive Nigel Morrison at SkyCity Grand. Good, I thought, greedily, because I do like a posh hotel breakfast, even when it is to be taken with an accountant. He is a grand sort of accountant, of course - which is what he started his ladder-climbing corporate career as - and the big boss, but nobody knew he was coming for breakfast. This caused a tremendous fuss involving much bustling about, many staff and the transformation of the boardroom into a breakfast room with pitchers of water and butter curls and a la carte menus. I carried out a thorough examination of the breakfast buffet while waiting and later told him, a little sourly, that his toaster didn't work (it is one of those silly revolving ones they always have in hotel breakfast rooms and which never work properly). He seemed not remotely interested but I wouldn't be surprised if an investigation is carried out. We didn't have any breakfast, which is why I was sour on his toaster: hunger can make you mean. We had a cup of coffee. We didn't even sit at that perfectly laid table. An hour later I said,
"You sent them into an enormous flurry and you didn't even have breakfast." He said, dismissively, that his communications manager "wasn't organised". Honestly, he could have just said, "Oh, well, I was busy and forgot to tell anyone', and taken the blame, but I suppose you don't get to be the CEO of a big casino by sweating the small stuff, like not bagging your staff in front of a journalist. I think he belatedly realised that he was supposed to have given me breakfast, although what did he think the laying of the table was for? He said, brusquely, "Would you like something?", but too late. This tells you about all you need to know about his style. He says he's English but he arrived in Australia when he was 10 and I'd say he took to it, and it to him, rather well. His father was from the industrial town of Gainsborough and one of 10 children. He left school at 14 to work in a steel mill and, his son the CEO, told me proudly, went on to became "one of the youngest professionally qualified mechanical engineers in the UK". So being competitive and wanting to succeed is likely both nature and nurture. The move to Australia was to create "an opportunity for us, my brother and I, to have, I think, relatively successful lives". His brother is a property developer who has "probably got a lot more!" money than he does. "Relatively successful" is relative then, because he makes about $2 million a year. When I asked how much he made, he said, "Oh, not a lot". I said, "Two million", and he said, "A couple of million", and I said, "More than two million", and that went on for a bit. Anyway it is about two million (made up of bonuses and shares and so on), but: is that a lot? "Well, it is a lot of money. It's not a lot when you compare it ... I'm probably the lowest paid of any of the top senior executives in Australasian gaming companies." This doesn't bother him, at least, "not really". So perhaps a bit. Well, what is his job? He runs the show, obviously, but what is the show? There are three SkyCity-owned casinos in NZ and two in Australia. But a casino is not just a place you go to gamble any more; they are mini, or not so mini-empires. I referred to these as his not so little fiefdoms and he didn't disagree. He says he has to have some sort of profile, but: "Why have you come to see me?" He meant that the interest is only in his title, not in him. He once said he had lots of friends who turned out to be friends only because he could get them into flash dos. He does meet celebrities and in answer to my question about whether he was impressed by celebrity, he said: "Oh, look! I'll tell you, you're talking about the joys of this industry ... I got to meet Bob Geldof! ... [He] has the capacity to make you feel like you're the only person in the room and that really is engaging." He was so interested in this, I think, because he told me that the schmoozing side of his job hasn't come naturally and that it took him until he was in his 30s (he is 52) to feel comfortable with the hobnobbing. "I had to learn it." He has just been named on an Auckland 1st XV list of ambassadors for the Rugby World Cup. Some of the other people on this list: John Walker, Carol Hirschfeld, Simon Gault. It's fair to say he's the least-known person. "Probably. Ha, ha. I'm certainly not a celebrity and most of those others are, but I think it reflects the significance of SkyCity ..." I said surely his inclusion reflected his significance as a successful lobbyist, for the significance of SkyCity, if you like. "No, it's the fact that we're investing $50 million before the Rugby World Cup, our commitment to the fact that we've got behind what we think is going to be a great event." This amounts to the same thing, I'd say. He must be pretty good at lobbying. He has to get the council on-side and SkyCity's latest expansionist plan is the upgrade of Federal St: three new restaurants, an air bridge, and the makeover of the street into a place you might actually want to loiter. Currently, it's a dump; he wants glamour - although his idea of glamour also includes sports bars with giant screens. That's the odd thing about casino empires: you have the pokies and the high rollers and the grand hotel and a girl on the escalator ahead of us as we went up to the gaming floor, who was wearing what you might charitably describe as hooker grunge - all in one empire. A bingo game had just finished. Bingo! It's back in fashion, apparently. Three hundred people had turned up. I asked whether he was interested in the psychology of gamblers and he said he had been "lucky enough to work for Kerry Packer" - the famously abrasive Australian businessman who owned casinos and, also famously, gambled millions. He gave Packer's definition of a gambler: "The thing about gamblers is that they know what they're doing is intrinsically wrong so they're always looking for an excuse to leave. I thought that was quite interesting." I thought that he did think it was interesting might have meant that he has some reservations about the game he's in. By that definition it means that his job is preventing people who know what they're doing is wrong, from leaving his premises. "So," he said, "you've got to look after them very, very well." He runs a joint which exists to take money off people. "To be honest, what business doesn't? You offer a service or goods. In our case, we offer a service." When Morrison arrived at SkyCity in 2009, his appointment was announced like this: Casino Boss Brings some Packer Panache. Does he have panache? You wouldn't think so from his assessment which is this: Many at the top of the gaming industry, he says, "have a numerical background, because our business is all about probability. So you've got to understand normal distribution, you need to understand standard deviations, you know, so you can set your risk and return rates". Did I mention that he's an accountant? You have to have other skills. "Yeah, that's exactly right. You need some sort of people skills." Which some accountants might not have? "Well, you said it." As for panache, he has bright pink silk lining his suit jacket and shirt cuffs monogrammed with his initials: NBW. The B is for Barclay. I was trying to think of what sort of person has monogrammed shirt cuffs. Unless you are a minor toff with pretensions, all I came up with was foppish. He said he didn't know what that meant. A bit dandyish. "I wouldn't have said dandyish!" "I don't know. It's probably a bit arrogant." Is he arrogant? "Look, I don't think I really am arrogant. I've probably got a bit of an ego." His friends, he once said, used to tell him he was too ambitious - which might amount to much the same thing as arrogance. "Where do you get this stuff from? Bloody hell." From what he's said in the past, and now he tells me that he has, in the past been accused of being arrogant. This is a funny thing to admit. "Yeah, hard to believe, isn't it!" He says his friends probably wouldn't accuse him of overarching ambition these days because he has now achieved a "reasonably balanced life". This means that he only works about 60 hours a week, and sometimes leaves the casino. He doesn't own a house here but rents "a small, modest house", in St Marys Bay. He showed me the label on his suit, to prove, presumably, that he doesn't splash it about: "Charlie Chang. He's a good tailor. A cheap tailor." He wears a Cartier watch, but a stainless steel one, he was at pains to point out. He denies he's mean with money but - thinking of the savings he made on my breakfast - I think he's cautious, which is what you'd want in a geezer who runs a gaming house. In a gaming house, the house always wins. He does like to win. He scoffed when I asked if it was true that casinos didn't have clocks. We went over to the casino and I said: Right. Where are the clocks? He eventually located a couple, hidden in dark corners. Nobody could read those! I said. He said, "Haven't you got a watch?", and looked very pleased with himself. I idiotically said that having his picture taken with the pokies wouldn't be good for his image. That was to pay him back for the win over the clocks, but he took this seriously, and then refused to have his picture taken by the pokies. He is often described as hard-bitten. He claimed not to know what hard-bitten means. It means a tough bastard. He said, "I don't think I'm that tough to be honest." Oh well, if he says so but I wouldn't want to be the person responsible for not making the breakfast booking. Share Investor Q & As The Warehouse' Ian Morrice Briscoe Group CEO Rod Duke Ryman Healthcare's CFO Gordon Macleod Ecoya's Geoff Ross Xero's Rod Drury Mainfreight MD Don Braid Burger Fuel Director Josef Roberts Sky City CEO, Nigel Morrison Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY Convention Centre proposal interview with Sky City CEO Nigel Morrison
I have been very critical of the plans that Sky City Entertainment Group [SKC.NZ] have for either expansion of their present convention centre or the building of a new one. They are known money losers. With this in mind I sat down with CEO Nigel Morrison yesterday and discussed the details and various proposals along with a few sidebars along the way. It is the first time I have met him personally, previous interviews have been conducted via email questions. Here is what I can tell you at present about SKC's convention centre plans, there is detail that Nigel had to keep to himself. We sat down at the Rebo Cafe just off Federal Street. On the extension of the present convention centre located in the Sky City Grand Hotel complex Mr Morrison indicated that shareholder money would be spent on upgrading and allowing for more delegates beyond its present capacity but costs would be hopefully mitigated by increased revenue from foot traffic to the casino (via the current footbridge) and patronage to a number of bars and eating establishments to be developed in the Federal Street precinct. Some Council money will also be used to fund this expansion and there are negotiations underway at present as to how much that will be. Interestingly Nigel would not be opposed to being a landlord in respect of any food and beverage outlets developed and for existing operators in other parts of the city to occupy spaces in Sky City owned real estate. A very exciting possibility exists in Federal Street (see power-point slide illustrations & SKC submission to Auckland City Council for more detail) to lever off patronage there and get customers to the door of the casino. The Auckland Casino has been pretty much flat revenue wise over the last few years and Nigel indicated that this was the best use of shareholders money to enable the possibility of growth again, more attractions means more revenue in theory. In terms of the National Convention Centre, which would be built on Hobson Street next to TVNZ, if it went ahead, around $400 million would be spent developing it, with the bulk of the money coming from the taxpayer, with a relatively small input from Sky City shareholders. I had previously thought that the bulk of the funding would come from SKC but to leverage off the taxpayer in this way would be a major benefit for the company (sadly the benefit to the taxpayer is a negative one) Nigel himself admitted many convention centres make little or no margin - they in fact tend to lose money - and also indicated that the rationale for getting into both their convention proposals was that that had to return a net income on investment of at least 15% before they went ahead. This 15% margin would come from increased patronage to the casino floor and the bars and food offerings that the company are keen on expanding. Off the topic of convention centres Nigel indicated that the Australian casino sector was likely to consolidate over the next couple of years with Tabcorp Ltd [TAH.ASX] a company under a fair amount of pressure as its Victorian gaming/wagering licenses expire. Mr Morrison indicated that the Sydney casino Star City was the jewel in the crown in terms of gaming in Australia and while well run, its potential was not being fully exploited. SKC has paid down a considerable amount of debt over the last year or so, with a capital raising in 2009 so far contributing the bulk of that. Mr Morrison indicated that his company has a balance sheet and credit resources that would make it open to any opportunity to purchase the right gaming assets at the right price should a shake up in the Australian gaming sector arise and he seems confident that this will happen in the next few years. Nigel knows the Australian gaming sector well and has almost 20 years experience in this industry. On the possibility of expansion of the casino sector in New Zealand he doesn't see the likelihood that Government would relax the present restrictions allowing more competition but that if it did (after a suggestion that Wellington would be a good place for a casino) they would be interested in a casino in at location. Little indication of how well the second half of 2010 has gone from Nigel (2 weeks until year end) but if there is any indication at all results are tracking to a record profit of between $126-132 million and that has been forecast by SKC management itself. I think given cost reductions, a sale of the cinema assets and reduced interest costs on paid down debt the profit is likely to be on the higher side of this estimate, if not higher.
After the release of Sky City Entertainment Group [SKC.NZ] half year profit to 31 December 2009 yesterday, I though it might be worthwhile speaking to CEO Nigel Morrison again to get his view on the company that he leads. The result was a record for the half year of NZ$71 million on revenue up by almost 6% and cost cutting due to a capital raising last year and other efficiencies. With this in mind lets put some questions to Nigel to get a better picture on where the company was in the half year and why and where the company might be headed in 2010. The interview was conducted by email and Nigel completed it late last night so he was working like a trouper yesterday dealing with folk like me. Share Investor (SI) Congratulations Nigel, an excellent result on the surface and a record half from memory for the company. Where you surprised at all by how well the last half of 2009 went if when you look at the NZ$71 million profit headline?
Nigel Morrison (NM)I think the $71m on the face of it up nearly 30% is pleasing. I don’t think it’s an outstanding result – and would liked to have seen stronger revenues in Auckland. I thought the Australian results weren’t bad given the fiscal stimulus package benefits in the prior comparative period. And of course the savings in funding costs following the USPP debt repurchase. Other than the above the win rate on international – I would have thought the result was within most analysts ranges – albeit at the upper end.
SI - The main bulk of profit increase seems to come from lower interest costs, from lower debt levels paid down in 2009, where will growth come from in 2010?
NM - That is correct – funding cost savings represented about 60% of the increase in NPAT. We expect the benefit of the funding cost savings to flow into the rest of 2010 – and so will continue to enhance comparative performance. Beyond that it’s about increasing the appeal of our core businesses, driving visitation and growing revenues. We will continue to focus on the International business.
SI - Auckland Casino revenue appears to have been stagnant for some time. What are you going to do to increase real revenue beyond cost cutting?
NM - As above the challenge is to enhance the appeal of our core businesses, driving visitation and grow revenues – We have a new TV ad that we will run over the next few months, we are enhancing the quality of our restaurants and bars offerings, new bars TwentyOne, XO and new Cantonese restaurant Jade Dragon opening next week, continuing to invest in gaming product, and some management changes with Jane Hastings who oversaw the turnaround of our Cinemas business returning to our core business here, heading up our restaurants and bars, Sky Tower, entertainment and attractions focused on driving visitation.
SI -How much impact do you expect on the Darwin Casino from the full effect of the smoking bans introduced there?
NM - Experience would suggest gaming machine revenues would decline by 10-15 % following the introduction of smoking bans – early indications are that following the expansion and refurbishment of the Darwin casino last year we would expect to mitigate this effect.
SI - Your reasons for keeping Adelaide Casino within the group have turned out to be vindicated, in least in terms of revenue growth, where do you see this unit going in 2010 and beyond?
NM - I think Adelaide has great potential – a city with over a million people and we have an exclusive casino licence – our job is to maximise its potential and we will work to do that. There is an election in March.
SI - While always a wildly fluctuating part of Sky City's business, the international revenue or VIP business seems to have been a winner this year. Is it at all an important part of the business as a whole and can we expect better results from it considering its high risk and volatile nature?
NM - We are trying to manage this business with a lower risk profile – and focusing more on volume players. I think if we manage it appropriate it is totally legitimate for a leading casino group to operate in the VIP player space.
SI - SKC shares have been sold down by more than 10% over the last few weeks in a flat market, pre-profit announcement and are incidentally up strongly today on the announcement. Clearly the market was expecting a poor result. What do you put the drop down to and do you think the market is valuing Sky City shares appropriately given a record result this half and an indicative record for full year 2010?
NM - I’ll leave this judgement to other commentators – but I do think our result was very solid.
SI - Looking past 2010 and into winter 2011. How much positive impact, if any, do you expect from patronage from Rugby Word Cup supporters using your facilities nationwide?
NM - I think the Rugby world cup will be great for NZ we will be doing everything we can to support it – I think we will be incredibly busy over that period – the challenge will be to carry it forward beyond the immediate period of the World cup.
SI - Just as an aside, can we see Sky City looking at online gaming if legislation allowing New Zealand companies to do that is passed and is that something Sky City would lobby Government for considering the loss of revenue from Kiwis gambling on overseas based gaming offers?
NM - We will stay close to this and open minded – but I can tell every major casino operator in Australia has looked at this and at the end of the day gone back to focusing on their core businesses – and most after investing and tearing up some $20m. So we will proceed with caution.
SI - Finally, as you say 2010 looks to be a challenging year for the company and economy as a whole, what new things, if any, can we expect to see as shareholders as a reaction to that challenge.
NM - We will continue to invest in our core facilities – new restaurants, bars, technology, systems, etc – we have a new TV ad that we will launch in March April in Auckland, communicating and presenting the enhanced Auckland facility to Aucklanders and New Zealanders. We have made some management changes that we think will help and as part of that we are welcoming Jane Hastings back to our core management team to run our restaurants and bars and entertainment and attractions at Auckland, after the great job she has done for the last 2 years turning round our cinemas business.
Sky City Entertainment Group [SKC.NZ] has had a very patchy last 7 years, and as a medium sized shareholder of the company I have obviously followed the fortunes, and mis-fortunes of a company that has; had huge financial write-offs due to overpaying for assets, flagging or stagnant profits, massive debts, a regulatory regime that has been deleterious to say the least and a former CEO in Evan Davies that has been over his head when it comes to operating a casino business in a sustainable and competent way.
Enter Nigel Morrison in March 2008, hired for his experience in casino "turn-arounds", most notably the Crown Casino by the Yarra River in Melbourne and he has had an impact almost immediately.
It is a positive impact to say the least.
Morrison first focused on cutting back costs from the bottom line then looked at ways to improve customer satisfaction and bring in more punters through the doors of its casinos and hotels.
For the last year an almost obsessive pay down of company debt by Nigel will lead to lower interest costs over the next year and beyond, more interest by investors in the company's shares and a better return to shareholders in the long run, and after all isn't that what all investors want?
Morrison achieved this by issuing new capital to existing shareholders and new ones in a highly contentious capital raising some months back, but as shareholders all get dividends out of the business, we sometimes have to put our hands back in.
Sound capital management with a focus on customer service and unnecessary costs stripped out have been the key to Nigel's success so far.
But what of the next 12 months and longer?
How will the business go under his leadership and what new ideas does he have to take this company through the $1 billion revenue barrier and beyond.
With this in mind I submitted some questions to Nigel via email and he kindly offered to answer them. This is after he contacted me after something I wrote about company debt levels.
The Q & A
Share Investor(SI) With your FY 2009 result released last week of over $115 million, a 13% increase on last year’s net profit, how sustainable do you think this sort of result will be for FY 2010 and beyond?
Nigel Morrison (NM) We think it is sustainable and we will be aiming for double digit underlying NPAT growth again in 2010.
SI - What are your thoughts on the recession and recent (apparent) recovery - if you want to call it that - are and what effect that will have on the company's overall strategy?
NM -The recession did make it difficult to grow revenues, however we believe our underlying revenues have been good throughout the recession and some return to growth is expected as we come out of it.
SI - Has your time as SKC CEO been what you expected or has the restructuring of the company that you were hired for been more or less of a challenge?
NM - Looking back now, 2009 has been a very pleasing year for me as CEO. I assembled a very good management team and reinvested in the basics that will provide a very solid platform for growth going forward. There was a lot of work that had to be done to improve technology, our human resources and our property management systems.
SI - The SkyCity Cinema division has always been a challenge, to put it mildly. How do you see its fit within your gaming assets given its poor operating history and low to negative returns over a long period?
NM - As I’ve always said since my arrival at SKYCITY, I don’t believe that SKYCITY Cinemas is a core division of our Group. Our Cinemas team, led by Jane Hastings, has done a good job turning around this division in 2009 and we are looking for better performance again in 2010.
SI - You have a core of loyal customers in the Auckland casino that keep coming back. Is that reflected in your other casinos and what are you doing to retain these loyal customers long-term while attracting the new ones that you have already and those that you plan to attract in the future?
NM - As a casino and being a major entertainment destination in all of the cities in which we operate, it is important for us to continually reinvent our entertainment offering. This might include new products, new restaurants, new bars, new value propositions and exciting regular promotions. It is important that we continue to retain our loyal clientele (in Auckland and in our other properties) and all of our casino operations run loyalty membership clubs, but we are also aiming to continually attract new valued customers.
SI - Are the extra bars and food outlets at the Auckland site attracting new gamers and if so is that a strategy that you are or will use at your other casinos to grow revenue and profit?
NM - Casinos are destinations for entertainment. For us it is about providing holistic experiences whereby there is something for everybody from a quick meal to fine dining or from a glass of Champagne to a beer. We want all our properties to have aspirational bars and restaurants and we’ve certainly got that in Darwin. We are looking at further development plans in Auckland and Adelaide.
SI - With a new National Government and the possibility of a more relaxed gaming regime flowing from that, what do you think of any casino expansion in New Zealand, say a casino in Wellington and given the possibility of this what would SkyCity’s chances be in gaining a Wellington location given the company’s dominance in New Zealand ?
NM - I think it is unlikely that this Government would encourage casino expansion in New Zealand. There are currently six casino licenses in New Zealand, including two in Queenstown. I think there are merits to having a casino in Wellington and we would be keen to be a major contender if that scenario was to develop.
SI - In relation to the previous question, how would you respond to any new gaming competitor entering the New Zealand market?
NM - We would welcome competition. Auckland will always be our flagship property in NZ.
SI - You know the Australian gaming market well, what opportunities exist for SkyCity to expand its presence there beyond its existing casinos in Adelaide and Darwin?
NM - Our current focus is to continue to realise the potential of our existing licenses including those in Adelaide and Darwin. In particular, we believe that Adelaide has significant growth potential (if we can un-lock it) as we also do with Auckland. We will monitor opportunities as they unfold in Australia, but we are unlikely to be a catalyst for expansion but will rather continue to invest in our existing businesses.
SI - Are you surprised at the spectacular turnaround of fortunes at the Adelaide casino, what have been the main drivers behind this, is it sustainable and can shareholders expect the level of returns from this casino that are coming from your Auckland casino?
NM - Adelaide was coming off a very low base. By enhancing the table games offering, including a new baccarat room, and introducing rapid roulette and installing the latest technology offerings like shuffle machines and with a renewed focus on customer service we have been able to significantly enhance the earnings of Adelaide. Earnings now from Adelaide are sustainable but to generate significantly better returns from this operation, as we do in Auckland, we would have to significantly expand the Adelaide property.
SI - What are the biggest commercial threats to your businesses in terms of competition and is your reaction to this competition likely to be aggressive or reactive in nature?
NM - Our biggest challenge is to continue to reinvent ourselves on a monthly basis and maintain the attractiveness and levels of entertainment at our casinos for the thousands of people who visit us every day.
SI - Your concentration of debt retirement over the last year has been admirable. Given sufficient payback of debt over time and sustained profit levels would you look at buying additional gaming assets for expansion – given the right price – or would a capital return to shareholders be a more efficient and wise use of shareholder capital?
NM - We believe our existing gaming assets offer good potential for organic growth through focused investment (as opposed to acquisitive growth). Any projected capital investment is critiqued against a required hurdle rate of return. I’m sure if the time came when we could not maintain satisfactory rates of return we would then consider a return of capital to our shareholders or some other distribution.
SI - Who are some of your business mentors/heroes and why?
NM - The late Kerry Packer because he was tough, probing, highly articulate and had an uncanny sense of judgement. Lloyd Williams, Founder of Crown in Melbourne, because of his honed attention to detail, incredible persistence and never accepting “no” for an answer.
SI - Who is your favourite New Zealand business leader/s and why?
NM - Sir Ron Brierley, who was a hero of mine when I was a ‘wet behind the ears’ corporate adviser back in the 80s.
SI - In relation to the 2 previous questions, are there any particular books or periodicals that you have read that you would recommend to Share Investor readers?
NM - In short, no. I’ve come up through the school of hard knocks and have been very fortunate to work alongside some great inspirational leaders. I find it bemusing that analysts sometimes recommend “sell” at $2.60 and then shortly after “buy” at $3.30. My advice would be find an industry (and companies) you understand and stick to them.
SI - In my investing experience I have found the level of business leadership in New Zealand wanting – with a few very notable exceptions - when it comes to making good long-term decisions based on sound business skills, the basic understanding of running a business and accountability when it comes to making mistakes and this is often reflected in businesses hiring from an overseas talent pool. What are your views on how we can get good shareholder representation in the boardroom?
NM - SKYCITY has a very strong Board which numbers some very successful New Zealanders including Chris Moller, Brent Harman and Peter Cullinane, who all have strong international business backgrounds. Also, I’ve certainly found the counsel of Elmar Toime (former CEO of NZ Post) for example, who was acting CEO before me, and Sir Dryden Spring incredibly valuable.
SI - I have recently become a dad for the first time and am now aware of higher demands on my time. I am sure the life of a CEO is very busy. How have the demands of SkyCity impacted on your family and what skills as a dad have you used in your business life and where and how do you find the balance between home and work, is it just good time management?
NM - Unfortunately, if you want to be a CEO there are serious sacrifices to be made. Looking back, I probably have focused too much on my career and in balance that has probably cost me dearly. For me there still is not much balance it is mainly work. I have grown-up children now who are 18, 20 and 21 years and I’m very proud of all of them. They live in Melbourne and I try to get back to see them at least once a month. I do enjoy photography and bike riding and I hope to get fitter because of it.
SI - Any business has inherent risks and gaming businesses possibly more than others. How do you manage those risks in the normal business operating environment that changes due to economic cycles and other outside and inside influences?
NM - Casinos invariably have great systems in place. We track risks actively daily, hourly and analyse that data. We have strong security and surveillance systems and we set a tight limit on our gaming parameters though a rigorous application of probability theory. We have found that our core casino operations are relatively resilient through all economic cycles so our daily cash flows and related issues are somewhat different to other industries in a recessionary environment.
SI - What do you see as the strongest and weakest quality of your leadership style?
NM - Weakest – I can be quickly intolerant of poor performance and it’s readily apparent when I am not happy about how things are going. Strongest – developing a sound organisational structure incorporating an experienced and loyal management team together with a preparedness to make decisions.
SI - Do you like to gamble and if so what is your favourite game and are you allowed to have a flutter at your own institutions?
NM - No, we can’t bet in our own casinos. It wouldn’t look good if one of our employees won a jackpot. I do like to gamble, but in measured amounts. I enjoy playing roulette and the gaming machines. Im looking forward to the opening of our newest bar “Twentyone” on Thursday this week, where we have “free play” tables that even I’ll be able to play at! I have no doubt many of your readers will enjoy that bar and I look forward to seeing them there.
SI - Where do you see yourself and the business you run over the next five years?
NM - I’d like to think that when we look back on the next five years, we will have seriously maximised the potential of our existing casino licenses. Adelaide would be a significantly larger facility; we would own 100% of Christchurch; I’d like to see Auckland as a larger and more diverse property from what it is today……and I’d like to see a $10 share price……at which point I think we would be able to say we have delivered satisfactory shareholder returns……and then hopefully at that stage I’ll be on the verge of retirement.
Thank you for your time Nigel.
About Nigel Morrison - Supplied by Sky City
Nigel Morrison joined SKYCITY Entertainment Group as Chief Executive Officer in March 2008. Mr Morrison has over 18 years experience in the finance and gaming industry throughout Australia and most recently in Asia.
Prior to being appointed CEO of SKYCITY, Mr Morrison was the Group Chief Financial Officer of Galaxy Entertainment Group in Macau, a leading publicly-listed Hong Kong-based group operating and developing casinos in Macau. Before that he was Chief Executive of the Federal Group, Australia’s largest private gaming group and prior to this Chief Operating Officer of Crown Limited, (operator of Melbourne’s Crown Casino) where he played a key role in restructuring the business and increasing revenues to over A$1 billion.
Prior to embarking on a career in casinos in 1993, he was a Corporate Finance Partner with Ernst and Young, specialising in the gaming industry.Over the past year, Mr Morrison has concentrated on turning around the fortunes of SKYCITY. With a strong financial and analytical background along with proven leadership skills, he has made the necessary organisational and management changes and appointments to implement a new structure that is working well for the Group. The secret to success, he says, is having a strong management team in place, bringing people with you on the journey and making sure you have access to all the information needed to make successful decisions.Mr Morrison is a member of the SKYCITY board as Managing Director.
