MCK: 2017 Results Announcement

MCK provides its audited financial statements for the period ended 31 December 2017, Chairman's Review and Media Release, the text of which follows below: *** CHAIRMAN'S REVIEW Financial Performance & Financial Position The Directors of Millennium & Copthorne Hotels New Zealand Limited ("MCK") are pleased to report a profit attributable to owners of the parent of $43.1 million (2016: $40.4 million) for the year ended 31 December 2017. MCK's revenue for the year increased to $187.3 million (2016: $172.0 million) and profit before tax and non-controlling interests totalled $74.9 million (2016: $70.5 million). The increases in revenue and profit from 2016 reflects both positive trading conditions in the tourism industry in New Zealand and ongoing positive sales activity from majority-owned CDL Investments New Zealand Limited. On a like for like basis, comparing operating hotels in 2016 and 2017 (excluding Grand Millennium Auckland and M Social Auckland), MCK's revenue growth was 7% and NPBT increased by 22%, reflecting the outstanding profit conversion efficiencies from both operating hotels and CDL Investments. Shareholders' funds excluding non-controlling interests as at 31 December 2017 totalled $588.9 million (2016: $489.1 million). Total assets at 31 December 2017 were $828.2 million (2016: $713.9 million). Net asset backing (with land and building revaluations and before distributions) as at 31 December 2017 increased to 371.96 cents per share (2016: 308.91 cents per share). Earnings per share increased to 27.25 cents per share (2016: 25.56 cents per share). New Zealand Hotel Operations 2017 saw the first full year of operations of Grand Millennium Auckland and, after an extensive refurbishment and rebuild of the former Copthorne Hotel on Quay Street, the opening of M Social Auckland in Q4 of 2017. Together with other hotels in the MCK network, we achieved growth in guests from all major geographical segments. Hotel revenues increased by 11.6% to $105.6 million (2016: $94.6 million) and revenue per available room (RevPAR) increased by 8.2%. This increase in yield was assisted by the company's domestic customer campaigns and ongoing initiatives to capitalize on the changing dynamics of visitors from China and South-east Asia. With an increase in occupancy rates, a resolution to the shortage of labour in the hospitality sector was crucial. To overcome this hurdle and retain talent in our hotels, we are pleased to report that MCK established a ground-breaking partnership and collaboration with the government and various institutions. Proactive management drove further gains as we adapted our systems to achieve better cost management, while improving the company's customer preference ratings. In July 2017, Auckland Council narrowly voted to introduce a controversial targeted rate on a selection of accommodation providers. This discriminatory form of tax by the Auckland Council, now implemented, has garnered strong opposition from the accommodation industry in Auckland who intend to initiate a judicial review of the Council's targeted rate in 2018. M Social Update October 2017 saw the opening of the 190 room M Social Auckland. Since its opening, it has benefitted from keen demand owing to the hotel's innovative design, social spaces and service ethos. Appeal from key markets, including International and New Zealand business and leisure travellers has been extremely positive, as the hotel's fresh thinking supports the coming of age of Auckland City. With its own entrance on Quay Street, the Beast and Butterflies Restaurant and Bar has been embraced and well-patronised by locals and the growing population of downtown CBD residents. MCK considered it important to complement the hotel's 100% NBS seismic rating with creative design and decor and we are very proud of the end result. Customer self-service technologies have been under trial at M Social Auckland, and we will continue to ensure that we provide the appropriate balance between convenience and service in a meaningful way, both for our customers, and to maximise the efficiency in the operation of the hotel. CDL Investments New Zealand Limited ("CDLI") CDLI continued to perform strongly announcing another record operating profit after tax for the year ended 31 December 2017 of $32.2 million (2016: $27.0 million). The Overseas Investment Amendment Bill proposed by the Government in December 2017 will have some but minimal impact on CDLI's business model of acquiring land for residential development. The proposed legislation was designed to curb the demand from a segment of buyers but not to "impede the broader objective of increasing the supply of residential housing". CDLI increased its ordinary dividend to 3.5 cents per share (2016: 3.0 cents per share). The Dividend Reinvestment Plan will apply to this dividend. Australia Update In Australia, occupancy at the Zenith residences was high at 98% and balcony remediation work fully completed in October 2017. We have initiated a marketing campaign for the sale of a selection of our units in 2018. Dividend Announcement Reflecting its positive results in 2017, MCK has resolved to declare and pay all shareholders a fully imputed dividend of 6.0 cents per share (2016: 5.0 cents per share) which represents a 20% increase over the 2016 dividend. The Board has chosen to increase MCK's dividend as it remains confident of MCK's ability to deliver consistent results and returns from its business units. The dividend, payable to all shareholders, will be paid on 18 May 2018. The record date will be 11 May 2018. Outlook We expect 2018 to be another positive and exciting year for MCK. With the addition of Grand Millennium Auckland and M Social Auckland in particular, we expect to benefit from the growing number of tourist and business visitors. Being different hotels that appeal to different market segments, Grand Millennium Auckland and M Social Auckland will assist MCK in attracting a diverse variety of visitors. In February the company acquired the Waterfront Hotel New Plymouth, an iconic 42 room hotel featuring the award-winning Salt Restaurant. This earnings accretive acquisition will further facilitate new opportunities for our global MCK customers from both leisure and business travel sectors. The Waterfront Hotel, which will be branded a Millennium Hotel, sits in a different market to the Copthorne Grand Central New Plymouth. The acquisition will boost our supplier, customer and national networks, in turn benefitting both hotels. In light of these developments, CDLI's developments and the planned sale of a selection of Zenith apartment units, we look forward to another successful year in 2018. Management and staff The Board and I sincerely thank the Company's management and staff for their diligent work during 2017 to deliver these excellent results. Colin Sim Chairman 8 February 2018 ***Media Release*** MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND REPORTS INCREASED 2017 REVENUES AND PROFIT Millennium & Copthorne Hotels New Zealand Limited (NZX: MCK) today reported its preliminary results for the year ended 31 December 2017 and announced a profit after tax attributable to owners of the parent of $43.1 million (2016: $40.4 million) on total revenue of $187.3 million (2016: $ 172.0 million). On a like for like basis between operating hotels in 2016 and 2017 (excluding Grand Millennium Auckland and M Social Auckland), MCK's revenue growth was 7% while NPBT increased by 22%, reflecting the outstanding profit conversion efficiencies of the revenue growth from both operating hotels and CDL Investments. Growth in hotel revenue came from all major geographical segments with significant yield increases resulting from initiatives focused on the changing dynamics of visitors from China and South-east Asian countries. Grand Millennium Auckland had its first full year of trading and it delivered an outstanding set of results. In October 2017, M Social Auckland on Quay Street was opened after undergoing an extensive rebuild and refurbishment to the former Copthorne Hotel, Auckland Harbour City. The new hotel has a 100% NBS seismic rating but it is the creative design, decor and its service ethos that had guests and bloggers complimenting it. The Beast and Butterflies Restaurant and Bar has its own entrance directly from Quay Street. Operating like a standalone restaurant, the menu is Pacific Asian style with street food influences, and the service prompted one food writer to comment "style with substance" and that "the bar for hotel restaurants has been raised". M Social Auckland's appeal to both international and New Zealand business and leisure travellers has been encouraging as the hotel's fresh thinking supports the coming of age of Auckland City. MCK Chairman Mr. Colin Sim was pleased with the Company's results, ongoing efficiency gains and newly re-opened hotel M Social Auckland on Auckland's waterfront. "Shareholders and guests alike will be pleased with this exceptional hotel with its lifestyle orientation and service ethos. We are looking forward to improving our results again in 2018", he said. MCK has resolved to declare an increased and fully imputed dividend of 6.0 cents per share for 2017 to all shareholders (2016: 5.0 cents per share). The dividend reflects the continued positive operational profitability of the Company. With the reopening of M Social Auckland and the newly acquired Waterfront Hotel New Plymouth, the Board is confident in exceeding its 2017 trading results in 2018. The dividend will be paid to shareholders on 18 May 2018. The record date will be 11 May 2018. Summary of results: o Profit after tax and non-controlling interests $43.1 million (2016: $40.4m) o Profit before tax and non-controlling interests $74.9 million (2016: $70.5m) o Group revenue $187.3 million (2016: $172.0m) o Shareholders' funds excluding non-controlling interests $588.9 million (2016: $489.1m) o Total assets $828.2 million (2016: $713.9m) o Earnings per share (cents per share) 27.25 cents (2016: 25.56 cents) ENDS Issued by Millennium & Copthorne Hotels New Zealand Limited Enquiries to: B K Chiu Managing Director (09) 353 5058 End CA:00313928 For:MCK Type:FLLYR Time:2018-02-08 16:02:05