Auckland: SkyCity's big engine

SkyCity chief Nigel Morrison. Photo / Richard Rob

Casino operator SkyCity often talks up its regional operations in Hamilton, Queenstown, Adelaide and Darwin, but the beating heart of its business is centred in Auckland where its flagship property generates two-thirds of the company's earnings.

With a market capitalisation of $2.4 billion on the NZX, it is the country's sixth-largest public company and employs nearly 3000 people.

The company is run by managing director Nigel Morrison, a former accountant who has worked in the casino industry since 1993. The board is led by Chris Moller, the former New Zealand Rugby Union chief executive who jointly led the successful bid to host the 2011 World Cup.

The company has traditionally paid out nearly all of its profits in dividends to shareholders, giving shareholders annual returns before capital gain of 5.1 per cent.

The NZICC project, and associated concessions, is viewed by financial commentators as key to providing for company growth, with research firm Morningstar concluding in a note it was the major part of expansion that could grow earnings by 60 per cent.

The note said the cost blowout was unlikely to scupper the project - Morningstar said after years of negotiation both government and the casino had "reached a point of no return" - and there was a "reasonably high" risk the company would be forced to fund at least part of the shortfall themselves.

A SkyCity spokeswoman said it was confident the project could be funded without reducing dividends.

Morningstar said even if SkyCity was required to cover the increased costs it expected the project would generate double-digit returns.

The largest identifiable individual shareholders in SkyCity are the government-owned Accident Compensation Scheme and the New Zealand Superannuation Fund, who respectively hold 2.6 and 1.8 per cent of shares.