Millennium & Copthorne Hotels New Zealand Limited Analysis

Overview

Millennium & Copthorne Hotels New Zealand Limited is currently the only hotel owner / operator listed on the NZSX. It currently has 19 hotels across New Zealand trading under the Millennium / Grand Millennium / M Social, Copthorne and Kingsgate brands.

MCK developed into its current form in 1992 when it became a subsidiary of the Millennium & Copthorne Group (then known as CDL Hotels International). Over the ensuing three decades, it has maintained its position as one of the largest hotel owner / operators in New Zealand.

MCK has a majority stake in NZX-listed CDL Investments New Zealand Limited (NZX:CDI) and also has property interests in Australia.

Performance

The following information was extracted from Millennium & Copthorne Hotels New Zealand Limited's Full year results, released 24 February 2025

Significant uplift in results; material growth in revenue and earnings over past two years

• Revenue $176.2m, up 21.0%
• Operating profit $42.5m, up 32.1%
• Profit before tax $47.1m, up 25.6%
• Profit after tax of $2.8m attributable to MCK shareholders includes a one off, non-cash deferred tax adjustment. Excluding this, profit after tax would be $27.2m
• Total Assets $762.3m (2023: $746.8m) which includes property assets at a book value of $694.1m. Fair market value of property assets assessed as $1.1b as at 31 December 2024 -Net asset backing per share on market value basis assessed as $5.39 per share.

For the FY24 year, MCK delivered its highest revenue result in five years, with a 21.0% yoy increase to $176.2m.

Operating profit increased 32.1% yoy to $42.5m, as a result of increased revenue and a focus on cost management. Profit before tax was up 25.6% yoy to $47.1m. Income Tax expense included a $25.8m one off, non-cash deferred tax adjustment (as noted in the 1H24 results release). Profit after tax attributable to MCK shareholders of $2.8m would have been $27.2m excluding the one-off tax adjustment impact.

CDL Investments New Zealand Limited (CDI), MCK’s 65% owned subsidiary, improved its pre-tax performance in 2024 against the previous year. CDI reported revenue of $49.1m and profit before tax of $26.8m. Profit after tax was $15.4m, including a one-off non-cash tax liability adjustment of approximately $3.9m. These results confirm that property markets in New Zealand are showing signs of improvement and there is now a positive momentum shift.

The company has a robust balance sheet, with a net cash position of $41.3m as at 31 December 2024. Bank debt was $3.0m at year end, with a further drawdown in January 2025 for the $31.9m settlement of The Mayfair Hotel. The book value of property assets was $694.1m, with the fair market value assessed as $1.1b2, contributing to a market value NTA per share attributable to MCK shareholders of $5.39 per share3.

A final dividend was not declared for FY24 due to the conditions of the CDLHH NZ takeover offer currently in process, which prevents a dividend from being paid.