Millennium & Copthorne Hotels New Zealand Limited: FY25 Results & Investor Update

Key Highlights from FY25 Financial Results

• Revenue at Five-Year High: Total revenue reached \$186.7 million, up 6% year-on-year, marking the highest level in five years. The NZ Hotels segment led the growth, with hotel revenue up 19.5% to \$130.9 million.
• Profit Surge: Net profit attributable to shareholders soared to \$20.2 million, a staggering 632% increase from the prior year, reflecting strong hotel performance and improved asset utilisation.
• Earnings Per Share: EPS rose sharply to 12.78 cents per share, compared to 1.75 cents in FY24. Adjusted for one-off deferred tax impacts, EPS would have been 17.17 cents.
• Dividend Maintained: Final dividend of 3.0 cents per share, fully imputed, supplemented by a supplementary dividend of 0.0053 cents per share.
• Net Tangible Assets (NTA): NTA per share increased to \$3.58 (up from \$3.46), with total net assets rising to \$685 million.
• Asset Portfolio: Book value of property assets stands at \$752.2 million, with an unaudited market value estimated at \$1.1 billion.
• Balance Sheet Strength: Positive cash positions (\$24.2 million consolidated), increased net assets, and manageable debt levels (\$20 million).
• Strategic Acquisitions and Investments: Acquisition of The Mayfair Hotel, Christchurch, for \$31.9 million. Significant hotel refurbishments completed at Millennium Queenstown and Rotorua; reinstated rooms at Copthorne Bay of Islands and Queenstown Lakefront.
• CDL Investments: Progressed development land acquisitions and maintained resilience in property leasing. Revenue for CDL Investments was \$38.1 million, with net assets at \$321.1 million.

Important Shareholder Information & Potential Price-Sensitive Developments

• Hotel Asset Impairment: A non-cash impairment was recognised for Copthorne Hotel Palmerston North, reflecting an updated independent valuation. Two hotel assets are sensitive to impairment; any material change in key valuation assumptions could trigger future impairments, potentially impacting future profits and asset values.
• Room Capacity Expansion: Increased room availability due to refurbishments and the inclusion of The Mayfair is expected to drive further revenue growth, especially as tourism rebounds.
• Property Market Conditions: Residential land development faced subdued market conditions, leading to reduced sales and margin compression. Management expects gradual recovery in residential demand, but continued softness may affect future earnings from this segment.
• Strategic Opportunities: Surplus land adjacent to hotels in Rotorua, Palmerston North, and Queenstown is being evaluated for development or sale, representing potential future value unlocks. Auckland Downtown Carpark development (adjoining M Social Hotel) is progressing through consenting, which could enhance asset values and future earnings if successful.
• Seismic Strengthening: Partial closure of Copthorne Hotel Wellington for seismic strengthening. Upcoming changes in criteria may require further assessments and works, potentially impacting asset values and operational capacity.
• Balance Sheet Optionality: Strengthened balance sheet provides flexibility for further growth, acquisitions, or capital returns, supporting investor confidence.
• CDL Investments: No bank debt, robust asset base, and progress in development pipeline position CDI for long-term value creation. However, revenue and profits declined year-on-year due to weaker property market conditions.
• Pillar Two Tax Rules: The Group has adopted the Pillar Two Model Rules for international tax reform. Management believes exposure is not material at this stage, but ongoing legislative changes could affect future tax liabilities.
• Dividend Notices: Both ordinary and redeemable preference shareholders will receive fully imputed dividends, with supplementary dividends for non-resident investors. Payment dates are set for 15 May 2026; record date is 8 May 2026.
• Climate-Related Disclosure: Management and valuers note that climate change risks are not yet explicitly priced into asset values, presenting both risk and opportunity for future asset valuations.

Segment Performance & Strategic Review

• Hotels Segment: Continues to outperform, driven by acquisitions, refurbishments, and increased demand. The Mayfair Hotel acquisition and the release of refurbished rooms have significantly boosted performance.
• Residential Land Development: Remains under pressure from subdued property market conditions, with lower volumes and margins. Management is cautiously optimistic for a gradual recovery.
• Investment Properties: Steady earnings resilience from industrial and commercial property leasing. Fair value of investment properties (\$69.9 million) exceeds carrying value, with no impairment recognised. Lease income is robust, with forward lease commitments totaling \$14 million.
• Joint Venture (Sofitel Brisbane): MCK’s share of profit from the JV was \$2.6 million, up from \$1.5 million last year, reflecting improved performance.

FY26 Outlook & Forward-Looking Statements

• Tourism Recovery: Economic recovery is expected to continue driving traveller and hotel demand, with government support needed to promote New Zealand as a destination.
• Room Utilisation: Continued investment in refurbishment and infrastructure to increase room capacity and drive bookings via loyalty schemes.
• Property Development: CDI will advance its development pipeline, aiming to unlock long-term value across key landholdings.
• Strategic Flexibility: Balance sheet optionality allows for opportunistic growth, asset optimisation, and capital returns.
• Risks: Ongoing economic uncertainty, climate change, and seismic strengthening requirements are being actively managed.

Conclusion

Millennium & Copthorne Hotels NZ delivered robust results in FY25, led by strong hotel performance, strategic acquisitions, and balance sheet strength. Shareholders should note the material uplift in profits, increased dividends, and strategic investments in the hotel portfolio, which support future growth. Ongoing challenges in the property market and asset impairment risks remain, but the Group’s resilience and asset base provide confidence. Price-sensitive developments include asset impairments, strategic land opportunities, seismic strengthening, and the progress of key developments, all of which could move the share price depending on execution and market conditions.

Disclaimer

This article has been prepared for informational purposes only and does not constitute investment advice, legal advice, or a recommendation to buy or sell any securities. Forward-looking statements are subject to risks and uncertainties; actual results may differ materially. Investors should seek independent professional advice before making any investment decisions. The information is based on public disclosures as of the reporting date and may be subject to change.

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