MCK: 2017 Annual Report
ANNUAL REPORT 2017
Cover photo: Whanganui River
Courtesy of photographer Mark Brimblecombe
www.markbrimblecombe.com
Inside cover: M Social Auckland,
Copthorne Hotel Queenstown Lakefront,
Geothermally heated swimming pool at Millennium Rotorua
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | 3
FINANCIAL SUMMARY (2013 - 2017)
CALENDAR
Annual Report Issued 28 March 2018
Dividend Paid 18 May 2018
Annual Meeting Late May 2018
Half Year End 30 June 2018
Interim Results July/August 2018
Financial Year End 31 December 2018
This report is dated 28 March 2018 and is signed on behalf of the Board of Millennium & Copthorne Hotels
New Zealand by:
BK Chiu
Managing Director
Colin Sim
Chairman
CONTENTS
04 Chairman’s Review
06 Showcasing NZ Internationally
07 - 08 Managing Director’s Review
10 Directors’ Profiles
11 Hotel Ownership
12 - 15 Corporate Governance
FIN 01 - 30 Financial Statements
FIN 31 - 35 Regulatory Disclosures and
Statutory Information
20132014201520162017
Revenue$119.2m$130.1m$136.5m$172.0m$187.3m
Profit after tax
and NCI
$27.1m$30.2m$21.7m$40.4m$43.1m
Dividend1.2c2.4c2.8c5.0c6.0c
Total Assets$719.2m$585.4m$590.0m$713.9m$828.2m
Group Equity$466.4m$371.4m$389.3m$489.1m$588.9m
Net Asset
Backing
per share
133.4cps234.6cps245.9cps308.9cps372.0cps
4 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
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 décor 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
CHAIRMAN’S REVIEW
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | 5
Harbour SuiteBeast & Butterflies Restaurant
EXPANDING OUR SOCIAL CIRCLE
October 2017 marked the opening of M Social Auckland, an innovative new
lifestyle hotel with a prime position on Auckland’s waterfront. A contemporary
hotel for the curious, the explorers and those who thrive on new experiences, and
the latest addition to Millennium & Copthorne Hotels’ signature M Collection.
The opening marks the completed rebrand of the Copthorne Harbour City hotel
into Millennium & Copthorne Hotels’ M Social Auckland. It is only the second
M Social hotel opened world-wide after M Social Singapore.
6 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
SHOWCASING NEW ZEALAND INTERNATIONALLY
Guests being served an authentic Chinese dinner banquet at
Copthorne Hotel Rotorua.
Lift Lobby Artwork at M Social Auckland featuring the “Kotuku”(White Heron) and the New Zealand Tomtit.
At the New Zealand Hotel Industry Awards 2017, the General Manager of the Year award went to Millennium’s own, Pipiana Whiston
(second from right) of Millennium Hotel Rotorua.
Tania Barnes (left), Conference & Incentives Business Development
Manager with Alison Smith (middle), National Director of Sales,
Conferences & Incentives at AIME, Melbourne.
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | 7
MANAGING DIRECTOR’S REVIEW
2017 was another year of growth for
both our hotels and CDL Investments. It
was also a year of notable events on our
people front and with two more operating
hotels. Grand Millennium Auckland had
a full twelve months of operations and
the team delivered an outstanding set of
results. Our other hotels achieved double
digit bottom line growth together with
productivity gains and conversions from
incremental revenue to gross operating
profits. Financial metrics were achieved
and a like for like comparison between
2016 and 2017 sees Net Profit before Tax
growth of 22%.
M Social Auckland, previously Copthorne
Hotel, Auckland, Harbour City
reopened in October after a complete
refurbishment and seismic upgrade work
to 100% of the New Building Standard.
Its prime location on the harbour front,
contemporary interior design and above
all, its service ethos, all add to the “live,
work and play” concept. The timing of its
opening in October was opportune and
the hotel is trading well. The restaurant
Beast & Butterflies has received excellent
cuisine reviews and as one reviewer
commented “this hotel restaurant has
raised the bar”. Beast & Butterflies is
making its mark as the go-to restaurant
for lunch and dinner on Auckland’s
waterfront with its Pacific-Asian menu
with street food influences.
While ownership of strategic real-estate
assets underpin the hotel company’s
success, the overall experiences of
travellers are complemented by the
engagement with the people they meet in
New Zealand. We were delighted when
Pipiana Whiston, General Manager of
Millennium Hotel Rotorua was awarded
New Zealand Hotel Industry General
Manager of the Year 2017. This accolade
is well deserved and I congratulate
Pipiana on such a fine achievement.
The continuing diversity of overseas
visitors and changing demographics
of New Zealand is also reflected in
our employees many of whom are
bilingual or even trilingual. In 2017, MCK
partnered with the Government piloting
a Pacific quota programme to recruit
staff from the Pacific Islands to work in
our hotels across the country. Successful
candidates can also bring their families to
live in New Zealand. We plan to continue
with this programme in 2018 and develop
similar initiatives.
As owners of hotels we are affected
in different ways than companies that
lease or manage properties. We have
continued our efforts in 2017 on a
number of fronts including the funding of
tourism activities, challenging unfair and
disproportionate allocation of costs for
activities that benefit a far broader range
of commercial, community and public
entities. Our ownership model intricately
bonds us to many communities in
regions across New Zealand. It is with
conviction that we contribute, support
and share with these communities the
opportunities together. It was heartening
to see these regions
Millennium Hotel Rotorua is an active supporter of the Wingspan Birds of Prey Trust,
where the hotel supports a Karearea (New Zealand falcon) named ‘Millennium’, or ‘Milly’
for short. Wingspan aims to restore populations of this endangered native falcon.
NZ Kaka Beak
8 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
develop our subdivisions for the next
two years. While demand overall has
not been as exuberant as 2016, our
portfolio across the country in key growth
areas, the quality of our subdivisions
and the housing gap continue to give us
confidence in the building industry. We
continue to evaluate opportunities for
land acquisitions for a pipeline of quality
sections for the years ahead.
2017 has again been a productive and
satisfying year for MCK. Our focus will
remain disciplined, to realise productivity
gains together with revenue growth and
the investment wisdom of the board.
Thank you to all our staff in New Zealand
and Australia for their commitment and
diligence. Our culture based on mutual
respect, sense of ownership and inspiring
leadership remains close to our hearts
to deliver the Outstanding Service
Experience to our guests while keeping
true to the principles behind People,
Planet and Profit. I commend you on your
achievements and look forward to the
challenges and opportunities ahead in
2018.
B K Chiu
Managing Director
promoted by our sales and marketing
team both domestically and at the many
international outreaches we attended
through-out the year.
As tourism grows and continues to
contribute significant economic benefits
to the country, the other side of the
equation is the impact to the country,
its infrastructure and the environment.
There will always be tension between
growth and conservation but there are
worthwhile initiatives that we can do
collectively and shape the character of
the tourism we want and sustainable
reputation that we aspire to. If you had
followed the controversy on the naming
of Whanganui with an “h” added, you
would ask what’s in a name? “A rose by
any other name would smell as sweet”.
Ardent growers of heritage and modern
roses and plant breeders will likely
disagree. Sure enough, there was plenty
of debate during the consultative process
in 2015 to add a “h” to “Wanganui”.
Then two years later in 2017 there was
a significant landmark decision that
took New Zealand to the forefront of
environmental care and sustainability.
That was when the Whanganui River
was given a “person” status by the
Justice Minister.
This legal status confers rights to the
Whanganui River as would accord to a
person or a company. To my knowledge,
no other country has ventured into this
domain. I think this landmark decision
is worthy of reflection. It adds not only
conviction for the care of our rivers but
also commitment to the cause with some
legal bite to make it happen! It can only
reinforce our claim to being 100% Pure.
For me, it is the conviction behind that
we are the guardians of our environment
and heritage that puts New Zealand
at the global forefront in caring for the
environment. How impactful for New
Zealand to lead and fly this flag when
we give a legal status to a river? It can
position New Zealand to the rest of the
world and to visitors to New Zealand
that what sustains her natural beauty is
the guardianship of her people. We want
our guests when leaving New Zealand to
have this impression and lasting memory.
We are not like anywhere else in the
world.
Our land company CDL Investments New
Zealand Limited had another excellent
year in 2017 contributing significantly
to our overall results. The summer has
been conducive to earthworks as we
How impactful for New Zealand to lead and fly this flag when we give a
legal person status to a river? It can position New Zealand to the rest of
the world and to visitors to New Zealand that what sustains her natural
beauty is the guardianship of her people. We want our guests when
leaving New Zealand to have this impression and lasting memory.
We are not like anywhere else in the world.
Lift Lobby Artwork at M Social Auckland. The display features the discipline and expression of modern dance and ballet. It is paired on the same lift
lobby with a minimalist ink-pen drawing of Wushu practitioners against a backdrop of an ink brush painting of a Chinese mountain landscape.
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | 9
PIPIANA WHISTON, GENERAL MANAGER OF THE YEAR 2017
On behalf of Millennium, Copthorne and Kingsgate Hotels New Zealand, we sincerely
congratulate Pipiana in winning this prestigious award, and thank her for the dedication
and unique values that she brings to the hospitality of Millennium Hotel Rotorua.
Beyond running the hotel, Pipiana also contributes greatly to the Rotorua community; a
current Maori in Tourism committee member and a mentor in the Big Brothers Big Sisters
programme
In Pipiana’s own words, the hospitality industry at the moment is “Vibrant, exciting, the
best is yet to come.” – we agree, and we can’t wait to see what Pipiana and her team have
in-store for the future!
AMBASSADORS OF EXCELLENCE
The TripAdvisor Certificate of Excellence is a prestigious award that displays on hotel TripAdvisor
profiles. Travelers trust hotels that have this award because it proves that a hotel or restaurant has
overwhelmingly positive reviews.
The below Millennium properties and restaurants are proud recipients of this award:
New Zealand beef and lamb is renowned throughout the world for its quality and
taste. The Excellence Awards are designed to acknowledge a consistently high
standard of beef and lamb cuisine. Whenever you see the Beef and Lamb Excellence
Award, you can expect tasty, skilfully composed and superbly presented beef and
lamb dishes.
We are delighted that 5 of our restaurants at various locations around New
Zealand have been selected as ambassadors for this prestigious award. Our proud
ambassadors are as below:
379 THE AVENUE
Kingsgate Hotel
The Avenue, Wanganui
SALT RESTAURANT
Millennium Hotel
New Plymouth, Waterfront
ONE80 RESTAURANT
Copthorne Hotel & Resort
Wellington, Oriental Bay
OBSERVATORY RESTAURANT
Millennium Hotel
Queenstown
THE GRILL
Copthorne Hotel & Resort
Solway Park, Wairarapa
MCKENZIE’S RESTAURANT & BAR
Kingsgate Hotel
Autolodge, Paihia
10 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
COLIN SIM (Chairman & Non-Executive Director)
Mr Sim is the executive chairman of the East Quarter Group of companies (East Quarter Hurstville, EQ Projects and EQ Constructions)
(EQ) in Australia. EQ is currently involved in the development and construction of residential units across New South Wales. Mr Sim is
also an executive director of Waterbrook Lifestyle Resorts (Waterbrook); an award-winning creator, developer and operator or luxury
resort lifestyles for retirees. Mr Sim has strong analytical skills and extensive experience in construction and property development/
investment in Australia. He studied Mechanical Engineering in London and has lived in Sydney, Australia for the last 40 years. Mr Sim
was appointed to the Board from 14 July 2017.
B K CHIU (Managing Director & Member of Audit Committee)
Mr Chiu is also the Managing Director of Millennium & Copthorne New Zealand Limited. Prior to joining the company, Mr. Chiu was
Regional Vice - President and Managing Director, Asia of Merisant Company. He holds a Masters degree in agricultural economics
and marketing from Massey University, Palmerston North. Mr Chiu was last re-elected to the Board at the 2017 annual meeting of
shareholders.
KIAN SENG TAN (Non-Executive Director)
Mr Tan was appointed to the Board effective from 28 February 2017 as a non-executive director.
Mr Tan is the Interim Group CEO of Millennium & Copthorne Hotels plc. Mr Tan’s management background includes over 30 years
of senior executive level experience managing SGX-listed businesses and US multinational corporations. His diverse experience
incorporates operations, financial management, legal and investor relations, purchasing, business development, human resources,
and information technology functions. He started his career as an accountant in the U.K. and audit manager in Malaysia with the
audit firms currently known as Deloitte and PricewaterhouseCoopers respectively. Mr Tan is an associate of the Institute of Chartered
Accountants in England and Wales. Mr Tan was re-elected to the Board at the 2017 annual meeting of shareholders.
KEVIN HANGCHI (Non-Executive Director)
Mr Hangchi is currently Senior Vice President, Hong Leong Management Services Pte. Limited. He has global
transactional experience across many of the Hong Leong Group’s entities including listings and public offerings, mergers
and acquisitions as well as capital markets issuances and banking facilities. Mr Hangchi has been called to the English
and Singaporean bars and holds an honours degree in Accountancy and Law from the University of Southampton. Mr
Hangchi was elected to the Board at the 2016 annual meeting of shareholders.
RICHARD BOBB (Independent Director, Chair of the Audit Committee)
Mr Bobb is a Chartered Accountant and Chartered Tax Advisor with over forty years’ experience. He is currently a member of the
Professional Conduct Appeals Tribunal of Chartered Accountants Australia and New Zealand (formerly known as the Institute of
Chartered Accountants in Australia) and was a member of New South Wales Joint State Taxes Committee of Chartered Accountants
ANZ and CPA Australia. He was also a member and past Chairman of the Joint Legislation Review Committee and a member and past
Chairman the Legislation Review Board of Chartered Accountants ANZ and CPA Australia. He is admitted as a Barrister in New South
Wales and holds a Bachelor Commerce degree from the University of NSW, a Diploma in Law from the Barristers Admission Board
(NSW) and a Master of Laws from the University of Sydney. He also holds a Graduate Diploma in Applied Finance and Investment from
the Securities Institute of Australia (now known as the Financial Services Institute of Australasia (“FINSIA”)) and is a Fellow of FINSIA.
Mr Bobb was last re-elected to the Board at the 2016 annual meeting of shareholders.
GRAHAM MCKENZIE (Independent Director, Member of the Audit Committee)
Mr McKenzie is a Barrister and Solicitor with over thirty years experience in corporate and commercial law and is a former
Partner and Consultant to Bell Gully, a leading New Zealand law firm. He is currently a member of the New Zealand Law
Society Disciplinary Tribunal. Mr McKenzie is a member of the New Zealand Law Society and the Queensland Law Society,
Australia and holds a Bachelor of Laws degree from Victoria University, Wellington and a Master of Laws degree from
Warwick University, England. Mr McKenzie was a Director of CDL Investments New Zealand Limited from 2005 to 2006.
Mr McKenzie was last re-elected to the Board at the 2015 annual meeting of shareholders.
DIRECTORS’ PROFILES
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | 11
QUANTUM LIMITED
MILLENNIUM &
COPTHORNE HOTELS
NEW ZEALAND LIMITED
OWNED
Millennium Hotel Queenstown
Copthorne Hotel Auckland City
Copthorne Hotel Rotorua
Copthorne Hotel Palmerston
North
Copthorne Hotel Wellington
Oriental Bay
Copthorne Hotel & Apartments
Queenstown Lakeview
Kingsgate Hotel Dunedin
FRANCHISED
Millennium Hotel & Resort
Manuels Taupo
Copthorne Hotel & Resort
Hokianga
Copthorne Hotel Grand Central
New Plymouth
Copthorne Hotel & Resort Solway
Park Wairarapa
Kingsgate Hotel The Avenue
Wanganui
OWNED
Millennium Hotel Rotorua
M Social Auckland
Copthorne Hotel & Resort Bay of
Islands (49%)
Copthorne Hotel & Resort
Queenstown Lakefront
Kingsgate Hotel Greymouth
Kingsgate Hotel Te Anau
HOTEL OWNERSHIP
MANAGED/FRANCHISED
Grand Millennium Auckland
Kingsgate Hotel Autolodge Paihia
HOSPITALITY
SERVICES LIMITED
Photo: of Copthorne Hotel & Resort Bay of Islands
12 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
As an NZX Main Board listed company,
Millennium & Copthorne Hotels New Zealand
Limited (MCK) is committed to maintaining
high standards of corporate governance in
line with best practice. MCK has adopted
corporate governance practices prescribed in
the NZX Corporate Governance Code 2017
(NZX Code) in the NZX Main Board and Debt
Market Listing Rules (the Listing Rules), except
where specifically noted otherwise below, and
have had regard to the Corporate Governance
Principles and Guidelines from the Financial
Markets Authority.
Our Corporate Governance policies and
processes are as follows:
ROLE AND FUNCTION OF THE BOARD
OF DIRECTORS
(NZX Code Principles 2 & 6)
The Board has overall control and oversight
of the business activities, the strategic
direction and the governance of MCK and
its subsidiaries. The Board looks at control
and oversight of the company’s businesses,
risk management and compliance, health &
safety, management performance, approving
and monitoring financial and other reports,
capital expenditure and shareholder
reporting. The Board approves MCK’s
budgets, business plans as well as significant
projects and has statutory obligations for
certain other matters, such as the payments
of distributions and the issue of shares. The
Board does not have a formal written charter
but one is presently under review.
Attendances of Directors
Board meetings are generally held quarterly
with additional meetings convened when
required.
Director Meetings Attended
C Sim (Chair)* .................................................... 1/1
HR Wong**............................................................ 2/2
KS Tan *.................................................................. 2/2
BK Chiu (Managing Director) ........................ 3/3
K Hangchi........................................................... 3/3
ATS Lee** .............................................................. 0/1
R Bobb .................................................................3/3
GA McKenzie .....................................................3/3
*Mr Tan and Mr Sim were appointed to the
Board on 1 March 2017 and 14 July 2017
respectively.
**Mr Lee and Mr Wong retired from the
Board on 28 February 2017 and 30 June 2017
respectively.
Certain powers are delegated to Board
Committees. Day-to-day management is
delegated to the Managing Director and senior
management. The levels of authority are
approved by the Board.
BOARD COMPOSITION
As at 31 December 2017, MCK’s Board
consisted of Messrs C Sim (Chairman),
B K Chiu (Managing Director), K S Tan
(Non-Executive Director), K Hangchi (Non-
Executive Director), R Bobb (Independent
Director) and G A McKenzie (Independent
Director). MCK’s Constitution and the
Listing Rules require a minimum number of 3
directors with a requirement that at least 2 be
ordinarily resident in New Zealand.
All Directors must act in the best interests of
the company and exercise independent and
unfettered judgement. They must also carry
out their duties with integrity and honesty
and participate in open and constructive
discussions.
The Board does not impose a restriction on
the tenure of any Director as it considers
that such a restriction may lead to the loss of
experience and expertise from the Board.
In line with the Listing Rules, MCK is
required to have at least two Independent
Directors and the Board is also required to
determine who the Independent Directors
are (Listing Rules 3.3.1 and 3.3.2). The Board
has determined that Messrs Sim, Bobb and
McKenzie are Independent Directors as
neither has a Disqualifying Relationship (as
that term is defined in the Listing Rules).
Messrs Tan, Chiu, and Hangchi are not
considered by the Board to be Independent
Directors.
BOARD COMMITTEES
MCK currently has an Audit Committee,
a Continuous Disclosure Committee and
constitutes other ad-hoc committees as
required from time to time.
Audit Committee
(NZX Code Principle 3)
Pursuant to Listing Rule 3.6, MCK maintains
an Audit Committee. Its responsibilities
include monitoring accounting policies and
financial reporting, internal controls, risk
management and corporate governance. The
Committee also engages MCK’s external
auditors and monitors their independence.
The Committee has a written charter outlining
its role and responsibilities.
During 2017, the members of this Committee
were Messrs Bobb (Chair), McKenzie and
Chiu. As Mr Chiu is MCK’s Managing
Director, MCK does not comply with the
requirement under the NZX Code which states
that the Audit Committee should comprise
solely of non-executive directors of the
company.
CORPORATE GOVERNANCE
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | 13
Attendance at Audit Committee
Director Meetings Attended
R Bobb (Chair) ............................................... 2/2
B K Chiu ........................................................... 2/2
GA McKenzie ................................................. 2/2
Nomination Committee
(NZX Code Principle 2 & 3)
MCK does not have a Nominations
Committee. All nominations for the Board
are considered by the Board as a whole. All
Directors are involved in the selection and
appointment process for any new Board
members. The Board reviews its composition
from time to time to ensure that it is equipped
with appropriate experience and skills.
Remuneration Committee
(NZX Code Principles 3 & 5)
The Board does not have a Remuneration
Committee. The Board considers its current
level of remuneration sufficient to meet
its current requirements. The Board last
recommended to shareholders an increase in
the total amount available for Directors fees
in 1996.
The remuneration of the Managing Director
and senior management is reviewed annually
by the Board. The Group has a performance-
based approach to remuneration and
remuneration reviews are linked to and
carried out after performance reviews.
Continuous Disclosure Committee
(NZX Code Principle 4)
MCK is committed to its obligations to inform
shareholders and market participants of all
material information that might affect the
price of its listed securities in accordance
with the Listing Rules and the Financial
Markets Conduct Act 2013.
MCK’s Board has adopted a continuous
disclosure policy (the Policy) which applies
to MCK, its subsidiaries (“Group”), and all
their respective directors and employees.
The Board has appointed the Chairman,
the Chairman of the Audit Committee, the
Managing Director, the Group Company
Secretary and the Vice President Finance
to act as MCK’s continuous disclosure
committee (the Disclosure Committee). A
quorum of the Disclosure Committee shall
consist of no less than three (3) of these
persons.
The Disclosure Committee is responsible for:
• Determining what information amounts
to material information and must be
disclosed;
• Determining the timing of disclosure of
any information in accordance with the
Policy;
• Approving the content of any disclosure
to NZX (including matters not directly
covered by the Policy);
• Ensuring that all employees and directors
within the Group whom the Committee
considers appropriate receive a copy of
the Policy and appropriate training with
respect to it;
• Developing mechanisms designed to
identify potential material information
(e.g. agenda item on management
meetings); and
• Liaising with legal advisers in respect of
MCK’s compliance with its continuous
disclosure obligations.
The key points from the Policy are:
• No person may release material
information concerning MCK to any
person who is not authorised to receive
it without the approval of the Disclosure
Committee.
• The Board will consider at each
Board meeting whether there is any
information that may require disclosure
in accordance with the Policy, and will
note any disclosures made subsequent
to the prior meeting. Any employee or
director of MCK must inform a member
of the Disclosure Committee as soon as
practicable after that person becomes
aware of any material information.
• The Policy includes a list of incidents
which should be disclosed to a member
of the Disclosure Committee. The
Disclosure Committee must confer,
decide whether disclosure is required,
and coordinate disclosure of any material
information in a form specified by the
Listing Rules as soon as practicable
after it becomes aware of the existence
of material information, unless it
determines:
a a reasonable person would not
expect the information to be
disclosed; and
b the information is confidential and
its confidentiality is maintained;
and
c one or more of the following
applies:
i it would breach the law to
disclose the information; or
ii the information concerns
an incomplete proposal or
negotiation; or
CORPORATE GOVERNANCE
Sealy Tarns Hike Trail, Mount Cook
14 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
iii the information comprises
matters of supposition or
is insufficiently definite to
warrant disclosure; or
iv the information is generated
for internal management
purposes of MCK or its
subsidiaries; or
v the information is a trade
secret.
The Disclosure Committee will ensure that
all Board members, not already aware of the
information, are promptly provided with it.
• The Disclosure Committee is responsible
for MCK’s obligations under the Listing
Rules to release material information to
NZX to the extent necessary to prevent
development or subsistence of a market
for its listed securities which is materially
influenced by false or misleading
information emanating from the issuer
or any associated person of the issuer; or
other persons in circumstances in each
case which would give such information
substantial credibility.
• All employees of MCK, as soon as
practicable after becoming aware
of a rumour or speculation that is
“generally available to the market”, must
disclose the existence of that rumour
or speculation to a member of the
Disclosure Committee.
• The Disclosure Committee is also
responsible for co-ordinating MCK’s
responses to leaks and inadvertent
disclosures. Even in the event that leaked
or inadvertently disclosed information
is not price sensitive, the Disclosure
Committee should consider whether the
information should be released to NZX
via its market announcement platform
in order to provide investors with equal
access.
• All external communications by MCK
must comply with this Policy, any media
policy and the Company’s rules with
respect to confidential information. No
material information is to be disclosed
to such persons before it is released to
NZX.
• Slides and presentations used in briefings
should be released to NZX for immediate
release to the market.
MCK requires all of its Directors and
employees to comply with the Policy. The
Disclosure Committee is responsible for
ensuring that the Policy is complied with and
for investigating any breach of the Policy. A
deliberate or reckless breach of the Policy
may result in the summary dismissal of the
employee who deliberately or recklessly
breaches the Policy, and a breach of the Policy
or any relevant law may also attract civil or
criminal legal penalties.
CODE OF ETHICS (NZX Code Principle 1)
MCK is committed to conducting its business
in accordance with the highest standards of
ethical behaviour and the board has a Code of
Ethics. This states that:
• All Directors shall undertake their duties
with due care and diligence at all times
and will conduct themselves honestly
and with integrity. All Directors shall
not do anything, or cause anything to
be done, which may or does bring the
Company or the Board into disrepute.
• To the best of their ability, all Directors
will use reasonable endeavours to
ensure that the Company’s records
and documents (including its financial
reports) are true and complete and
comply with the requisite reporting
standards and controls.
• So that the Board may determine a
Director’s independence and to ensure
that there are no conflicts of interest,
all Directors shall disclose all relevant
business and / or personal interests they
may have to the Board as well as any
relationships they may have with the
Company.
• All Directors shall ensure that they do
not support any organisation other than
in a personal capacity without the prior
approval of the Chairman.
• Directors shall not accept gifts or
personal benefits from external parties
if it could be perceived that this could
compromise or influence any decision by
the Board or by the Company.
• All Directors shall maintain and protect
the confidentiality of all information
about MCK at all times except where
disclosure is permitted or required by
law.
• All Directors shall ensure that they
do not use Company information and
property for personal gain or profit.
All Directors shall use and / or retain
Company information and property only
for business purposes in their capacity
as Directors of the Company or to meet
legal obligations.
• All Directors shall comply with the
laws and regulations that apply to MCK
including any disclosure requirements.
• All Directors shall report any illegal
or unethical behaviour of which they
become aware to the Chairman of the
Board and to the Chairman of the Audit
Committee.
All of our employees are expected to act in the
best interests of the Company and to enhance
the reputation of the Company. Guidance is
provided to management and employees by
way of code of conduct policies. The Company
believes in fair dealing with its customers and
suppliers, shareholders, employees and other
stakeholders and external third parties.
MCK has a current Insider Trading Policy
which applies to Directors and Officers and
a Whistleblowing Policy which extends
to all management and employees. The
Whistleblowing Policy facilitates the
disclosure and impartial investigation of any
serious wrongdoing. This policy advises
employees of their right to disclose serious
wrongdoing, and sets out the Company’s
internal procedures for receiving and dealing
with such disclosures. The policy is consistent
with, and facilitates, the Protected Disclosures
Act 2000 and is supported by the Board.
EXTERNAL AUDITORS AND AUDITOR
INDEPENDENCE
(NZX Code Principle 7)
MCK has a policy regarding auditor
independence which covers:
• provision of services by MCK’s external
auditors;
• external auditor rotation;
• the hiring of staff from the external audit
firm; and
• relationships between the external
auditor and MCK.
The policy states that:
The Audit Committee shall only recommend
to the Board a firm to be external auditor if
that firm:
• would be regarded by a reasonable
investor, with full knowledge of all
relevant facts and circumstances,
as capable of exercising objective
and impartial judgment on all issues
encompassed within the auditor’s
engagement;
• audit partner’s are members of Chartered
Accountants Australia New Zealand
(CAANZ);
• has not, within two years prior to the
commencement of the audit, had as a
member of its audit engagement team
MCK’s Managing Director, Vice President
Finance, Financial Controller, or any
member of the Company’s management
who act in a financial oversight role.
• does not allow the direct compensation
of its audit partners for selling non-audit
services to MCK.
The general principles to be applied in
assessing non-audit services are as follows:
a) the external auditor should not have
any involvement in the production of
financial information or preparation
of financial statements such that they
might be perceived as auditing their
own work. This includes the provision
of bookkeeping and payroll services as
well as valuation services where such
valuation forms an input into audited
financial information;
b) the external auditor should not perform
any function of management, or be
responsible for making management
decisions;
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | 15
c) the external auditor should not
be responsible for the design or
implementation of financial information
systems; and
d) the separation between internal audit
and external audit should be maintained.
MCK’s Audit Committee shall pre-approve
all audit and related services that are to be
provided by the auditor. Aside from core
external audit services, it is appropriate for
the MCK’s auditors to provide the following
services:
• due diligence (but not valuations) on
proposed transactions;
• review of financial information where
third party verification is required or
deemed necessary (outside the normal
audit process);
• completion audits / reviews;
• financial model preparation or review;
• accounting policy advice (including
opinions on compliance with New
Zealand and international Generally
Accepted Accounting Practice);
• listing advice;
• accounting/technical training; and
• taxation services of an assurance nature
(e.g. review of tax computations and
returns prior to filing and advice on
interpretation and application of Inland
Revenue’s rulings and policies).
It is not considered appropriate for MCK’s
external auditors to provide:
• book keeping services related to
accounting records or financial
statements;
• tax planning and strategy services
unless specifically approved by the Audit
Committee;
• appraisal / valuation services including
opinions as to fairness;
• provision of payroll services;
• the design or implementation of financial
information systems;
• outsourced internal audit and risk
management services;
• legal services (these are services that
could only be provided by a person who
is qualified in law);
• management functions;
• broker / dealer / investment adviser /
investment banking services;
• advocacy for the Company;
• actuarial services; and
• assistance in the recruitment of senior
management.
These prohibitions apply to all offices of the
audit firm, including overseas offices and
affiliates.
The billing arrangements for services provided
by MCK’s external auditors should not include
any contingent fees.
It is expected that the MCK’s external auditors
will rigorously comply with their own internal
policies on independence and all relevant
professional guidance, including independence
rules and guidance issued by CAANZ.
While this policy does not prescribe any
particular ratio of non-audit service fees to
audit fees, this ratio will be monitored by the
Audit Committee. Accordingly, the nature
of services provided by MCK’s auditors
and the level of fees incurred should be
reported to the Audit Committee Chairman
semi-annually (or sooner where requested)
to enable the Committee to perform its
oversight role and report back to the Board.
Development of local and overseas practice
with regard to auditor independence shall be
monitored by the Audit Committee to ensure
that this policy remains consistent with best
practice and meets the Company’s needs.
The continued appointment of MCK’s
external auditors is to be confirmed annually
by the Board on recommendation from the
Audit Committee.
Rotation of the lead audit partner or firm
will be required every five years. Lead audit
partners who are rotated will be subject
to a 2 year cooling off period (i.e. 2 years
must expire between the rotation of an audit
partner and that partner’s next engagement
with the Company). Accordingly it is
expected that such a policy will be adopted
by MCK’s auditors.
The hiring by MCK of any former lead
audit partner or audit manager must first
be approved by the Chairman of the Audit
Committee. There are no other restrictions on
the hiring of other staff from the audit firm.
KPMG were appointed as external auditors
to MCK in 1985. The lead external audit
engagement partner was rotated in 2013. The
role of the external auditor is to plan and carry
out an audit of MCK’s annual financial reports
and review the half-yearly reports. The Audit
Committee reviews the performance and
independence of the external auditors.
MCK’s external auditors attend the Company’s
Annual Meeting to answer any questions from
shareholders as to the audit and the content of
the report.
DIVERSITY POLICY
(NZX Code Principle 2)
MCK is committed to pursuing a culture of
diversity within the Company. While the
Company did not have a formal diversity
policy in 2017, as a hospitality company
hosting guests from around New Zealand and
the world, we recognise the importance of
supporting and valuing every employee as well
as the promotion of diversity, acceptance and
inclusion in the workplace.
Gender composition by number and
percentage
Position20172016
MaleFemaleMaleFemale
Directors6
(100%)
0
(0%)
6
(100%)
0
(0%)
Officers*7
(64%)
4
(36%)
8
(73%)
3
(27%)
Hotel
managers
12
(80%)
3
(20%)
11
(73%)
4
(27%)
Permanent
employees
538
(42%)
732
(58%)
496
(42%)
691
(58%)
* Officers comprise the Company’s Managing
Director / CEO and his direct reports.
INTERNAL CONTROLS AND RISK
MANAGEMENT
MCK has a series of internal controls in place
covering such areas as financial monitoring
and reporting, human resources and risk
management. The primary responsibility for
monitoring and reporting against internal
controls and remedying any deficiencies lies
with Management. MCK has an internal audit
function to conduct audits and reviews of
the Company’s operations. MCK also keeps
current insurances appropriate to its business
with global insurers with a high prudential
rating.
SHAREHOLDER COMMUNICATIONS
(NZX Code Principle 8)
MCK is committed to providing shareholders
and stakeholders with information on its
activities and performance. MCK does this
through a number of channels including:
• announcements in accordance with
continuous disclosure as required under
the Listing Rules;
• publication of the company’s annual
and interim reports which are sent to all
shareholders and also made available
through the company’s website www.
millenniumhotels.co.nz; and
• encouraging shareholders to attend the
Annual Meeting to hear the Chairman
and the Managing Director provide
updates on the company’s performance,
ask questions of the Board and vote on
the resolutions to be determined at the
meeting.
MCK is proud to have a workforce of diverse
cultures, nationalities and talented and
motivated people.
Pursuant to NZX Main Board Listing Rule
10.4.5(j), set out below is a quantitative
breakdown of the gender composition of the
Company’s directors, officers, hotel managers
and other permanent employees as at 31
December 2017:
16 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
About Our Restaurants
JIMMY COOK’S KIWI KITCHEN
Jimmy Cook’s Kiwi Kitchen, unique to Copthorne and Kingsgate
hotels in New Zealand, draws its inspiration from Captain
James Cook, the renowned explorer who visited New Zealand
three times during the 18th Century. In addition to his seafaring
activities, James Cook was known for having a grasp of nutrition
that was ahead of his time.
Using fresh local produce, our chefs combine the indigenous
flavours of New Zealand to create a relaxed dining environment.
BEAST & BUTTERFLIES AUCKLAND
Located within M Social Auckland is Beast & Butterflies, a
casual all-day dining destination complete with an outdoor
terrace. The tantalising menu features Pacific-Asian flavours
with street food influences including dishes that showcase the
region’s best fresh seafood.
Or catch up with friends, old or new, at the Beast & Butterflies
Bar. The drinks menu contains a range of classic and signature
cocktails alongside a comprehensive wine list encompassing all
regions of New Zealand and around the world, complemented
by an extensive bar menu.
KATSURA JAPANESE RESTAURANT
Katsura Japanese restaurant specialising in Steaks, Seafood
and Teppanyaki was established in 1989 and has a dedicated
following amongst Local and International guests.
Katsura’s Chefs are the first each day into the seafood market
and with over 25 years of relationships this ensures we get the
first pick and often exclusivity. Katsura also features the very
best in premium Japanese Beers, Whisky and Sake and twice
weekly we showcase our famous Grand Seafood Buffet.
ONE80 RESTAURANT
Located inside Copthorne Wellington, Oriental Bay, Executive
One80’s award-winning chefs blend seasonal ingredients with a
touch of city flair.
They have created a kitchen culture that is based on techniques
and different backgrounds, but continuously endeavor to serve
new flavours and textures.
One80° Restaurant is focused in providing only the best
seasonal ingredients & freshest local market produce. An award
winning dining experience that is uniquely One80° Restaurant
with “views to dine for.’’ Enjoy your meal.
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | 17
MILLENNIUM HOTELS & RESORTS IN NEW ZEALAND
1. Grand Millennium Auckland
71 Mayoral Drive, Auckland
Phone +64 6 366 3000
grandmillennium.auckland@millenniumhotels.co.nz
2. Millennium Hotel Rotorua
Cnr Eruera & Hinemaru Streets, Rotorua
Phone +64 7 347 1234
Fax +64 7 348 1234
millennium.rotorua@millenniumhotels.co.nz
3. Millennium Hotel & Resort Manuels Taupo
243 Lake Terrace, Taupo
Phone +64 7 378 5110
Fax +64 7 378 5341
millennium.taupo@millenniumhotels.co.nz
4. Millennium Hotel Queenstown
Cnr Frankton Road & Stanley Street, Queenstown
Phone +64 3 450 0150
Fax +64 3 441 8889
millennium.queenstown@millenniumhotels.co.nz
5. Millennium Hotel New Plymouth Waterfront
1 Egmont St, New Plymouth 4310
Phone +64 6 769 5301
Fax +64 6 769 5302
millennium.waterfront@millenniumhotels.co.nz
1. M Social Auckland
196 - 200 Quay Street, Auckland 1010
Phone +64 9 377 0349
msocial.auckland@millenniumhotels.com
1. Copthorne Hotel & Resort Bay of Islands
Tau Henare Drive, Paihia
Phone +64 9 402 7411
Fax +64 9 402 8200
copthorne.bayofislands@millenniumhotels.co.nz
2. Copthorne Hotel & Resort Hokianga
S.H 12 Omapere, Hokianga
Phone +64 9 405 8737
Fax +64 9 405 8801
copthorne.hokianga@millenniumhotels.co.nz
3. Copthorne Hotel Auckland City
150 Anzac Avenue, Auckland
Phone +64 9 379 8509
Fax +64 9 379 8582
copthorne.aucklandcity@millenniumhotels.co.nz
4. Copthorne Hotel Rotorua
Fenton Street, Rotorua
Phone +64 7 348 0199
Fax +64 7 346 1973
copthorne.rotorua@millenniumhotels.co.nz
5. Copthorne Hotel Grand Central
New Plymouth
42 Powderham Street, New Plymouth
Phone +64 6 758 7495
Fax +64 6 758 7496
copthorne.newplymouth@millenniumhotels.co.nz
6. Copthorne Hotel Palmerston North
110 Fitzherbert Avenue, Palmerston North
Phone +64 6 356 8059
Fax +64 6 356 8604
copthorne.palmerston@millenniumhotels.co.nz
7. Copthorne Hotel & Resort Solway Park
Wairarapa
High Street, South Masterton
Phone +64 6 370 0500
Fax +64 6 370 0501
reservations@solway.co.nz
8. Copthorne Hotel Wellington Oriental Bay
100 Oriental Parade, Wellington
Phone +64 4 385 0279
Fax +64 4 384 5324
copthorne.orientalbay@millenniumhotels.co.nz
9. Copthorne Hotel & Resort Queenstown
Lakefront
Cnr Adelaide Street and Frankton Road, Queenstown
Phone +64 3 450 0260
Fax +64 3 442 7472
copthorne.lakefront@millenniumhotels.co.nz
10. Copthorne Hotel & Apartments
Queenstown Lakeview
88 Frankton Road, Queenstown
Phone +64 3 442 7950
Fax +64 3 442 8066
copthorne.lakeview@millenniumhotels.co.nz
11. Kingsgate Hotel Autolodge Paihia
Marsden Road, Paihia
Phone +64 9 402 7416
Fax +64 9 402 8348
kingsgate.paihia@millenniumhotels.co.nz
12. Kingsgate Hotel The Avenue Wanganui
379 Victoria Avenue, Wanganui
Phone +64 6 349 0044
Fax +64 6 345 3250
kingsgate.wanganui@millenniumhotels.co.nz
13. Kingsgate Hotel Greymouth
32 Mawhera Quay, Greymouth
Phone +64 3 768 5085
Fax +64 3 768 5844
kingsgate.greymouth@millenniumhotels.co.nz
14. Kingsgate Hotel Te Anau
20 Lakefront Drive, Te Anau
Phone +64 3 249 7421
Fax +64 3 249 8037
kingsgate.teanau@millenniumhotels.co.nz
15. Kingsgate Hotel Dunedin
10 Smith Street, Dunedin
Phone +64 3 477 6784
Fax +64 3 474 0115
kingsgate.dunedin@millenniumhotels.co.nz
Millennium Hotels & Resorts
Copthorne Hotels & Resorts
Kingsgate Hotels & Resorts
M Collection Hotels
M COLLECTION
18 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
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MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | 19
Financial Statements – Contents
Consolidated Income Statement FIN 1
Consolidated Statement of Comprehensive Income FIN 1
Consolidated Statement of Changes in Equity FIN 2-3
Consolidated Statement of Financial Position FIN 4
Consolidated Statement of Cash Flows FIN 5-6
Notes to the Financial Statements FIN 7-25
Audit Report FIN 26-30
Regulatory Disclosures and Statutory Information –
Contents
Shareholder Information FIN 31
Waivers from NZX Limited FIN 32
Statutory Information FIN 33-35
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Moments
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Copthorne
Hotel & Resort
Bay of Islands
Friends
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Gifting made easy.
For friends and family or for yourself, choose from 21
Millennium, Copthorne and Kingsgate hotel locations -
from accommodation packages to dining and spa treatment,
you can even add your own personal message!
AwaytoGo.co.nz Gifting made easy.
FIN 1 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
Millennium & Copthorne Hotels New Zealand Limited
Consolidated Income Statement
For the year ended 31 December 2017
FIN 1
Millennium & Copthorne Hotels New Zealand Limited
Consolidated Income Statement
For the year ended 31 December 2017
Group
Group
DOLLARS IN THOUSANDS Note 2017 2016
Hotel revenue 105,567 94,607
Rental income 3,070 2,993
Property sales 78,630 74,435
Revenue 187,267 172,035
Cost of sales 4,11 (74,847) (72,702)
Gross profit 112,420 99,333
Other income 2 - 4,311
Administration expenses 3,4 (20,504) (17,246)
Other operating expenses 3,4 (1 9,148) (16,737)
Operating profit 72,768 69,661
Finance income 5 4,072 3,027
Finance costs 5 (1,897) (2,151)
Net finance income 2,175 876
Profit before income tax 74,943 70,537
Income tax expense 6 (19,847) (20,117)
Profit for the year 55,096 50,420
Attributable to:
Owners of the parent 43,116 40,447
Non-controlling interests 11,980 9,973
Profit for the year 55,096 50,420
Basic earnings per share (cents) 9 27.25 25.56
Diluted earnings per share (cents) 9 27.25 25.56
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2017
Group
Group
DOLLARS IN THOUSANDS Note 2017
2016
Profit for the year 55,096 50,420
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation/impairment of property, plant and equipment 10 75,326 79,424
- Tax expense on revaluation/impairment of property, plant
and equipment
6, 17 (1 1,342) (14,602)
63,984 64,822
Items that are or may be reclassified to profit or loss
Foreign exchange translation movements 5 3,426 (1,024)
- Tax credit on foreign exchange translation movements 5, 6 11 67
3,437 (957)
Total comprehensive income for the year 122,517 114,285
Total comprehensive income for the year attributable to :
Owners of the parent 107,648 104,312
Non-controlling interests 14,869 9,973
Total comprehensive income for the year 122,517 114,285
The accompanying notes form part of, and should be read in conjunction with, these financial statements
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 2
FIN 2
Millennium & Copthorne Hotels New Zealand Limited
Consolidated
S
tatement of Changes in Equity
For the year ended 31 December 20
17
Group
Attributable to equity holders of the Group
DOLLARS IN THOUSANDS
Share
Capital
Revaluation
Reserve
Exchange
Reserve
Accumulated
Losses
Treasury
Stock
Total
Non
-
controlling
Interests
Total
Equity
Balance at 1 January 2017
383,266
161,370
(3,323)
(52,224)
(26)
489,063
63,218
552,281
Movement in exchange
translation reserve, net of
tax
-
-
3,437
-
-
3,437
-
3,437
Revaluation/impairment of property, plant & equipment, net of tax
-
61,095
-
-
-
61,095
2,889
63,984
Total other comprehensive income/(loss)
-
61,095
3,437
-
-
64,532
2,889
67,421
Profit for the year
-
-
-
43,116
-
43,116
11,
980
55,096
Total comprehensive income for the year
-
61,095
3,437
43,116
-
107
,648
14,
869
122,
517
Transactions with owners, recorded directly in equity:
Dividends paid to:
Owners of the parent
-
-
-
(7,911)
-
(7,911)
-
(7,911)
Non-
controlling interests
-
-
-
-
-
-
(3,662)
(3,662)
Supplementary dividends
-
-
-
(221)
-
(221)
-
(221)
Foreign investment tax credits
-
-
-
221
-
221
-
221
Movement in
non-
controlling interests
without a change in control
-
-
-
80
-
80
385
465
Balance at
31 December 201
7
383,266
222,
465
114
(16,
939)
(26)
588,
880
74,
810
663,
690
The accompanying notes form part of, and should
be read in conjunction with, these financial statements
FIN 3 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
FIN 3
Millennium & Copthorne Hotels New Zealand Limited
Consolidated Statement of Changes in Equity
For the year ended 31 December 201
7
Group
Attributable to equity holders of the Group
DOLLARS IN
THOUSANDS
Share
Capital
Revaluation
Reserve
Exchange
Reserve
Accumulated
Losses
Treasury
Stock
Total
Non
-
controlling
Interests
Total
Equity
Balance at 1 January 2016
383,266
96,548
(2,366)
(88,129)
(26)
389,293
55,552
444,845
Movement in exchange translation reserve, net of tax
-
-
(957)
-
-
(957)
-
(957)
Revaluation/impairment of property, plant & equipment, net of tax
-
64,822
-
-
-
64,822
-
64,822
Total other comprehensive income/(loss)
-
64,822
(957)
-
-
63,865
-
63,865
Profit for the year
-
-
-
40,447
-
40,447
9,973
50,420
Total comprehensive income for the year
-
64,822
(957)
40,447
-
104,312
9,973
114,285
Transactions with owners, recorded directly in equity:
Movement in fair value on assets
held
for sale
-
-
-
(1)
-
(1)
-
(1)
Dividends paid to:
Owners of the parent
-
-
-
(4,430)
-
(4,430)
-
(4,430)
Non-
controlling interests
-
-
-
-
-
-
(2,787)
(2,787)
Supplementary dividends
-
-
-
(124)
-
(124)
-
(124)
Foreign
investment tax credits
-
-
-
124
-
124
-
124
Movement in non
-controlling interests
without a change in control
-
-
-
(111)
-
(111)
480
369
Balance at 31 December 2016
383,266
161,370
(3,323)
(52,224)
(26)
489,063
63,218
552,281
The accompanying notes form part of, and should be read in conjunction with, these financial statements
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 4
Millennium & Copthorne Hotels New Zealand Limited
Consolidated Statement of Financial Position
As at 31 December 2017
Group Group
DOLLARS IN THOUSANDS
Note
2017
2016
SHAREHOLDERS’ EQUITY
Issued capital 8 383,266 383,266
Reserves 205,640 105,823
Treasury stock 8 (26) (26)
Equity attributable to owners of the parent 588,880 489,063
Non-controlling interests 74,810 63,218
Total equity 663,690 552,281
Represented by:
NON CURRENT ASSETS
Property, plant and equipment 10 505,908 422,603
Development properties 11 145,751 135,136
Investment in associates 12 2 2
Total non-current assets 651,661 557,741
CURRENT ASSETS
Cash and cash equivalents 13 34,195 15,520
Short term bank deposits 88,890 85,598
Trade and other receivables 14 17,729 18,693
Inventories 1,646 1,508
Development properties 11 34,104 34,845
Total current assets 176,564 156,164
Total assets 828,225 713,905
NON CURRENT LIABILITIES
Interest-bearing loans and borrowings 15 66,000 66,000
Provision for deferred taxation 17 70,245 59,183
Total non-current liabilities 136,245 125,183
CURRENT LIABILITIES
Interest-bearing loans and borrowings 15 - 4
Trade and other payables 18 22,442 24,957
Trade payables due to related parties 23 1,981 2,137
Loans due to related parties 23 - 5,800
Income tax payable 3,867 3,543
Total current liabilities 28,290 36,441
Total liabilities 164,535 161,624
NET ASSETS 663,690 552,281
For and on behalf of the Board
R BOBB, DIRECTOR, 08 February 2018 BK CHIU, MANAGING DIRECTOR, 08
February 2018
The accompanying notes form part of, and should be read in conjunction with, these financial statements
Millennium & Copthorne Hotels New Zealand Limited
Consolidated Statement of Financial Position
As at 31 December 2017
The accompanying notes form part of, and should be read in conjunction with, these financial statements
R BOBB, DIRECTOR, 08 February 2018 BK CHIU, MANAGING DIRECTOR, 08 February 2018
FIN 5 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
FIN 5
Millennium & Copthorne Hotels New Zealand Limited
Consolidated Statement of Cash Flows
For the year ended 31 December 2017
Group Group
DOLLARS IN THOUSANDS Note
2017
2016
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers 188,776 169,208
Receipts from insurers 2 - 4,500
Interest received 3,428 3,370
Dividends received 5 2 7
Cash was applied to:
Payments to suppliers and employees (102,504) (87,371)
Purchases of development land (15,139) -
Interest paid (1,859) (2,134)
Income tax paid (1 9,782) (16,571)
Net cash inflow from operating activities 52,922 71,009
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was (applied to)/provided from:
Proceeds from the sale of property, plant and equipment 12 10
Proceeds from the sale of assets held for sale - 314
Purchases of property, plant and equipment 10 (14,466) (32,565)
Investments in short term bank deposits ( 3,292) (25,643)
Net cash outflow from investing activities (17,746) (57,884)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was (applied to)/provided from:
Repayment of borrowings 15 (4) (6,523)
Loans advanced from parent company - 2,000
Repayment of loan from parent company 23 (5,800) -
Dividends paid to shareholders of Millennium & Copthorne Hotels New
Zealand Ltd 8 (7,911) (4,430)
Dividends paid to non-controlling shareholders (3,662) (2,786)
Net cash inflow/(outflow) from financing activities (1 7,377) (11,739)
Net increase/(decrease) in cash and cash equivalents 17,799 1,386
Add opening cash and cash equivalents 15,520 14,021
Exchange rate adjustment 876 113
Closing cash and cash equivalents 13 34,195 15,520
The accompanying notes form part of, and should be read in conjunction with, these financial statements
Millennium & Copthorne Hotels New Zealand Limited
Consolidated Statement of Cash Flows
For the year ended 31 December 2017
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 6
FIN 6
Millennium & Copthorne Hotels New Zealand Limited
Consolidated Statement of Cash Flows – continued
For the year ended 31 December 2017
Group Group
DOLLARS IN THOUSANDS Note 2017
2016
RECONCILIATION OF NET PROFIT FOR THE YEAR TO CASH FLOWS
FROM OPERATING ACTIVITIES
Profit for the year
55,096 50,420
Adjusted for non-cash items:
Goodwill written off - 2,823
Gain on sale of property, plant and equipment 3 (5) (9)
Depreciation 10 6,482 5,837
Unrealised foreign exchange (gain)/losses 65 (74)
Income tax expense 6 19,847 20,117
Gain on insurance claim 2 - (4,311)
81,485 74,803
Adjustments for movements in working capital:
(Increase)/Decrease in trade & other receivables 964 2,120
(Increase)/Decrease in inventories (138) (256)
(Increase)/Decrease in development properties (6 ,936) 8,030
Increase/(Decrease) in trade & other payables (7 60) 3,514
Increase/(Decrease) in related parties (156) 1,497
Cash generated from operations 74,459 89,708
Interest expense 5 (1,755) (2,128)
Income tax paid (1 9,782) (16,571)
Cash inflows from operating activities 52,922 71,009
The accompanying notes form part of, and should be read in conjunction with, these financial statements
Millennium & Copthorne Hotels New Zealand Limited
Consolidated Statement of Cash Flows –
continued
For the year ended 31 December 2017
FIN 6
Millennium & Copthorne Hotels New Zealand Limited
Consolidated Statement of Cash Flows – continued
For the year ended 31 December 2016
Group
Group
DOLLARS IN THOUSANDS Note 2016
2015
RECONCILIATION OF NET PROFIT FOR THE YEAR TO CASH FLOWS
FROM OPERATING ACTIVITIES
Profit for the year
50,420 28,372
Adjusted for non-cash items:
Goodwill written off 12 2,823 -
Gain on sale of property, plant and equipment 3 (9) (58)
Depreciation 10 5,837 6,662
Unrealised foreign exchange (gain)/losses (74) 71
Income tax expense 6 20,117 11,645
Gain on insurance claim 2 (4,311) -
74,803 46,692
Adjustments for movements in working capital:
Increase in trade & other receivables 2,120 789
(Increase)/Decrease in inventories (256) 4
Decrease/(Increase) in development properties 8,030 (30,933)
Increase in trade & other payables 3,514 2,791
Increase in related parties 1,497 127
Cash generated from operations 89,708 19,470
Interest expense 5 (2,128) (3,178)
Income tax paid (16,571) (10,563)
Cash inflows from operating activities 71,009 5,729
The accompanying notes form part of, and should be read in conjunction with, these financial statements
50,420
55,096
FIN 7 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
Significant accounting policies
Millennium & Copthorne Hotels New Zealand Limited is a company domiciled in New Zealand registered under the Companies Act
1993 and listed on the New Zealand Stock Exchange. Millennium & Copthorne Hotels New Zealand Limited (the “Company”) is a
Financial Markets Conduct Reporting Entity in terms of the Financial Markets Conduct Act 2013 and the Financial Reporting Act 2013.
The financial statements of the Company for the year ended 31 December 2017 comprise the Company and its subsidiaries (together
referred to as the “Group”). The registered office is located at Level 13, 280 Centre, 280 Queen Street, Auckland, New Zealand.
The principal activities of the Group are ownership and operation of hotels in New Zealand; residential development and sale of land in
New Zealand; and development and sale of residential units in Australia.
(a) Statement of compliance
The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice
(NZ GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRSs) as
appropriate for Tier 1 profit-oriented entities. The financial statements also comply with International Financial Reporting
Standards (IFRSs).
The financial statements were authorised for issuance on 08 February 2018.
(b) Basis of preparation
The financial statements are presented in New Zealand Dollars, rounded to the nearest thousand. They are prepared on
the historical cost basis except that hotel land and buildings are stated at their fair value (refer to Note 10).
The preparation of financial statements in conformity with NZ IFRSs requires management to make judgments, estimates
and assumptions that affect the application of the Group’s policies and reported amounts of assets and liabilities, income
and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised and in any future period affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount recognised in the financial statements are described in Note
24 – Accounting Estimates and Judgements.
(c) Change in accounting policies
The accounting policies have been applied consistently to all periods presented in these financial statements.
The accounting policies are now included within the relevant notes to the consolidated financial statements.
(d) Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the balance date are translated to New Zealand dollars at the
foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income
statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies
that are stated at fair value are translated to New Zealand dollars at foreign exchange rates ruling at the dates the fair value
was determined.
(e) Insurance proceeds
Compensation from third parties for items of property, plant and equipment that were damaged, impaired, lost or given up is
included in the profit or loss when the compensation becomes virtually certain. Any subsequent purchase or construction of
replacement assets are separate economic events and are accounted for separately.
(f) Revenue
Revenue represents amounts derived from:
• The ownership, management and operation of hotels: recognised on an accruals basis to match the provision of the
related goods and services.
• Income from property rental: recognised on an accruals basis, straight line over the lease period. Lease incentives
granted are recognised as an integral part of the total rental income.
• Income from development property sales: recognised on the transfer of the related significant risk and rewards of
ownership, which is not until legal title passes to the buyer when the full settlement of the purchase consideration of
the properties occurs.
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 8
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 8
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
Index
1.
Segment reporting
2. Other income
3. Administration and other operating expenses
4. Personnel expenses
5. Net finance income
6. Income tax expense
7. Imputation credits
8. Capital and reserves
9. Earnings per share
10. Property, plant and equipment
11. Development properties
12. Investment in associates
13. Cash and cash equivalents
14. Trade and other receivables
15. Interest-bearing loans and borrowings
16. Provisions
17. Deferred tax assets and liabilities
18. Trade and other payables
19. Financial instruments
20. Operating leases
21. Capital commitments
22. Related parties
23. Group entities
24. Accounting estimates and judgements
25. New standards and interpretations not yet adopted
26. Subsequent events
27. Contingent Liability
FIN 9 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 9
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
1. Segment reporting
Operating segments
The Group consisted of the following main operating segments:
• Hotel operations, comprising income from the ownership and management of hotels.
• Residential land development, comprising the development and sale of land.
• Residential and commercial property development, comprising the development and sale of residential
apartments.
The Group has no major customer representing greater than 10% of the Group’s total revenue.
Operating segments
Hotel Operations
Residential Land
Development
Residential
Property
Development Group
Dollars In Thousands 2017 2016 2017 2016 2017 2016 2017 2016
External revenue 105,567 94,576 78,667 74,471 3,033 2,988 187,267 172,035
Earnings before interest, depreciation
& amortisation 35,925 33,748 42,526 36,584 799 5,166 79,250 75,498 xxxx xxxx
Finance income 1,778 1,916 2,144 956 150 155 4,072 3,027
Finance expense (1,897) (2,151) - - - - (1,897) (2,151)
Depreciation and amortisation (6,476) (5,829) (1) (2) (5) (6) (6,482) (5,837)
Profit before income tax 29,330 27,684 44,669 37,538 944 5,315 74,943 70,537
Income tax (expense)/credit (6,725) (8,301) (12,507) (10,510) (615) (1,306) (19,847) (20,117)
Profit after income tax 22,605 19,383 32,162 27,028 329 4,009 55,096 50,420
Other material/non-cash items:
Gain on insurance claim - 4,311 - - - - - 4,311
Goodwill written-off - (2,823) - - - - - (2,823)
Release of earthquake and FF&E
provisions - 3,000 - - - - - 3,000
Release of excess remedial costs
provided for Zenith Residences - - - - - 4,393 - 4,393
Segment assets 572,697 486,137 191,703 168,276 63,823 59,490 828,223 713,903
Tax assets - - - - - - - -
Investment in associates - - 2 2 - - 2 2
Total assets 572,697 486,137 191,705 168,278 63,823 59,490 828,225 713,905
Segment liabilities (87,154) (93,426) (2,160) (4,335) (1,109) (1,137) (90,423) (98,898)
Tax liabilities (71,235) (61,660) (3,433) (2,149) 556 1,083 (74,112) (62,726)
Total liabilities (158,389) (155,086) (5,593) (6,484) (553) (54) (164,535) (161,624)
Capital expenditure 14,463 32,551 - 5 3 9 14,466 32,565
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 10
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 10
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
1. Segment reporting - continued
Geographical areas
The Group operates in the following main geographical areas:
• New Zealand.
• Australia.
Segment revenue is based on the geographical location of the asset.
New Zealand Australia Group
Dollars In Thousands 2017 2016 2017 2016 2017 2016
External revenue 184,234 169,047 3,033 2,988 187,267 172,035
Earnings before interest, depreciation &
amortisation 78,505 71,372 745 4,126 79,250 75,498
Finance income 3,922 2,873 150 154 4,072 3,027
Finance expense (1,897) (2,151) - - (1,897) (2,151)
Depreciation and amortisation (6,477) (5,831) (5) (6) (6,482) (5,837)
Profit before income tax 74,053 66,263 890 4,274 74,943 70,537
Income tax (expense)/credit (19,248) (18,828) (599) (1,289) (19,847) (20,117)
Profit after income tax 54,805 47,435 291 2,985 55,096 50,420
Other material/non-cash items:
Gain on insurance claim - 4,311 - - - 4,311
Goodwill written-off - (2,823) - - - (2,823)
Release of earthquake and FF&E
provisions - 3,000 - - - 3,000
Release of excess remedial costs provided
for Zenith Residences - - - 4,393 - 4,393
Segment assets 764,400 654,415 63,823 59,488 828,223 713,903
Tax assets - - - - - -
Investment in associates 2 2 - - 2 2
Total assets 764,402 654,417 63,823 59,488 828,225 713,905
Segment liabilities (90,384) (98,868) (39) (30) (90,423) (98,898)
Tax liabilities (74,673) (63,814) 561 1,088 (74,112) (62,726)
Total liabilities (165,057) (162,682) 522 1,058 (164,535) (161,624)
Capital expenditure 14,463 32,556 3 9 14,466 32,565
An operating segment is a distinguishable component of the Group:
• that is engaged in business activities from which it earns revenues and incurs expenses;
• whose operating results are regularly reviewed by the Group’s chief operating decision maker to make decisions on
resource allocation to the segment and assess its performance; and
• for which discrete financial information is available.
Segment information is presented in respect of the Group’s reporting segments. Operating segments are the primary basis of
segment reporting. The Group has determined that its chief operating decision maker is the Board of Directors on the basis that it
is this group which determines the allocation of resources to segments and assesses their performance.
Inter-segment pricing is determined on an arm’s length basis. Segment results include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used
for more than one period.
2. Other income
Group
Dollars In Thousands 2017 2016
Gain on insurance claim - 4,311
- 4,311
In May 2016, the insurers settled the Group’s material damage claim in respect of the fixture, fittings and equipment at the
Millennium Hotel Christchurch. This settlement of $4.50 million resulted in a gain on disposal of property plant and equipment of
$4.31 million
.
FIN 11 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 11
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
3. Administration and other operating expenses
Group
Dollars In Thousands Note 2017 2016
Depreciation 10 6,482 5,837
Auditors remuneration
Audit fees 306 294
Tax compliance and advisory fees 52 132
Directors fees 22 321 231
Lease and rental expenses 20 2,247 2,235
Provision for bad debts
Debts written off 1 1
Movement in doubtful debt provision 46 34
Goodwill written-off - 2,823
Net gain on disposal of property, plant and equipment (5) (9)
Release of earthquake and FF&E provisions for Millennium Hotel
Christchurch
16 - (3,000)
Release of excess remedial costs provided for Zenith Residences 11 - (4,393)
Other 30,202 29,798
39,652 33,983
4. Personnel expenses
Group
Dollars In Thousands 2017 2016
Wages and salaries 36,517 34,345
Employee related expenses and benefits 1,382 1,079
Contributions to defined contribution plans 677 586
Increase in liability for long-service leave 88 56
38,664 36,066
The personnel expenses are included in cost of sales, administration expenses and other operating expenses in the income
statement.
Employee long-term service benefits
The Group’s net obligation in respect of long-term service benefits, is the amount of future benefit that employees have earned in
return for their service in the current and prior periods. The obligation is calculated using their expected remuneration and an
assessment of likelihood the liability will arise.
5. Net finance income
Recognised in the income statement
Group
Dollars In Thousands 2017 2016
Interest income 3,992 2,923
Dividend income 2 7
Foreign exchange gain 78 97
Finance income 4,072 3,027
Interest expense (1,755) (2,128)
Foreign exchange loss (142) (23)
Finance costs (1,897) (2,151)
Net finance income recognised in the income statement 2,175 876
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 12
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 12
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
5. Net finance income - continued
Finance income and expenses
Finance income comprises interest income on funds invested, dividend income and foreign currency gains that are recognised in
profit or loss. Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised in the
income statement on the date the entity’s right to receive payments is established which in the case of quoted securities is the ex-
dividend date.
Finance expenses comprise interest payable on borrowings calculated using the effective interest rate method and foreign
exchange losses that are recognised in the income statement.
Recognised in other comprehensive income
Group
Dollars In Thousands 2017 2016
Foreign exchange translation movements 3,437 (957)
Net finance income recognised in other comprehensive income 3,437 (957)
Exchange translation of financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated
to New Zealand dollars at foreign exchange rates ruling at the balance date. The revenues and expenses of foreign operations are
translated to New Zealand dollars at rates approximating the foreign exchange rates ruling at the dates of the transactions. Foreign
exchange differences arising on re-translation are recognised directly as a separate component of equity. When a foreign operation
is disposed of, in part or in full, the relevant amount in the exchange reserve is released into the income statement.
6. Income tax expense
Recognised in the income statement
Group
Dollars In Thousands 2017 2016
Current tax expense
Current year 20,790 18,373
Adjustments for prior years (674) (23)
20,116 18,350
Deferred tax expense
Origination and reversal of temporary difference (157) 1,687
Changes in Tax Rates 103 -
Adjustments for prior years (215) 80
(269) 1,767
Total income tax expense in the income statement 19,847 20,117
Reconciliation of tax expense
Group
Dollars In Thousands 2017 2016
Profit before income tax 74,943 70,537
Income tax at the company tax rate of 28% (2016: 28%) 20,984 19,750
Adjusted for:
Non-deductible expenses - 790
Tax rate difference (if different from 28% above) 103 75
Tax exempt income (351) (555)
Under/(Over) - provided in prior years (889) 57
Total income tax expense
19,847 20,117
Effective tax rate 26% 29%
FIN 13 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 13
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
6. Income tax expense - continued
Deferred tax expense/(credit) recognised in other comprehensive income
Group
Dollars In Thousands 2017 2016
Relating to revaluation of property, plant and equipment 11,342 14,602
Relating to foreign currency translation of foreign subsidiaries (11) (67)
11,331 14,535
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case
it is recognised in other comprehensive income or equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at
the balance date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of the temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided
for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that neither affect accounting nor taxable
profit; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable
future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the balance date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
Deferred tax assets and deferred tax liabilities are offset only if the Group has a legally enforceable right to set off current tax
assets against current tax liabilities; the Group intends to settle net; and the deferred tax assets and the deferred tax liabilities
relate to income taxes levied by the same taxation authority.
7. Imputation credits
The KIN Holdings Group has A$5.5 million (2016: A$5.6 million) franking credits available as at 31 December 2017.
8. Capital and reserves
Share capital
Group Group
2017 2017 2016 2016
Shares $000’s Shares $000’s
Ordinary shares issued 1 January
105,578,290 350,048 105,578,290 350,048
Ordinary shares issued at 31 December – fully paid
105,578,290 350,048 105,578,290 350,048
Redeemable preference shares 1 January
52,739,543 33,218 52,739,543 33,218
Redeemable preference shares issued at 31 December –
fully paid
52,739,543 33,218 52,739,543 33,218
Ordinary shares repurchased and held as treasury stock 1
January
(99,547) (26) (99,547) (26)
Ordinary shares repurchased and held as treasury stock 31
December
(99,547) (26) (99,547) (26)
Total shares issued and outstanding
158,218,286 383,240 158,218,286 383,240
At 31 December 2017, the authorised share capital consisted of 105,578,290 ordinary shares (2016: 105,578,290 ordinary shares)
with no par value and 52,739,543 redeemable preference shares (2016: 52,739,543 redeemable preference shares) with no par
value.
Repurchase of share capital
Group
Dollars In Thousands 2017 2016
Imputation credits available for use in subsequent reporting periods 79,680 65,620
FIN 13
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
6. Income tax expense - continued
Deferred tax expense/(credit) recognised in other comprehensive income
Group
Dollars In Thousands 2017 2016
Relating to revaluation of property, plant and equipment 11,342 14,602
Relating to foreign currency translation of foreign subsidiaries (11) (67)
11,331 14,535
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case
it is recognised in other comprehensive income or equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at
the balance date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of the temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided
for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that neither affect accounting nor taxable
profit; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable
future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at the balance date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
Deferred tax assets and deferred tax liabilities are offset only if the Group has a legally enforceable right to set off current tax
assets against current tax liabilities; the Group intends to settle net; and the deferred tax assets and the deferred tax liabilities
relate to income taxes levied by the same taxation authority.
7. Imputation credits
The KIN Holdings Group has A$5.5 million (2016: A$5.6 million) franking credits available as at 31 December 2017.
8. Capital and reserves
Share capital
Group Group
2017 2017 2016 2016
Shares $000’s Shares $000’s
Ordinary shares issued 1 January
105,578,290 350,048 105,578,290 350,048
Ordinary shares issued at 31 December – fully paid
105,578,290 350,048 105,578,290 350,048
Redeemable preference shares 1 January
52,739,543 33,218 52,739,543 33,218
Redeemable preference shares issued at 31 December –
fully paid
52,739,543 33,218 52,739,543 33,218
Ordinary shares repurchased and held as treasury stock 1
January
(99,547) (26) (99,547) (26)
Ordinary shares repurchased and held as treasury stock 31
December
(99,547) (26) (99,547) (26)
Total shares issued and outstanding
158,218,286 383,240 158,218,286 383,240
At 31 December 2017, the authorised share capital consisted of 105,578,290 ordinary shares (2016: 105,578,290 ordinary shares)
with no par value and 52,739,543 redeemable preference shares (2016: 52,739,543 redeemable preference shares) with no par
value.
Repurchase of share capital
Group
Dollars In Thousands 2017 2016
Imputation credits available for use in subsequent reporting periods 79,680 65,620
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 14
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 14
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributed costs,
is recognised as a change in equity. Repurchased shares are classified as treasury stock and presented as a deduction from total
equity.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
8. Capital and reserves – continued
Revaluation reserve
The revaluation reserve relates to property, plant and equipment. Movements in the revaluation reserve arise from the revaluation
surpluses and deficits of property, plant and equipment.
Exchange reserve
The exchange reserve comprises the foreign exchange differences arising from the translation of the financial statements of
foreign operations.
Dividends
The following dividends were declared and paid during the year ended 31 December:
Parent
Dollars In Thousands 2017 2016
Ordinary Dividend – 5.0 cents per qualifying ordinary share (2016: 2.8 cents) 7,911 4,430
Supplementary Dividend – 0.8824 cents per qualifying ordinary share (2016: 0.49412 cents) 221 124
8,132 4,554
After 31 December 2017, the following dividends were declared by the directors. The dividends have not been provided for and
there are no income tax consequences.
Dollars In Thousands Parent
Ordinary Dividend – 6.0 cents per qualifying share (2016: 5.0 cents) 9,493
Supplementary Dividend – 1.0588 cents per qualifying share (2016: 0.8824 cents) 273
Total Dividends 9.766
Dividends and tax
Dividends are recognised as a liability in the period in which they are declared. Additional income taxes that arise from the
distribution of dividends are recognised at the same time as the liability to pay the related dividend.
9. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 December 2017 was based on the profit attributable to ordinary and redeemable
preference shareholders of $43,116,000 (2016: $40,447,000) and weighted average number of shares outstanding during the
year ended 31 December 2017 of 158,218,286 (2016: 158,218,286), calculated as follows:
Profit attributable to shareholders
Group
Dollars In Thousands 2017 2016
Profit for the year 55,096 50,420
Profit attributable to non-controlling interests (11,980) (9,973)
Profit attributable to shareholders 43,116 40,447
Weighted average number of shares
Group
2017 2016
Weighted average number of shares (ordinary and redeemable preference shares) 158,317,833 158,317,833
Effect of own shares held (ordinary shares) (99,547) (99,547)
Weighted average number of shares for earnings per share calculation 158,218,286 158,218,286
Diluted earnings per share
The calculation of diluted earnings per share is the same as basic earnings per share.
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributed costs, is
recognised as a change in equity. Repurchased shares are classified as treasury stock and presented as a deduction from total equity.
Repurchase of share capital
FIN 14
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributed costs,
is recognised as a change in equity. Repurchased shares are classified as treasury stock and presented as a deduction from total
equity.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
8. Capital and reserves – continued
Revaluation reserve
The revaluation reserve relates to property, plant and equipment. Movements in the revaluation reserve arise from the revaluation
surpluses and deficits of property, plant and equipment.
Exchange reserve
The exchange reserve comprises the foreign exchange differences arising from the translation of the financial statements of
foreign operations.
Dividends
The following dividends were declared and paid during the year ended 31 December:
Parent
Dollars In Thousands 2017 2016
Ordinary Dividend – 5.0 cents per qualifying ordinary share (2016: 2.8 cents) 7,911 4,430
Supplementary Dividend – 0.8824 cents per qualifying ordinary share (2016: 0.49412 cents) 221 124
8,132 4,554
After 31 December 2017, the following dividends were declared by the directors. The dividends have not been provided for and
there are no income tax consequences.
Dollars In Thousands Parent
Ordinary Dividend – 6.0 cents per qualifying share (2016: 5.0 cents) 9,493
Supplementary Dividend – 1.0588 cents per qualifying share (2016: 0.8824 cents) 273
Total Dividends 9.766
Dividends and tax
Dividends are recognised as a liability in the period in which they are declared. Additional income taxes that arise from the
distribution of dividends are recognised at the same time as the liability to pay the related dividend.
9. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 December 2017 was based on the profit attributable to ordinary and redeemable
preference shareholders of $43,116,000 (2016: $40,447,000) and weighted average number of shares outstanding during the
year ended 31 December 2017 of 158,218,286 (2016: 158,218,286), calculated as follows:
Profit attributable to shareholders
Group
Dollars In Thousands 2017 2016
Profit for the year 55,096 50,420
Profit attributable to non-controlling interests (11,980) (9,973)
Profit attributable to shareholders 43,116 40,447
Weighted average number of shares
Group
2017 2016
Weighted average number of shares (ordinary and redeemable preference shares) 158,317,833 158,317,833
Effect of own shares held (ordinary shares) (99,547) (99,547)
Weighted average number of shares for earnings per share calculation 158,218,286 158,218,286
Diluted earnings per share
The calculation of diluted earnings per share is the same as basic earnings per share.
FIN 15 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 15
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
10. Property, plant and equipment
Group
Dollars In Thousands
Freehold
Land
Freehold
Buildings
Leasehold
Land and
Buildings
Plant,
Equipment,
Fixtures
and
Fittings
Motor
Vehicles
Work
In
Progress Total
Cost
Balance at 1 January 2016 103,086 171,867 27,859 90,398 65 11,710 404,985
Acquisitions - - - 14 - 32,551 32,565
Disposals - - - (5,017) - - (5,017)
Transfers between categories - 508 (21) 2,237 - (2,724) -
Transfer from accumulated
depreciation following revaluation - (957) (41) - - - (998)
Movements in foreign exchange - - - (9) - - (9)
Revaluation surplus/(deficit) 25,775 43,889 9,760 - - - 79,424
Balance at 31 December 2016 128,861 215,307 37,557 87,623 65 41,537 510,950
Balance at 1 January 2017 128,861 215,307 37,557 87,623 65 41,537 510,950
Acquisitions - - - 3 - 14,463 14,466
Disposals - - - (256) - - (256)
Transfers between categories - 45,489 24 8,888 1 (54,402) -
Transfer from accumulated
depreciation following revaluation - (136)
(149)
- - - (285)
Movements in foreign exchange - - - 25 - - 25
Revaluation surplus/(deficit) 31,214 37,047 7,065 - - - 75,326
Balance at 31 December 2017 160,075 297,707 44,497 96,283 66 1,598 600,226
Depreciation and impairment
losses
Balance at 1 January 2016 - (12,773) (2,869) (72,658) (51) - (88,351)
Depreciation charge for the year - (2,047) (370) (3,416) (4) - (5,837)
Disposals - - - 4,835 - - 4,835
Transfer accumulated depreciation
against cost following revaluation - 957 41 - - - 998
Movements in foreign exchange - - - 8 - - 8
Balance at 31 December 2016 - (13,863) (3,198) (71,231) (55) - (88,347)
- (12,773) (2,869) (72,658) (51) - (88,351)
Balance at 1 January 2017 - (13,863) (3,198) (71,231) (55) - (88,347)
Depreciation charge for the year - (2,451) (399) (3,628) (4) - (6,482)
Disposals - - - 250 - - 250
Transfer accumulated depreciation
against cost following revaluation - 136 149 - - - 285
Movements in foreign exchange - - - (24) - - (24)
Balance at 31 December 2017 - (16,178) (3,448) (74,633) (59) - (94,318)
Carrying amounts
At 1 January 2016 103,086 159,094 24,990 17,740 14 11,710 316,634
At 31 December 2016 128,861 201,444 34,359 16,392 10 41,537 422,603
At 1 January 2017 128,861 201,444 34,359 16,392 10 41,537 422,603
At 31 December 2017 160,075 281,529 41,049 21,650 7 1,598 505,908
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 16
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 16
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
10. Property, plant and equipment – continued
The Directors consider the value of the hotel assets with a net book value of $505.9 million (2016: $422.6 million) to be within a
range of $505.91 to $529.72 million (2016: $422.00 to $436.00 million). This is substantiated by valuations completed by Bower
Valuations Limited, registered valuers, on: 3 hotel assets valued in total at $28.0 million in December 2015; 7 hotel assets valued in
total at $245.69 million in December 2016; and 3 hotel assets valued in total at $251.48 million in December 2017.
During 2017, three (2016: seven) of the Group’s freehold and leasehold hotel properties were subject to an external professional
valuation by Bower Valuations Limited, registered valuers, on a highest and best use basis. Based on these valuations and in
accordance with the Group’s accounting policies the respective properties’ land and buildings were revalued to their fair value. A
total of $75.33 million (2016: $79.42 million) was added to the carrying values of land and buildings.
The Group's fair value of hotel properties as determined by independent valuers is categorised as Level 3 based on the inputs to
the valuation methodology. The basis of the valuation is the net present value of the future earnings of the assets. The major
unobservable inputs and assumptions that are used in the valuation model that require judgement include forecasts of the future
earnings, projected operational and maintenance expenditure profiles and discount rates (internal rate of return). The estimated
fair value would increase or (decrease) if: forecast future earnings were higher / (lower); projected operational and maintenance
expenditures were (higher) / lower; and the discount rates were (higher) / lower.
The Directors consider the net book value of the hotels not valued by independent valuers in 2017 to approximate their fair value
as at 31 December 2017. This is on the basis that the Group’s hotels which were not subject to external professional valuations,
10 hotels in total, were tested for impairment by management. Based on these tests none of the 10 hotels was assessed to be
impaired.
The testing for impairment requires management to estimate future cash flows to be generated by the cash generating units and is
categorised as Level 3 based on the inputs to the impairment models. The major unobservable inputs that management use that
require judgement in estimating future cash flows include expected rate of growth in revenue and costs, market segment mix,
occupancy, average room rates expected to be achieved and the appropriate discount rate to apply when discounting future cash
flows. Average annual growth rates appropriate to the hotels range from 1.25% to 3.74% (2016: 0.39% to 8.23%) over the five
years projection. Pre-tax discount rates ranging between 8.50% and 14.50% (2016: 8.25% and 14.50%) were applied to the future
cash flows of the individual hotels based on the specific circumstances of the property.
Initial recording
Items of property, plant and equipment are initially stated at cost. The cost of purchased property, plant and equipment is the value
of the consideration given to acquire the assets and the value of other directly attributable costs, which have been incurred in
bringing the assets to the location and condition necessary for their intended service. Where parts of an item of property, plant and
equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Capital expenditure on major projects is recorded separately within property, plant and equipment as capital work in progress.
Once the project is complete the balance is transferred to the appropriate property, plant and equipment categories. Capital work in
progress is not depreciated.
Subsequent measurement
Property, plant and equipment is subsequently measured at cost less accumulated depreciation and impairment losses, except for
land and buildings which are re-valued. The Group recognises the cost of replacing part of such an item of property, plant and
equipment when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the
Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as
incurred.
Disposal or retirement
Gains or losses arising from the disposal or retirement of property, plant and equipment are determined as the difference between
the actual net disposal proceeds and the carrying amount of the asset and are recognised in the income statement on the date of
retirement or disposal.
Revaluation
Land and buildings are shown at fair value less subsequent depreciation for buildings. Fair value is determined by management
using valuation models and confirmed by independent registered valuers on a triennial basis. Any accumulated depreciation at the
date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the re-valued
amount of the asset. Any decreases in value that offset a previous increase in value of the same asset is charged against reserves
in equity, any other decrease in value is charged to the income statement.
Depreciation
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or re-valued
amounts to their residual values over their estimated useful lives, as follows:
• Building core 50 years or lease term if shorter
• Building surfaces and finishes 30 years or lease term if shorter
• Plant and machinery 15 - 20 years
• Furniture and equipment 10 years
• Soft furnishings 5 - 7 years
• Computer equipment 5 years
• Motor vehicles
4 years
No residual values are ascribed to building surfaces and finishes. Residual values ascribed to building core depend on the nature,
location and tenure of each property.
FIN 17 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 17
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
10. Property, plant and equipment – continued
Had the property, plant and equipment been carried under the cost model, the following carrying values would have been
recognised:
Group
M Social Auckland (Copthorne Hotel Auckland Harbourcity)
The Copthorne Hotel Auckland Harbourcity closed down on 24 July 2015 for a major refurbishment project valued at over $40.00
million. This project included a complete replacement of the building services, seismic strengthening, new guest rooms and public
areas. The hotel had a soft opening in early October 2017 under a new brand and a trading name i.e. M Social Auckland. The hotel
was included in the triennial external valuation exercise at 31 December 2017. Based on this valuation the carrying value of the
land was increased by $11.36 million. The Group determined the carrying value of the buildings to approximate fair value and
therefore did not adjust its carrying value.
Canterbury Earthquake
With the insurance settlement of the Millennium Hotel Christchurch in May 2016, the Group presently has one property left in
Christchurch City. This property is the land upon which the Copthorne Hotel Central Christchurch was sited before its demolition in
2013. The Group has commenced predesign work on a new hotel.
11. Development properties
Group
Dollars In Thousands 2017 2016
Development land 124,699 117,763
Residential development 55,156 52,218
179,855 169,981
Less expected to settle within one year (34,104) (34,845)
145,751 135,136
Development land recognised in cost of sales 32,144 33,747
Development land is carried at the lower of cost and net realisable value. No interest (2016: $nil) has been capitalised during the
year. The fair value of development land held at 31 December 2017 was determined by an independent registered valuer, DM
Koomen SPINZ, of Extensor Advisory Limited as $276.32 million (2016: $297.03 million).
The fair value of development property as determined by the independent valuer is categorised as Level 3 based on the inputs to
the valuation methodology. The basis of the valuation is the hypothetical subdivision approach and/or block land sales
comparisons to derive the residual block land values. The major unobservable inputs that are used in the valuation model that
require judgement include the individual section prices, allowances for profit and risk, projected completion and sell down periods
and interest rates during the holding period. The estimated fair value would increase or (decrease) if: the individual section prices
were higher / (lower); the allowances for profit were higher / (lower); the allowances for risk were lower / (higher); the projected
completion and sell down periods were shorter / (longer); and the interest rate during the holding period was lower / (higher).
Residential development at balance date consists of the residential development known as Zenith Residences in Sydney,
Australia. The value of Zenith Residences held at 31 December 2017 was determined by R Laoulach AAPI of Laoulach &
Company Pty Ltd, registered valuers as $93.97 million (A$85.50 million) (2016: $78.09 million (A$75.50 million)).
The fair value of the residential development as determined by the independent valuer is categorised as Level 3 based on the
inputs to the valuation methodology. The basis of the valuation is gross realisations ‘as is’ assuming individual sales of unsold
units. The major unobservable inputs and assumptions that are used in the valuation model that require judgement include the
interest rates, consumer confidence, unemployment rate and residential unit demand. The estimated fair value would increase or
Dollars In Thousands
Freehold
Land
Freehold
Building
s
Leasehold
Land and
Buildings
Plant,
Equipment
, Fixtures
and
Fittings
Motor
Vehicles
Work
In
Progres
s Total
Cost less accumulated
depreciation
At 1 January 2016 38,659 74,954 19,289 17,743 14 11,710 162,369
At 31 December 2016 38,659 73,415 18,898 16,395 10 41,537 188,914
At 1 January 2017 38,659 73,415 18,898 16,395 10 41,537 188,914
At 31 December 2017 38,659 116,453 18,523 21,653 7 1,598 196,893
Development land is carried at the lower of cost and net realisable value. No interest (2016: $nil) has been capitalised during the year. The fair
value of development land held at 31 December 2017 was determined by an independent registered valuer, DM Koomen SPINZ, of Extensor
Advisory Limited as $276.32 million (2016: $297.03 million).
The fair value of development property as determined by the independent valuer is categorised as Level 3 based on the inputs to the
valuation methodology. The basis of the valuation is the hypothetical subdivision approach and/or block land sales comparisons to derive the
residual block land values. The major unobservable inputs that are used in the valuation model that require judgement include the individual
section prices, allowances for profit and risk, projected completion and sell down periods and interest rates during the holding period. The
estimated fair value would increase or (decrease) if: the individual section prices were higher / (lower); the allowances for profit were higher /
(lower); the allowances for risk were lower / (higher); the projected completion and sell down periods were shorter / (longer); and the interest
rate during the holding period was lower / (higher).
Residential development at balance date consists of the residential development known as Zenith Residences in Sydney, Australia. The value
of Zenith Residences held at 31 December 2017 was determined by R Laoulach AAPI of Laoulach & Company Pty Ltd, registered valuers as
$93.97 million (A$85.50 million) (2016: $78.09 million (A$75.50 million)).The fair value of the residential development as determined by the
independent valuer is categorised as Level 3 based on the inputs to the valuation methodology. The basis of the valuation is gross realisations
‘as is’ assuming individual sales of unsold units. The major unobservable inputs and assumptions that are used in the valuation model that
require judgement include the interest rates, consumer confidence, unemployment rate and residential unit demand. The estimated fair
value would increase or (decrease) if: the interest rates were lower / (higher); the consumer confidence was optimistic / (pessimistic); the
unemployment rate was lower / (higher); the residential unit demand was stronger / (weaker).
Freehold
Land
Freehold
Buildings
Leasehold
Land and
Buildings
Plant,
Equipment,
Fixtures and
Fittings
Motor
Vehicles
Work
In
Progress
Total
FIN 17
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
10. Property, plant and equipment – continued
Had the property, plant and equipment been carried under the cost model, the following carrying values would have been
recognised:
Group
M Social Auckland (Copthorne Hotel Auckland Harbourcity)
The Copthorne Hotel Auckland Harbourcity closed down on 24 July 2015 for a major refurbishment project valued at over $40.00
million. This project included a complete replacement of the building services, seismic strengthening, new guest rooms and public
areas. The hotel had a soft opening in early October 2017 under a new brand and a trading name i.e. M Social Auckland. The hotel
was included in the triennial external valuation exercise at 31 December 2017. Based on this valuation the carrying value of the
land was increased by $11.36 million. The Group determined the carrying value of the buildings to approximate fair value and
therefore did not adjust its carrying value.
Canterbury Earthquake
With the insurance settlement of the Millennium Hotel Christchurch in May 2016, the Group presently has one property left in
Christchurch City. This property is the land upon which the Copthorne Hotel Central Christchurch was sited before its demolition in
2013. The Group has commenced predesign work on a new hotel.
11. Development properties
Group
Dollars In Thousands 2017 2016
Development land 124,699 117,763
Residential development 55,156 52,218
179,855 169,981
Less expected to settle within one year (34,104) (34,845)
145,751 135,136
Development land recognised in cost of sales 32,144 33,747
Development land is carried at the lower of cost and net realisable value. No interest (2016: $nil) has been capitalised during the
year. The fair value of development land held at 31 December 2017 was determined by an independent registered valuer, DM
Koomen SPINZ, of Extensor Advisory Limited as $276.32 million (2016: $297.03 million).
The fair value of development property as determined by the independent valuer is categorised as Level 3 based on the inputs to
the valuation methodology. The basis of the valuation is the hypothetical subdivision approach and/or block land sales
comparisons to derive the residual block land values. The major unobservable inputs that are used in the valuation model that
require judgement include the individual section prices, allowances for profit and risk, projected completion and sell down periods
and interest rates during the holding period. The estimated fair value would increase or (decrease) if: the individual section prices
were higher / (lower); the allowances for profit were higher / (lower); the allowances for risk were lower / (higher); the projected
completion and sell down periods were shorter / (longer); and the interest rate during the holding period was lower / (higher).
Residential development at balance date consists of the residential development known as Zenith Residences in Sydney,
Australia. The value of Zenith Residences held at 31 December 2017 was determined by R Laoulach AAPI of Laoulach &
Company Pty Ltd, registered valuers as $93.97 million (A$85.50 million) (2016: $78.09 million (A$75.50 million)).
The fair value of the residential development as determined by the independent valuer is categorised as Level 3 based on the
inputs to the valuation methodology. The basis of the valuation is gross realisations ‘as is’ assuming individual sales of unsold
units. The major unobservable inputs and assumptions that are used in the valuation model that require judgement include the
interest rates, consumer confidence, unemployment rate and residential unit demand. The estimated fair value would increase or
Dollars In Thousands
Freehold
Land
Freehold
Building
s
Leasehold
Land and
Buildings
Plant,
Equipment
, Fixtures
and
Fittings
Motor
Vehicles
Work
In
Progres
s
Total
Cost less accumulated
depreciation
At 1 January 2016 38,659 74,954 19,289 17,743 14 11,710 162,369
At 31 December 2016 38,659 73,415 18,898 16,395 10 41,537 188,914
At 1 January 2017 38,659 73,415 18,898 16,395 10 41,537 188,914
At 31 December 2017 38,659 116,453 18,523 21,653 7 1,598 196,893
FIN 17
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
10. Property, plant and equipment – continued
Had the property, plant and equipment been carried under the cost model, the following carrying values would have been
recognised:
Group
M Social Auckland (Copthorne Hotel Auckland Harbourcity)
The Copthorne Hotel Auckland Harbourcity closed down on 24 July 2015 for a major refurbishment project valued at over $40.00
million. This project included a complete replacement of the building services, seismic strengthening, new guest rooms and public
areas. The hotel had a soft opening in early October 2017 under a new brand and a trading name i.e. M Social Auckland. The hotel
was included in the triennial external valuation exercise at 31 December 2017. Based on this valuation the carrying value of the
land was increased by $11.36 million. The Group determined the carrying value of the buildings to approximate fair value and
therefore did not adjust its carrying value.
Canterbury Earthquake
With the insurance settlement of the Millennium Hotel Christchurch in May 2016, the Group presently has one property left in
Christchurch City. This property is the land upon which the Copthorne Hotel Central Christchurch was sited before its demolition in
2013. The Group has commenced predesign work on a new hotel.
11. Development properties
Group
Dollars In Thousands 2017 2016
Development land 124,699 117,763
Residential development 55,156 52,218
179,855 169,981
Less expected to settle within one year (34,104) (34,845)
145,751 135,136
Development land recognised in cost of sales 32,144 33,747
Development land is carried at the lower of cost and net realisable value. No interest (2016: $nil) has been capitalised during the
year. The fair value of development land held at 31 December 2017 was determined by an independent registered valuer, DM
Koomen SPINZ, of Extensor Advisory Limited as $276.32 million (2016: $297.03 million).
The fair value of development property as determined by the independent valuer is categorised as Level 3 based on the inputs to
the valuation methodology. The basis of the valuation is the hypothetical subdivision approach and/or block land sales
comparisons to derive the residual block land values. The major unobservable inputs that are used in the valuation model that
require judgement include the individual section prices, allowances for profit and risk, projected completion and sell down periods
and interest rates during the holding period. The estimated fair value would increase or (decrease) if: the individual section prices
were higher / (lower); the allowances for profit were higher / (lower); the allowances for risk were lower / (higher); the projected
completion and sell down periods were shorter / (longer); and the interest rate during the holding period was lower / (higher).
Residential development at balance date consists of the residential development known as Zenith Residences in Sydney,
Australia. The value of Zenith Residences held at 31 December 2017 was determined by R Laoulach AAPI of Laoulach &
Company Pty Ltd, registered valuers as $93.97 million (A$85.50 million) (2016: $78.09 million (A$75.50 million)).
The fair value of the residential development as determined by the independent valuer is categorised as Level 3 based on the
inputs to the valuation methodology. The basis of the valuation is gross realisations ‘as is’ assuming individual sales of unsold
units. The major unobservable inputs and assumptions that are used in the valuation model that require judgement include the
interest rates, consumer confidence, unemployment rate and residential unit demand. The estimated fair value would increase or
Dollars In Thousands
Freehold
Land
Freehold
Building
s
Leasehold
Land and
Buildings
Plant,
Equipment
, Fixtures
and
Fittings
Motor
Vehicles
Work
In
Progres
s
Total
Cost less accumulated
depreciation
At 1 January 2016 38,659 74,954 19,289 17,743 14 11,710 162,369
At 31 December 2016 38,659 73,415 18,898 16,395 10 41,537 188,914
At 1 January 2017 38,659 73,415 18,898 16,395 10 41,537 188,914
At 31 December 2017 38,659 116,453 18,523 21,653 7 1,598 196,893
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 18
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 18
(decrease) if: the interest rates were lower / (higher); the consumer confidence was optimistic / (pessimistic); the unemployment
rate was lower / (higher); the residential unit demand was stronger / (weaker).
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
11. Development properties - continued
In July 2016, Kingsgate Investment Pty Ltd (100% owned subsidiary within the Group) settled with the Owners Corporation in
respect of the remedial costs of building defects at Zenith Residences, Sydney Australia. The excess consultancy, legal, and
remedial costs of $4.39m were then released into the profit & loss.
Development properties
Property held for future development and development property completed and held for sale are stated at the lower of cost and net
realisable value. The net realisable value is determined by independent valuers. Cost includes the cost of acquisition, development,
and holding costs. Development properties also include deposits paid on unconditional contracts on land purchases. All holding
costs incurred after completion of development are expensed as incurred. Revenue and profit are not recognised on development
properties until the legal title passes to the buyer when the full settlement of the purchase consideration of the properties occurs and
the development property is derecognised.
12. Investment in associates
The associate companies included in the financial statements of Millennium & Copthorne Hotels New Zealand Limited as at 31
December 2017 are:
Principal Activity
Principal Place of
Business
Holding % by CDL
Land New Zealand
Limited
2017
Holding % by CDL Land
New Zealand Limited
2016
Prestons Road Limited Service provider NZ 33.33 33.33
Prestons Road Limited has no revenue or expenses, therefore the Group’s share of profit of its associate was nil (2016: nil).
During the year, the Group maintained its 33.33% economic interest in Prestons Road Limited. The principal activity of Prestons
Road Limited is as service provider to the Group’s subsidiary, CDL Land New Zealand Limited, and in this regard, it is charged
with engaging suitably qualified consultants in fields such as geotechnical engineering, resource management compliance,
subdivision of land, legal and regulatory compliance and related issues to enable the Group to develop its land at Prestons Road
in Christchurch.
The net assets of Prestons Road Limited not adjusted for the percentage ownership held by the Group is $6,000, with the
Group’s share equal to $2,000. Prestons Road Limited has a 31 March balance date. No adjustment is made for the difference in
balance date of Prestons Road Limited, because it has no revenue or profits to report.
Investment in associates
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and
operating policies. Interests in associates are accounted for using the equity method. They are initially recognised at cost.
Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other
comprehensive income (OCI) of equity-accounted investees, until the date on which significant influence ceases. When the Group’s
share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term
investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an
obligation or has made payments on behalf of the associate.
13. Cash and cash equivalents
Group
Dollars In Thousands 2017 2016
Cash 15,707 5,467
Call deposits 18,488 10,053
34,195 15,520
Cash and cash equivalents comprise cash balances and call deposits with an maturity of three months or less. Bank overdrafts
that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash
and cash equivalents for the purpose of the statement of cash flows.
14. Trade and other receivables
Group
Dollars In Thousands 2017 2016
Trade receivables 10,370 10,024
Less provision for doubtful debts (89) (42)
Other trade receivables and prepayments 7,448 8,711
FIN 20
14. Trade and other receivables
Group
Dollars In Thousands 2017 2016
Trade receivables 10,370 10,024
Less provision for doubtful debts (89) (42)
Other trade receivables and prepayments 7,448 8,711
17,729 18,693
Trade and other receivables are stated at their cost less impairment losses. The carrying amounts of the trade receivables, other
trade receivables, and prepayments are reviewed at each balance date to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable amount is estimated and provided for. An impairment loss in
respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related
objectively to an event occurring after the impairment loss was recognised.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
15. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more
information about the Group’s exposure to interest rate and foreign currency risk, see Note 19.
Group
Dollars in
Thousands
Currency
Interest
Rate
Facility
Total
31 December 2017 31 December 2016
Face
Value
Carrying
Amount
Face
Value
Carrying
Amount
Revolving credit NZD 2.44% 53,000 35,000 35,000 35,000 35,000
Revolving credit NZD 2.44% 46,000 31,000 31,000 31,000 31,000
Overdraft NZD 2.44% 6,000 - - 4 4
TOTAL 105,000 66,000 66,000 66,004 66,004
Current - - 4 4
Non-current 66,000 66,000 66,000 66,000
Terms and debt repayment schedule
The bank loans are secured over hotel properties with a carrying amount of $467.67 million (2016: $389.81 million) – refer to Note
10. The bank loans have no fixed term of repayment before maturity. The Group facilities were renewed on 30 December 2016 with
a new maturity of 31 July 2019.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing loans and borrowings are stated at amortised cost with any difference between cost and redemption
value being recognised in the income statement over the period of the borrowings on an effective interest basis.
16. Provisions
As a result of the settlement of the Group’s material damage claim with the insurers in May 2016, the earthquake provisions of
$2.24 million and FF&E provision of $0.76 million relating to the Millennium Hotel Christchurch were released to other operating
expenses in the income statement.
A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
17. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Group
Assets Liabilities Net
Dollars In Thousands 2017 2016 2017 2016 2017 2016
Property, plant and equipment - - 72,132 61,175 72,132 61,175
Development properties (1,103) (1,139) - - (1,103) (1,139)
Provisions (75) (81) - - (75) (81)
Employee benefits (1,135) (978) - - (1,135) (978)
Trade and other payables (411) (576) - - (411) (576)
Net investment in foreign operations - - 837 782 837 782
Net tax (assets) / liabilities (2,724) (2,774) 72,969 61,957 70,245 59,183
Movement in deferred tax balances during the year
FIN 19 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 19
17,729 18,693
Trade and other receivables are stated at their cost less impairment losses. The carrying amounts of the trade receivables, other
trade receivables, and prepayments are reviewed at each balance date to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable amount is estimated and provided for. An impairment loss in
respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related
objectively to an event occurring after the impairment loss was recognised.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
15. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more
information about the Group’s exposure to interest rate and foreign currency risk, see Note 19.
Group
Dollars in
Thousands
Currency
Interest
Rate
Facility
Total
31 December 2017 31 December 2016
Face
Value
Carrying
Amount
Face
Value
Carrying
Amount
Revolving credit NZD 2.44% 53,000 35,000 35,000 35,000 35,000
Revolving credit NZD 2.44% 46,000 31,000 31,000 31,000 31,000
Overdraft NZD 2.44% 6,000 - - 4 4
TOTAL 105,000 66,000 66,000 66,004 66,004
Current - - 4 4
Non-current 66,000 66,000 66,000 66,000
Terms and debt repayment schedule
The bank loans are secured over hotel properties with a carrying amount of $467.67 million (2016: $389.81 million) – refer to Note
10. The bank loans have no fixed term of repayment before maturity. The Group facilities were renewed on 30 December 2016 with
a new maturity of 31 July 2019.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing loans and borrowings are stated at amortised cost with any difference between cost and redemption
value being recognised in the income statement over the period of the borrowings on an effective interest basis.
16. Provisions
As a result of the settlement of the Group’s material damage claim with the insurers in May 2016, the earthquake provisions of
$2.24 million and FF&E provision of $0.76 million relating to the Millennium Hotel Christchurch were released to other operating
expenses in the income statement.
A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
17. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Group
Assets Liabilities Net
Dollars In Thousands 2017 2016 2017 2016 2017 2016
Property, plant and equipment - - 72,132 61,175 72,132 61,175
Development properties (1,103) (1,139) - - (1,103) (1,139)
Provisions (75) (81) - - (75) (81)
Employee benefits (1,135) (978) - - (1,135) (978)
Trade and other payables (411) (576) - - (411) (576)
Net investment in foreign operations - - 837 782 837 782
Net tax (assets) / liabilities (2,724) (2,774) 72,969 61,957 70,245 59,183
Movement in deferred tax balances during the year
Group
Dollars In Thousands
Balance
1 Jan 16
Recognised in
income
Recognised in
equity
Balance
31 Dec 16
Property, plant and equipment 46,594 (21) 14,602 61,175
Development properties (1,149) (10) 20 (1,139)
Provisions (2,109) 2,040 (12) (81)
Employee benefits (768) (210) - (978)
Trade and other payables (545) (32) 1 (576)
FIN 19
17,729 18,693
Trade and other receivables are stated at their cost less impairment losses. The carrying amounts of the trade receivables, other
trade receivables, and prepayments are reviewed at each balance date to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable amount is estimated and provided for. An impairment loss in
respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related
objectively to an event occurring after the impairment loss was recognised.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
15. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more
information about the Group’s exposure to interest rate and foreign currency risk, see Note 19.
Group
Dollars in
Thousands
Currency
Interest
Rate
Facility
Total
31 December 2017 31 December 2016
Face
Value
Carrying
Amount
Face
Value
Carrying
Amount
Revolving credit NZD 2.44% 53,000 35,000 35,000 35,000 35,000
Revolving credit NZD 2.44% 46,000 31,000 31,000 31,000 31,000
Overdraft NZD 2.44% 6,000 - - 4 4
TOTAL 105,000 66,000 66,000 66,004 66,004
Current - - 4 4
Non-current 66,000 66,000 66,000 66,000
Terms and debt repayment schedule
The bank loans are secured over hotel properties with a carrying amount of $467.67 million (2016: $389.81 million) – refer to Note
10. The bank loans have no fixed term of repayment before maturity. The Group facilities were renewed on 30 December 2016 with
a new maturity of 31 July 2019.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing loans and borrowings are stated at amortised cost with any difference between cost and redemption
value being recognised in the income statement over the period of the borrowings on an effective interest basis.
16. Provisions
As a result of the settlement of the Group’s material damage claim with the insurers in May 2016, the earthquake provisions of
$2.24 million and FF&E provision of $0.76 million relating to the Millennium Hotel Christchurch were released to other operating
expenses in the income statement.
A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
17. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Group
Assets Liabilities Net
Dollars In Thousands 2017 2016 2017 2016 2017 2016
Property, plant and equipment - - 72,132 61,175 72,132 61,175
Development properties (1,103) (1,139) - - (1,103) (1,139)
Provisions (75) (81) - - (75) (81)
Employee benefits (1,135) (978) - - (1,135) (978)
Trade and other payables (411) (576) - - (411) (576)
Net investment in foreign operations - - 837 782 837 782
Net tax (assets) / liabilities (2,724) (2,774) 72,969 61,957 70,245 59,183
Movement in deferred tax balances during the year
Group
Dollars In Thousands
Balance
1 Jan 16
Recognised in
income
Recognised in
equity
Balance
31 Dec 16
Property, plant and equipment 46,594 (21) 14,602 61,175
Development properties (1,149) (10) 20 (1,139)
Provisions (2,109) 2,040 (12) (81)
Employee benefits (768) (210) - (978)
Trade and other payables (545) (32) 1 (576)
Trade and other receivables are stated at their cost less impairment losses. The carrying amounts of the trade receivables, other trade
receivables, and prepayments are reviewed at each balance date to determine whether there is any indication of impairment. If any such
indication exists, the asset’s recoverable amount is estimated and provided for. An impairment loss in respect of a receivable carried at
amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the
impairment loss was recognised.
FIN 20
Movement in deferred tax balances during the year
Group
Dollars In Thousands
Balance
1 Jan 16
Recognised in
income
Recognised in
equity
Balance
31 Dec 16
Property, plant and equipment 46,594 (21) 14,602 61,175
Development properties (1,149) (10) 20 (1,139)
Provisions (2,109) 2,040 (12) (81)
Employee benefits (768) (210) - (978)
Trade and other payables (545) (32) 1 (576)
Net investment in foreign operations 858 - (76) 782
42,881 1,767 14,535 59,183
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
17. Deferred tax assets and liabilities - continued
Group
Dollars In Thousands
Balance
1 Jan 17
Recognised in
income
Recognised in
equity
Balance
31 Dec 17
Property, plant and equipment 61,175 (385) 11,342 72,132
Development properties (1,139) 103 (67) (1,103)
Provisions (81) 6 - (75)
Employee benefits (978) (157) - (1,135)
Trade and other payables (576) 164 1 (411)
Net investment in foreign operations 782 - 55 837
59,183 (269) 11,331 70,245
18. Trade and other payables
Group
Dollars In Thousands 2017 2016
Trade payables 1,787 1,952
Employee entitlements 3,905 3,344
Non-trade payables and accrued expenses 16,750 19,661
22,442 24,957
Trade and other payables are stated at cost.
19. Financial instruments
The Group only holds non-derivative financial instruments which comprise cash and cash equivalents, trade and other receivables,
trade receivables due from related parties, related party advances, secured bank loans, trade and other payables and trade
payables due to related parties.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through the income
statement, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are
measured as described in accounting policies below.
Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group
transfer the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Financial
liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.
Exposure to credit, liquidity and market risks arises in the normal course of the Group’s business.
Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual obligations. The Group evaluates its liquidity requirements on an
ongoing basis. In general, the Group generates sufficient cash flows from its operating activities to meet its obligations arising from
its financial liabilities. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are
performed on all customers requiring credit over a certain amount. The Group does not require collateral in respect of financial
assets. There are no significant aged debtors which have not been fully provided for.
FIN 20
Movement in deferred tax balances during the year
Group
Dollars In Thousands
Balance
1 Jan 16
Recognised in
income
Recognised in
equity
Balance
31 Dec 16
Property, plant and equipment 46,594 (21) 14,602 61,175
Development properties (1,149) (10) 20 (1,139)
Provisions (2,109) 2,040 (12) (81)
Employee benefits (768) (210) - (978)
Trade and other payables (545) (32) 1 (576)
Net investment in foreign operations 858 - (76) 782
42,881 1,767 14,535 59,183
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
17. Deferred tax assets and liabilities - continued
Group
Dollars In Thousands
Balance
1 Jan 17
Recognised in
income
Recognised in
equity
Balance
31 Dec 17
Property, plant and equipment 61,175 (385) 11,342 72,132
Development properties (1,139) 103 (67) (1,103)
Provisions (81) 6 - (75)
Employee benefits (978) (157) - (1,135)
Trade and other payables (576) 164 1 (411)
Net investment in foreign operations 782 - 55 837
59,183 (269) 11,331 70,245
18. Trade and other payables
Group
Dollars In Thousands 2017 2016
Trade payables 1,787 1,952
Employee entitlements 3,905 3,344
Non-trade payables and accrued expenses 16,750 19,661
22,442 24,957
Trade and other payables are stated at cost.
19. Financial instruments
The Group only holds non-derivative financial instruments which comprise cash and cash equivalents, trade and other receivables,
trade receivables due from related parties, related party advances, secured bank loans, trade and other payables and trade
payables due to related parties.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through the income
statement, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are
measured as described in accounting policies below.
Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group
transfer the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Financial
liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.
Exposure to credit, liquidity and market risks arises in the normal course of the Group’s business.
Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual obligations. The Group evaluates its liquidity requirements on an
ongoing basis. In general, the Group generates sufficient cash flows from its operating activities to meet its obligations arising from
its financial liabilities. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are
performed on all customers requiring credit over a certain amount. The Group does not require collateral in respect of financial
assets. There are no significant aged debtors which have not been fully provided for.
14. Trade and other receivables – continued
FIN 19
17,729 18,693
Trade and other receivables are stated at their cost less impairment losses. The carrying amounts of the trade receivables, other
trade receivables, and prepayments are reviewed at each balance date to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable amount is estimated and provided for. An impairment loss in
respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related
objectively to an event occurring after the impairment loss was recognised.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
15. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more
information about the Group’s exposure to interest rate and foreign currency risk, see Note 19.
Group
Dollars in
Thousands Currency
Interest
Rate
Facility
Total
31 December 2017 31 December 2016
Face
Value
Carrying
Amount
Face
Value
Carrying
Amount
Revolving credit NZD 2.44% 53,000 35,000 35,000 35,000 35,000
Revolving credit NZD 2.44% 46,000 31,000 31,000 31,000 31,000
Overdraft NZD 2.44% 6,000 - - 4 4
TOTAL 105,000 66,000 66,000 66,004 66,004
Current - - 4 4
Non-current 66,000 66,000 66,000 66,000
Terms and debt repayment schedule
The bank loans are secured over hotel properties with a carrying amount of $467.67 million (2016: $389.81 million) – refer to Note
10. The bank loans have no fixed term of repayment before maturity. The Group facilities were renewed on 30 December 2016 with
a new maturity of 31 July 2019.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing loans and borrowings are stated at amortised cost with any difference between cost and redemption
value being recognised in the income statement over the period of the borrowings on an effective interest basis.
16. Provisions
As a result of the settlement of the Group’s material damage claim with the insurers in May 2016, the earthquake provisions of
$2.24 million and FF&E provision of $0.76 million relating to the Millennium Hotel Christchurch were released to other operating
expenses in the income statement.
A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
17. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Group
Assets Liabilities Net
Dollars In Thousands 2017 2016 2017 2016 2017 2016
Property, plant and equipment - - 72,132 61,175 72,132 61,175
Development properties (1,103) (1,139) - - (1,103) (1,139)
Provisions (75) (81) - - (75) (81)
Employee benefits (1,135) (978) - - (1,135) (978)
Trade and other payables (411) (576) - - (411) (576)
Net investment in foreign operations - - 837 782 837 782
Net tax (assets) / liabilities (2,724) (2,774) 72,969 61,957 70,245 59,183
Movement in deferred tax balances during the year
Group
Dollars In Thousands
Balance
1 Jan 16
Recognised in
income
Recognised in
equity
Balance
31 Dec 16
Property, plant and equipment 46,594 (21) 14,602 61,175
Development properties (1,149) (10) 20 (1,139)
Provisions (2,109) 2,040 (12) (81)
Employee benefits (768) (210) - (978)
Trade and other payables (545) (32) 1 (576)
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 20
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 20
Net investment in foreign operations 858 - (76) 782
42,881 1,767 14,535 59,183
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
17. Deferred tax assets and liabilities - continued
Group
Dollars In Thousands
Balance
1 Jan 17
Recognised in
income
Recognised in
equity
Balance
31 Dec 17
Property, plant and equipment 61,175 (385) 11,342 72,132
Development properties (1,139) 103 (67) (1,103)
Provisions (81) 6 - (75)
Employee benefits (978) (157) - (1,135)
Trade and other payables (576) 164 1 (411)
Net investment in foreign operations 782 - 55 837
59,183 (269) 11,331 70,245
18. Trade and other payables
Group
Dollars In Thousands 2017 2016
Trade payables 1,787 1,952
Employee entitlements 3,905 3,344
Non-trade payables and accrued expenses 16,750 19,661
22,442 24,957
Trade and other payables are stated at cost.
19. Financial instruments
The Group only holds non-derivative financial instruments which comprise cash and cash equivalents, trade and other receivables,
trade receivables due from related parties, related party advances, secured bank loans, trade and other payables and trade
payables due to related parties.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through the income
statement, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are
measured as described in accounting policies below.
Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group
transfer the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Financial
liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.
Exposure to credit, liquidity and market risks arises in the normal course of the Group’s business.
Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual obligations. The Group evaluates its liquidity requirements on an
ongoing basis. In general, the Group generates sufficient cash flows from its operating activities to meet its obligations arising from
its financial liabilities. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are
performed on all customers requiring credit over a certain amount. The Group does not require collateral in respect of financial
assets. There are no significant aged debtors which have not been fully provided for.
Investments are allowed only in short-term financial instruments and only with counterparties approved by the Board, such that the
exposure to a single counterparty is minimised.
At balance date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the statement of financial position.
The maximum exposure to credit risk in Australia is $23,000 (2016: $41,000). All other credit risk exposure relates to New Zealand.
Market risk
FIN 20
Net investment in foreign operations 858 - (76) 782
42,881 1,767 14,535 59,183
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
17. Deferred tax assets and liabilities - continued
Group
Dollars In Thousands
Balance
1 Jan 17
Recognised in
income
Recognised in
equity
Balance
31 Dec 17
Property, plant and equipment 61,175 (385) 11,342 72,132
Development properties (1,139) 103 (67) (1,103)
Provisions (81) 6 - (75)
Employee benefits (978) (157) - (1,135)
Trade and other payables (576) 164 1 (411)
Net investment in foreign operations 782 - 55 837
59,183 (269) 11,331 70,245
18. Trade and other payables
Group
Dollars In Thousands 2017 2016
Trade payables 1,787 1,952
Employee entitlements 3,905 3,344
Non-trade payables and accrued expenses 16,750 19,661
22,442 24,957
Trade and other payables are stated at cost.
19. Financial instruments
The Group only holds non-derivative financial instruments which comprise cash and cash equivalents, trade and other receivables,
trade receivables due from related parties, related party advances, secured bank loans, trade and other payables and trade
payables due to related parties.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through the income
statement, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are
measured as described in accounting policies below.
Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group
transfer the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Financial
liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.
Exposure to credit, liquidity and market risks arises in the normal course of the Group’s business.
Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual obligations. The Group evaluates its liquidity requirements on an
ongoing basis. In general, the Group generates sufficient cash flows from its operating activities to meet its obligations arising from
its financial liabilities. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are
performed on all customers requiring credit over a certain amount. The Group does not require collateral in respect of financial
assets. There are no significant aged debtors which have not been fully provided for.
Investments are allowed only in short-term financial instruments and only with counterparties approved by the Board, such that the
exposure to a single counterparty is minimised.
At balance date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the statement of financial position.
The maximum exposure to credit risk in Australia is $23,000 (2016: $41,000). All other credit risk exposure relates to New Zealand.
Market risk
Market risk
(i) Interest rate risk
In managing interest rate risks the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings with an ongoing review
of its exposure to changes in interest rates on its borrowings, the maturity profile of the debt, and the cash flows of the underlying debt. The
Group maintains its borrowings at fixed rates on short term which gives the Group flexibility in the context of the economic climate, business
cycle, loan covenants, cash flows, and cash balances.
An increase of 1.0% in interest rates would have increased profit before tax for the Group in the current period by $0.48 million (2016: $0.12
million increase), assuming all other variables remained constant.
FIN 21 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 21
(i) Interest rate risk
In managing interest rate risks the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings with an
ongoing review of its exposure to changes in interest rates on its borrowings, the maturity profile of the debt, and the cash flows of
the underlying debt. The Group maintains its borrowings at fixed rates on short term which gives the Group flexibility in the context
of the economic climate, business cycle, loan covenants, cash flows, and cash balances.
An increase of 1.0% in interest rates would have increased profit before tax for the Group in the current period by $0.48 million
(2016: $0.12 million increase), assuming all other variables remained constant.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
19. Financial instruments - continued
Effective interest and re-pricing analysis
In respect of income-earning financial assets and interest-bearing financial liabilities the following table indicates their effective
interest rates at the balance date and the periods in which they re-price.
* These assets / (liabilities) bear interest at a fixed rate
(ii) Foreign currency risk
The Group owns 100.00% (2016: 100.00%) of KIN Holdings Limited. Substantially all the operations of this subsidiary is
denominated in foreign currencies. The foreign currencies giving rise to this risk are Australian Dollars. The Group has determined
that the primary risk affects the carrying values of the net investments in its foreign operations with the currency movements being
recognised in the foreign currency translation reserves. The Group has not taken any measurements to manage this risk.
The Group is not exposed to any other foreign currency risks.
Capital management
The Group’s capital includes share capital and retained earnings.
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain
future development of the business. The impact of the level of capital on shareholders’ return is also recognised and the Group
recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the
advantages and security afforded by a sound capital position.
The Group is not subject to any external imposed capital requirements.
The allocation of capital is, to a large extent, driven by optimisation of the return achieved on the capital allocated.
The Group’s policies in respect of capital management and allocation are reviewed regularly by the Board of Directors. There were
no changes in the Group’s capital management policies during the year.
Fair values
The fair values together with the carrying amounts shown in the statement of financial position are as follows:
Group Carrying
amount
Fair value
Carrying
amount
Fair value
Dollars In Thousands Note 2017 2017 2016 2016
LOANS AND RECEIVABLES
Cash and cash equivalents 13 34,195 34,195 15,520 15,520
Short term bank deposits 88,890 88,890 85,598 85,598
Trade and other receivables 14 17,729 17,729 18,693 18,693
OTHER LIABILITIES
Secured bank loans and overdrafts 15 (66,000) (66,000) (66,004) (66,004)
Group 2017 2016
Dollars In Thousands
Effective
interest
rate
Total
6
months
or less
6 to 12
months
Effective
interest
rate
Total
6
months
or less
6 to 12
months
Note
Interest bearing cash &
cash equivalents * 13
0.25% to
2.67% 34,195 34,195 -
0.25% to
3.10% 15,380 15,380 -
Short term bank
deposits *
2.14% to
3.68% 88,890 34,649 54,241
1.90% to
3.60% 85,598 34,858 50,740
Secured bank loans * 15 2.44% (66,000) (66,000) - 2.525% (66,000) (66,000) -
Bank overdrafts * 15 2.44% - - - 2.525% (4) (4) -
FIN 23
Fair values
The fair values together with the carrying amounts shown in the statement of financial position are as follows:
Group Carrying
amount
Fair value
Carrying
amount
Fair value
Dollars In Thousands Note 2017 2017 2016 2016
LOANS AND RECEIVABLES
Cash and cash equivalents 13 34,195 34,195 15,520 15,520
Short term bank deposits 88,890 88,890 85,598 85,598
Trade and other receivables 14 17,729 17,729 18,693 18,693
OTHER LIABILITIES
Secured bank loans and overdrafts 15 (66,000) (66,000) (66,004) (66,004)
Trade and other payables 18 (22,442) (22,442) (24,957) (24,957)
Trade payables due to related parties 23 (1,981) (1,981) (2,137) (2,137)
Loans due to related parties 23 - - (5,800) (5,800)
50,391 50,391 20,913 20,913
Unrecognised (losses) / gains - - - -
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
19. Financial instruments – continued
Estimation of fair values
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected
in the table:
(a) Cash, accounts receivable, accounts payable and related party balances. The carrying amounts for these balances
approximate their fair value because of the short maturities of these items.
(b) Borrowings. The carrying amounts for the borrowings represent their fair values because the interest rates are reset to market
periodically, every 1 to 2 months.
20. Operating leases
Leases as lessee
The minimum amount payable under non-cancellable operating lease rentals are as follows:
Group
Dollars In Thousands 2017 2016
Less than one year 992 956
Between one and five years 2,562 3,029
More than five years 89 447
3,643 4,432
The Group leases a number of hotels and motor vehicles under operating leases. The hotel leases typically run for a period of
years, with an option to renew the lease after that date. Lease payments are increased regularly to reflect market rentals. Typically
these leases include a base rent plus a performance related element which becomes payable if revenue exceeds a specified level.
During the year ended 31 December 2017, $2.25 million was recognised as an expense in the income statement in respect of
operating leases (2016: $2.24 million).
Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight line basis over the term of the
lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.
21. Capital commitments
As at 31 December 2017, the Group had entered into contractual commitments for capital expenditure, development expenditure,
and purchase of an existing business and assets. The majority of the capital committed in 2016 is related to the refurbishment of
Copthorne Hotel Auckland Harbourcity (refer to Note 10).
Group
Dollars In Thousands 2017 2016
Capital expenditure 3,746 13,579
Purchase of business and assets 10,988 -
Development expenditure 68,621 13,589
83,355 27,168
22. Related parties
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 22
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 22
Trade and other payables 18 (22,442) (22,442) (24,957) (24,957)
Trade payables due to related parties 23 (1,981) (1,981) (2,137) (2,137)
Loans due to related parties 23 - - (5,800) (5,800)
50,391 50,391 20,913 20,913
Unrecognised (losses) / gains - - - -
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
19. Financial instruments – continued
Estimation of fair values
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected
in the table:
(a) Cash, accounts receivable, accounts payable and related party balances. The carrying amounts for these balances
approximate their fair value because of the short maturities of these items.
(b) Borrowings. The carrying amounts for the borrowings represent their fair values because the interest rates are reset to market
periodically, every 1 to 2 months.
20. Operating leases
Leases as lessee
The minimum amount payable under non-cancellable operating lease rentals are as follows:
Group
Dollars In Thousands 2017 2016
Less than one year 992 956
Between one and five years 2,562 3,029
More than five years 89 447
3,643 4,432
The Group leases a number of hotels and motor vehicles under operating leases. The hotel leases typically run for a period of
years, with an option to renew the lease after that date. Lease payments are increased regularly to reflect market rentals. Typically
these leases include a base rent plus a performance related element which becomes payable if revenue exceeds a specified level.
During the year ended 31 December 2017, $2.25 million was recognised as an expense in the income statement in respect of
operating leases (2016: $2.24 million).
Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight line basis over the term of the
lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.
21. Capital commitments
As at 31 December 2017, the Group had entered into contractual commitments for capital expenditure, development expenditure,
and purchase of an existing business and assets. The majority of the capital committed in 2016 is related to the refurbishment of
Copthorne Hotel Auckland Harbourcity (refer to Note 10).
Group
Dollars In Thousands 2017 2016
Capital expenditure 3,746 13,579
Purchase of business and assets 10,988 -
Development expenditure 68,621 13,589
83,355 27,168
22. Related parties
Identity of related parties
The Group has a related party relationship with its parent, subsidiaries (see Note 25), associates and with its directors and
executive officers.
Transactions with key management personnel
On 11 September 2017, a director of the Company sold 906,000 company’s shares to CDL Hotels Holdings New Zealand Limited,
As a result of the sale, there was no control (2016: 0.57%) of the voting shares of the Company by directors of the company and
their immediate relatives. There were no loans (2016: $nil) advanced to directors for the year ended 31 December 2017. Key
management personnel include the Board and the Executive Team.
FIN 23 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 23
Total remuneration for key management personnel
Group
Dollars In Thousands 2017 2016
Non-executive directors 321 231
Executive director 532 518
Executive officers 756 751
1,609 1,500
Non-executive directors receive director’s fees only. Executive director and executive officers receive short-term employee benefits
which include a base salary and an incentive plan. They do not receive remuneration or any other benefits as a director of the
Parent Company or its subsidiaries. Directors’ fees are included in “administration expenses” (see Note 3) and remuneration for
executive director and executive officers are included in “personnel expenses” (see Note 4).
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
23. Group entities
Control of the Group
Millennium & Copthorne Hotels New Zealand Limited is a 75.78% (2016: 75.20%) owned (economic interests from both ordinary
and preference shares) subsidiary of CDL Hotels Holdings New Zealand Limited which is a wholly owned subsidiary of Millennium
& Copthorne Hotels plc in the United Kingdom. The ultimate parent company is Hong Leong Investment Holdings Pte Ltd in
Singapore.
At balance date there were related party advances owing from/(owing to) the following related companies:
Group
Dollars In Thousands Nature of balance 2017 2016
Trade payables and receivables due to related
parties
Millennium & Copthorne Hotels plc Recharge of expenses (654) (558)
Millennium & Copthorne International Limited Recharge of expenses - (31)
CDL Hotels Holdings New Zealand Limited Recharge of expenses - (7)
CDLHT (BVI) One Ltd Rent payment (1,327) (1,541)
(1,981) (2,137)
Loans due to related parties
CDL Hotels Holdings New Zealand Limited Inter-company loan - (5,800)
- (5,800)
No debts with related parties were written off or forgiven during the year. No interest was charged on these payables during 2017
and 2016. There are no set repayment terms. During this period costs amounting to $250,000 (2016: $250,000) have been
recorded in the income statement in respect of fees payable to Millennium & Copthorne International Limited for the provision of
management and marketing support.
On 7 September 2016, the Group commenced operations of the Grand Millennium Auckland under a management lease
agreement with CDLHT (BVI) One Ltd, a subsidiary of CDL Hospitality Trusts Singapore. Under the accounting standards, the
Group accounts for the results of the Grand Millennium Auckland on a net basis. The Group records the management, franchise
and incentive incomes derived from the management of the hotel in the profit and loss. At the balance sheet date, there was an
amount owing to CDLHT (BVI) One Ltd of $1.33 million being rent payable with respect to the leasing of the property. During the
year ended 31 December 2017, the Group received $1.62 million (2016: $496,000 ) in management, franchise, and incentive fees.
At the balance sheet date, the company has fully repaid the loan due to CDL Hotels Holdings New Zealand Limited which was
interest bearing. The interest rates were fixed and ranged between 2.00% and 2.37% (2016: 2.22% to 2.47%).
During the year consulting fees of $12,000 (2016: $41,000) were paid to Bobb Management Pty Ltd of which Mr. R Bobb (Director)
is a shareholder and director.
FIN 23
Total remuneration for key management personnel
Group
Dollars In Thousands 2017 2016
Non-executive directors 321 231
Executive director 532 518
Executive officers 756 751
1,609 1,500
Non-executive directors receive director’s fees only. Executive director and executive officers receive short-term employee benefits
which include a base salary and an incentive plan. They do not receive remuneration or any other benefits as a director of the
Parent Company or its subsidiaries. Directors’ fees are included in “administration expenses” (see Note 3) and remuneration for
executive director and executive officers are included in “personnel expenses” (see Note 4).
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
23. Group entities
Control of the Group
Millennium & Copthorne Hotels New Zealand Limited is a 75.78% (2016: 75.20%) owned (economic interests from both ordinary
and preference shares) subsidiary of CDL Hotels Holdings New Zealand Limited which is a wholly owned subsidiary of Millennium
& Copthorne Hotels plc in the United Kingdom. The ultimate parent company is Hong Leong Investment Holdings Pte Ltd in
Singapore.
At balance date there were related party advances owing from/(owing to) the following related companies:
Group
Dollars In Thousands Nature of balance 2017 2016
Trade payables and receivables due to related
parties
Millennium & Copthorne Hotels plc Recharge of expenses (654) (558)
Millennium & Copthorne International Limited Recharge of expenses - (31)
CDL Hotels Holdings New Zealand Limited Recharge of expenses - (7)
CDLHT (BVI) One Ltd Rent payment (1,327) (1,541)
(1,981) (2,137)
Loans due to related parties
CDL Hotels Holdings New Zealand Limited Inter-company loan - (5,800)
- (5,800)
No debts with related parties were written off or forgiven during the year. No interest was charged on these payables during 2017
and 2016. There are no set repayment terms. During this period costs amounting to $250,000 (2016: $250,000) have been
recorded in the income statement in respect of fees payable to Millennium & Copthorne International Limited for the provision of
management and marketing support.
On 7 September 2016, the Group commenced operations of the Grand Millennium Auckland under a management lease
agreement with CDLHT (BVI) One Ltd, a subsidiary of CDL Hospitality Trusts Singapore. Under the accounting standards, the
Group accounts for the results of the Grand Millennium Auckland on a net basis. The Group records the management, franchise
and incentive incomes derived from the management of the hotel in the profit and loss. At the balance sheet date, there was an
amount owing to CDLHT (BVI) One Ltd of $1.33 million being rent payable with respect to the leasing of the property. During the
year ended 31 December 2017, the Group received $1.62 million (2016: $496,000 ) in management, franchise, and incentive fees.
At the balance sheet date, the company has fully repaid the loan due to CDL Hotels Holdings New Zealand Limited which was
interest bearing. The interest rates were fixed and ranged between 2.00% and 2.37% (2016: 2.22% to 2.47%).
During the year consulting fees of $12,000 (2016: $41,000) were paid to Bobb Management Pty Ltd of which Mr. R Bobb (Director)
is a shareholder and director.
22. Related Parties – continued
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 24
FIN 24
Subsidiary companies
The principal subsidiary companies of Millennium & Copthorne Hotels New Zealand Limited included in the consolidation as at 31
December 2017 are:
Principal Activity
Principal
Place of
Business
Group
Holding %
2017
Group
Holding %
2016
Context Securities Limited Investment Holding NZ 100.00 100.00
Copthorne Hotel & Resort Bay of Islands Joint
Venture
Hotel Operations NZ 49.00 49.00
Quantum Limited Holding Company NZ 100.00 100.00
100% owned subsidiaries of Quantum Limited are:
Hospitality Group Limited Holding Company NZ
100% owned subsidiaries of Hospitality Group
Limited are:
Hospitality Leases Limited Lessee Company/Hotel
Operations
NZ
QINZ Anzac Avenue Limited Hotel Owner NZ
Hospitality Services Limited Hotel Operations/Franchise
Holder
NZ
CDL Investments New Zealand Limited Holding Company NZ 66.56 66.70
100% owned subsidiaries of CDL Investments New
Zealand Limited are:
CDL Land New Zealand Limited Property Investment and
Development
NZ
KIN Holdings Limited Holding Company NZ 100.00 100.00
100% owned subsidiaries of KIN Holdings Limited
are:
Kingsgate Investments Pty Limited Residential Apartment
Developer
Australia
All of the above subsidiaries have a 31 December balance date.
Although the Group owns less than half of the voting power of the Copthorne Hotel & Resort Bay of Islands Joint Venture, it is able
to control the financial and operating policies of the Copthorne Hotel & Resort Bay of Islands Joint Venture so as to obtain benefits
from its activities by virtue of an agreement with the other parties of the Joint Venture. Therefore, the results of the Joint Venture
are consolidated from the date control commenced until the date control ceases.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
23. Group entities - continued
Subsidiaries
Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of subsidiaries are included in the financial statements from the date that control commences until the date that
control ceases.
Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are
eliminated in preparing the financial statements. Unrealised gains arising from transactions with jointly controlled entities are
eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
24. Accounting estimates and judgements
Management discussed with the Audit Committee the development, selection and disclosure of the Group’s critical accounting
policies and estimates and the application of these policies and estimates.
Critical accounting judgements in applying the Group’s accounting policies
Certain critical accounting judgements in applying the Group’s accounting policies are described below.
Property, plant and equipment
The Group adopted a revaluation model of valuing land and buildings rather than the cost model. This results in any future
decreases in asset values being charged in the income statement unless there is a surplus for that asset in the revaluation account
in which case the decrease can be charged to equity.
Assessing whether individual properties are impaired may involve estimating the future cash flows expected to be generated by
those properties. This will in turn involve assumptions, including expected rate of growth in revenue and costs, occupancy and
average room rates and an appropriate discount rate, to apply when discounting future cash flows. With respect to the carrying
value of the Harbour City work in progress assets which are held at cost, the Group have performed an impairment assessment in
the current year to assess the recoverable amount. The methods used are in line with those described above.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
FIN 24
Subsidiary companies
The principal subsidiary companies of Millennium & Copthorne Hotels New Zealand Limited included in the consolidation as at 31
December 2017 are:
Principal Activity
Principal
Place of
Business
Group
Holding %
2017
Group
Holding %
2016
Context Securities Limited Investment Holding NZ 100.00 100.00
Copthorne Hotel & Resort Bay of Islands Joint
Venture
Hotel Operations NZ 49.00 49.00
Quantum Limited Holding Company NZ 100.00 100.00
100% owned subsidiaries of Quantum Limited are:
Hospitality Group Limited Holding Company NZ
100% owned subsidiaries of Hospitality Group
Limited are:
Hospitality Leases Limited Lessee Company/Hotel
Operations
NZ
QINZ Anzac Avenue Limited Hotel Owner NZ
Hospitality Services Limited Hotel Operations/Franchise
Holder
NZ
CDL Investments New Zealand Limited Holding Company NZ 66.56 66.70
100% owned subsidiaries of CDL Investments New
Zealand Limited are:
CDL Land New Zealand Limited Property Investment and
Development
NZ
KIN Holdings Limited Holding Company NZ 100.00 100.00
100% owned subsidiaries of KIN Holdings Limited
are:
Kingsgate Investments Pty Limited Residential Apartment
Developer
Australia
All of the above subsidiaries have a 31 December balance date.
Although the Group owns less than half of the voting power of the Copthorne Hotel & Resort Bay of Islands Joint Venture, it is able
to control the financial and operating policies of the Copthorne Hotel & Resort Bay of Islands Joint Venture so as to obtain benefits
from its activities by virtue of an agreement with the other parties of the Joint Venture. Therefore, the results of the Joint Venture
are consolidated from the date control commenced until the date control ceases.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
23. Group entities - continued
Subsidiaries
Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of subsidiaries are included in the financial statements from the date that control commences until the date that
control ceases.
Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are
eliminated in preparing the financial statements. Unrealised gains arising from transactions with jointly controlled entities are
eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
24. Accounting estimates and judgements
Management discussed with the Audit Committee the development, selection and disclosure of the Group’s critical accounting
policies and estimates and the application of these policies and estimates.
Critical accounting judgements in applying the Group’s accounting policies
Certain critical accounting judgements in applying the Group’s accounting policies are described below.
Property, plant and equipment
The Group adopted a revaluation model of valuing land and buildings rather than the cost model. This results in any future
decreases in asset values being charged in the income statement unless there is a surplus for that asset in the revaluation account
in which case the decrease can be charged to equity.
Assessing whether individual properties are impaired may involve estimating the future cash flows expected to be generated by
those properties. This will in turn involve assumptions, including expected rate of growth in revenue and costs, occupancy and
average room rates and an appropriate discount rate, to apply when discounting future cash flows. With respect to the carrying
value of the Harbour City work in progress assets which are held at cost, the Group have performed an impairment assessment in
the current year to assess the recoverable amount. The methods used are in line with those described above.
23. Group entities – continued
FIN 25 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
FIN 24
Subsidiary companies
The principal subsidiary companies of Millennium & Copthorne Hotels New Zealand Limited included in the consolidation as at 31
December 2017 are:
Principal Activity
Principal
Place of
Business
Group
Holding %
2017
Group
Holding %
2016
Context Securities Limited Investment Holding NZ 100.00 100.00
Copthorne Hotel & Resort Bay of Islands Joint
Venture
Hotel Operations NZ 49.00 49.00
Quantum Limited Holding Company NZ 100.00 100.00
100% owned subsidiaries of Quantum Limited are:
Hospitality Group Limited Holding Company NZ
100% owned subsidiaries of Hospitality Group
Limited are:
Hospitality Leases Limited Lessee Company/Hotel
Operations
NZ
QINZ Anzac Avenue Limited Hotel Owner NZ
Hospitality Services Limited Hotel Operations/Franchise
Holder
NZ
CDL Investments New Zealand Limited Holding Company NZ 66.56 66.70
100% owned subsidiaries of CDL Investments New
Zealand Limited are:
CDL Land New Zealand Limited Property Investment and
Development
NZ
KIN Holdings Limited Holding Company NZ 100.00 100.00
100% owned subsidiaries of KIN Holdings Limited
are:
Kingsgate Investments Pty Limited Residential Apartment
Developer
Australia
All of the above subsidiaries have a 31 December balance date.
Although the Group owns less than half of the voting power of the Copthorne Hotel & Resort Bay of Islands Joint Venture, it is able
to control the financial and operating policies of the Copthorne Hotel & Resort Bay of Islands Joint Venture so as to obtain benefits
from its activities by virtue of an agreement with the other parties of the Joint Venture. Therefore, the results of the Joint Venture
are consolidated from the date control commenced until the date control ceases.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
23. Group entities - continued
Subsidiaries
Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of subsidiaries are included in the financial statements from the date that control commences until the date that
control ceases.
Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are
eliminated in preparing the financial statements. Unrealised gains arising from transactions with jointly controlled entities are
eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
24. Accounting estimates and judgements
Management discussed with the Audit Committee the development, selection and disclosure of the Group’s critical accounting
policies and estimates and the application of these policies and estimates.
Critical accounting judgements in applying the Group’s accounting policies
Certain critical accounting judgements in applying the Group’s accounting policies are described below.
Property, plant and equipment
The Group adopted a revaluation model of valuing land and buildings rather than the cost model. This results in any future
decreases in asset values being charged in the income statement unless there is a surplus for that asset in the revaluation account
in which case the decrease can be charged to equity.
Assessing whether individual properties are impaired may involve estimating the future cash flows expected to be generated by
those properties. This will in turn involve assumptions, including expected rate of growth in revenue and costs, occupancy and
average room rates and an appropriate discount rate, to apply when discounting future cash flows. With respect to the carrying
value of the Harbour City work in progress assets which are held at cost, the Group have performed an impairment assessment in
the current year to assess the recoverable amount. The methods used are in line with those described above.
FIN 25
The Group has one remaining property affected by the Christchurch earthquakes. In assessing the land for impairment the
following assumption was made: the land is not affected by liquefaction or other geological issues which prevent the rebuild of a
replacement building upon it.
Development property
The Group is also exposed to market fluctuations in the value of development properties. The carrying value of development
properties is $179.86 million (2016: $169.98 million) while the fair value determined by independent valuers is $370.29 million
(2016: $375.12 million).
In determining fair values, the valuers will also make assumptions relating to section prices, sell down periods, consumer
confidence, unemployment rates, interest rates and external economic factors.
25. New standards and interpretations not yet adopted
The following new standards and amendments to standards are not yet effective for the year ended 31 December 2017, and have
not been applied in preparing these financial statements.
• NZ IFRS 9 – Financial Instruments (effective after 1 January 2018). Based on assessments, this standard has no
impact on the Group’s financial statements.
• NZ IFRS 15 – Revenue from Contracts with Customers (effective 1 January 2018). Based on assessments of the
impact of this standard on each class of revenue recognised within the group, this standard is not expected to
have a material impact on the Group’s financial statements.
• NZ IFRS 16 – Leases (effective 1 January 2019). The Group leases a number of hotels under operating leases.
This standard requires a right of use asset and a corresponding lease liability to be recognised on the balance
sheet in respect of the leased assets. The current lease expenses will be replaced with an interest expense and
an amortisation expense in the income statement. Based on preliminary assessments, this standard is expected to
have a material impact on the financial statements.
The Group intends to adopt these standards on the effective dates.
26. Subsequent event
The Group executed a sale and purchase agreement on 1 December 2017 to purchase the business, land, buildings, chattels
and other assets which comprise The Waterfront Hotel in New Plymouth. The agreement became unconditional on 11 January
2018. The deposit of 10% was paid on 11 January 2018 and the settlement of the balance of the purchase price and full
possession occurred on 1 February 2018. The full purchase consideration is disclosed in Note 21.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
27. Contingent liability
The Group has an outstanding claim from the main contractor of the Copthorne Hotel Harbourcity City project. The Group
received the notice for an arbitration but no date has been set. The total of the claim is unknown and the outcome of the
arbitration is indeterminate at present, hence no liability has been recognised in the financial statements at balance date.
FIN 25
The Group has one remaining property affected by the Christchurch earthquakes. In assessing the land for impairment the
following assumption was made: the land is not affected by liquefaction or other geological issues which prevent the rebuild of a
replacement building upon it.
Development property
The Group is also exposed to market fluctuations in the value of development properties. The carrying value of development
properties is $179.86 million (2016: $169.98 million) while the fair value determined by independent valuers is $370.29 million
(2016: $375.12 million).
In determining fair values, the valuers will also make assumptions relating to section prices, sell down periods, consumer
confidence, unemployment rates, interest rates and external economic factors.
25. New standards and interpretations not yet adopted
The following new standards and amendments to standards are not yet effective for the year ended 31 December 2017, and have
not been applied in preparing these financial statements.
• NZ IFRS 9 – Financial Instruments (effective after 1 January 2018). Based on assessments, this standard has no
impact on the Group’s financial statements.
• NZ IFRS 15 – Revenue from Contracts with Customers (effective 1 January 2018). Based on assessments of the
impact of this standard on each class of revenue recognised within the group, this standard is not expected to
have a material impact on the Group’s financial statements.
• NZ IFRS 16 – Leases (effective 1 January 2019). The Group leases a number of hotels under operating leases.
This standard requires a right of use asset and a corresponding lease liability to be recognised on the balance
sheet in respect of the leased assets. The current lease expenses will be replaced with an interest expense and
an amortisation expense in the income statement. Based on preliminary assessments, this standard is expected to
have a material impact on the financial statements.
The Group intends to adopt these standards on the effective dates.
26. Subsequent event
The Group executed a sale and purchase agreement on 1 December 2017 to purchase the business, land, buildings, chattels
and other assets which comprise The Waterfront Hotel in New Plymouth. The agreement became unconditional on 11 January
2018. The deposit of 10% was paid on 11 January 2018 and the settlement of the balance of the purchase price and full
possession occurred on 1 February 2018. The full purchase consideration is disclosed in Note 21.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
27. Contingent liability
The Group has an outstanding claim from the main contractor of the Copthorne Hotel Harbourcity City project. The Group
received the notice for an arbitration but no date has been set. The total of the claim is unknown and the outcome of the
arbitration is indeterminate at present, hence no liability has been recognised in the financial statements at balance date.
Millennium & Copthorne Hotels New Zealand Limited
Notes to the Consolidated Financial Statements for the year ended 31 December 2017
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 26
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. FIN26
Independent Auditor’s Report
To the shareholders of Millennium & Copthorne Hotels New Zealand Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Millennium & Copthorne
Hotels New Zealand Limited (the company) and its
subsidiaries (the group) on pages FIN1 to FIN25:
i.present fairly in all material respects the group’s
financial position as at 31 December 2017 and its
financial performance and cash flows for the year
ended on that date; and
ii.comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
—the consolidated statement of financial position
as at 31 December 2017;
—the consolidated statements of comprehensive
income, changes in equity and cash flows for the
year then ended; and
—notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics
for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code),
and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the group in relation to taxation compliance and tax advisory services.
Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal terms
within the ordinary course of trading activities of the business of the group. These matters have not impaired our
independence as auditor of the group. The firm has no other relationship with, or interest in, the group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and
on the consolidated financial statements as a whole. The materiality for the consolidated financial statements as a
whole was set at $3.7 million determined with reference to a benchmark of group profit before tax. We chose the
benchmark because, in our view, this is a key measure of the group’s performance.
FIN 27 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
FIN27
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the consolidated financial statements in the current period. We summarise below those matters and our key audit
procedures to address those matters in order that the shareholders as a body may better understand the process
by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely for the
purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not express
discrete opinions on separate elements of the consolidated financial statements.
The key audit matter How the matter was addressed in our audit
1.Valuation of M Social Redevelopment
Refer to note 10 of the consolidated
financial statements.
The redeveloped hotel was
substantially operating by December
2017. The hotel land and buildings are
therefore part of the portfolio of
assets recognised at fair value. To
establish fair value, management
obtained an independent valuation
and prepared their own assessment
of fair value.
Management revalued the land based
on an external valuation however did
not revalue the building on the basis
that it would be premature until there
is an established pattern of trading
results and in their judgement the
carrying value of the redeveloped
building is a fair reflection of fair value
at 31 December 2017.
There is significant judgement to
determine the fair value of the
redevelopment. The valuation relies
on assumptions and trading
performance which is largely
unproven. There is also potential for
additional costs to complete as
negotiations with the third party
contractor occur with respect to final
costs and the project has not yet
received final sign off.
Our procedures focused on obtaining evidence to support the carrying
value of the M Social Hotel land and building at 31 December 2017.
—We met with the project manager and legal counsel to understand
progress of project completion and assessed the likelihood for
additional costs to complete.
—We attended a site visit of the hotel in September 2017.
—We challenged the external valuation by comparing projected post
redevelopment revenue and profits to historical trends and market
data achieved by similar quality rated hotels in the Auckland region
as well as to management’s budgets and achieved results to date
since opening.
—We reviewed the methodology for the land valuation and
benchmarked against publically available comparable data.
—We compared key valuation assumptions including discount rates
and terminal multipliers to historical rates and those used by the
independent valuer for other hotels in the portfolio.
—We met with the valuer to understand and challenge key
assumptions used in the report.
—We used our own valuation specialist to assess the appropriateness
of the external valuation methodology
and key assumptions including
discount rates and terminal multipliers.
—We reviewed management’s own assessment of the valuation of
the hotel assets and challenged the assumptions used.
We consider the approach taken by the group on the valuation of the M
Social Hotel land and building is reasonable.
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 28
FIN28
2.Valuation of Hotel Land and Building assets
Refer to note 10 of the consolidated
financial statements.
Land and buildings of $483m
(representing 58% of assets) are
recognised at fair value in the
financial statements. To establish fair
value, each hotel is required to
undergo an independent valuation on
a tri-annual basis. In the intervening
years, management complete an
impairment assessment.
The valuations and impairment
assessments are based on future
cashflow forecast models and
available market data which have a
number of assumptions built into the
models. The key assumptions
(including forecast growth, occupancy
rates and revenue per available room)
are inherently judgemental and
consequently a change in the
assumptions could have a material
impact on the valuations.
Our procedures on the independently valued hotels involved the
following:
—Using our own valuation specialist to assist us in assessing the
appropriateness of the valuation model used, including compliance
with relevant accounting standards and alignment to market practice.
—We assessed the scope of work performed, competency,
professional qualifications and experience of the external expert
engaged by the group.
—We challenged the key assumptions used within each valuation in
determining the fair value of these hotel assets. This included a
comparison of occupancy rates, revenue per available room, market
growth and expected inflation with externally derived data including
external hotel industry reports.
—We also performed our own assessment of other key inputs such as
estimated future costs, discount rates and terminal multipliers, and
considered the external expert’s estimates with historical hotel
performance.
—We performed sensitivities and break-even analysis on the key
assumptions.
Our testing indicated that the estimates and assumptions used were
reasonable in the context of the group’s property portfolio.
The hotels not within the tri-annual valuation cycle were assessed for
impairment by management.
—We considered management’s impairment assessment of each
hotel’s recoverable amount. This included comparing actual hotel
performance to previous forecasts.
—Based on this analysis, two hotels warranted a detailed impairment
review. For these hotels we challenged the key assumptions used in
determining the recoverable amount of the hotel assets.
—We also considered future forecasts, comparing these to internal
plans and external market information.
Our testing indicated that the estimates and assumptions used were
reasonable in the context of the group’s property portfolio.
Other information
The Directors, on behalf of the group, are responsible for the other information included in the entity’s Annual
Report. Other information includes the Chairman’s Review, Managing Director’s Review, disclosures relating to
corporate governance and the financial summary included in the Annual Report. Our opinion on the consolidated
financial statements does not cover any other information and we do not express any form of assurance
conclusion thereon.
FIN 29 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
FIN29
In connection with our audit of the consolidated financial statements our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears materially misstated. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have received the Chairman’s Review and have nothing to report in regards to it. The Annual
Report is expected to be made available to us after the date of this Independent Auditor's Report and we will report
the matters identified, if any, to those charged with governance.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been
undertaken so that we might state to the shareholders those matters we are required to state to them in the
independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the shareholders as a body for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
Responsibilities of the Directors for the consolidated financial
statements
The Directors, on behalf of the company, are responsible for:
—the preparation and fair presentation of the consolidated financial statements in accordance with generally
accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards) and International Financial Reporting Standards;
—implementing necessary internal control to enable the preparation of a consolidated set of financial statements
that is fairly presented and free from material misstatement, whether due to fraud or error; and
—assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless they either intend to liquidate or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial
statements
Our objective is:
—to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error; and
—to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs NZ will always detect a material misstatement when it exists.
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 30
FIN30
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is located at the
External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Jason Doherty.
For and on behalf of
Jason Doherty
KPMG Auckland
8 February 2018
FIN 31 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
REGULATORY DISCLOSURES
20 LARGEST ORDINARY SHAREHOLDERS
(as at 28 February 2018) (Listing Rule 10.4.5(b)
20 LARGEST REDEEMABLE PREFERENCE SHAREHOLDERS (as at 28 February 2018) (Listing Rule 10.4.5(b)
HOLDINGS SIZE – ORDINARY SHARES (as at 28 February 2018)
RankNameUnits%
1.CDL HOTELS HOLDINGS NEW ZEALAND LIMITED74,743,07770.79
2.HSBC NOMINEES (NEW ZEALAND) LIMITED A/C STATE STREET -NZCSD <HKBN45>6,526,2866.18
3.BNP PARIBAS NOMINEES (NZ) LIMITED - NZCSD5,962,4095.65
4.NATIONAL NOMINEES NEW ZEALAND LIMITED - NZCSD <NNLZ90>1,906,9871.81
5.CITIBANK NOMINEES (NEW ZEALAND) LIMITED - NZCSD <CNOM90>1,787,2681.69
6.SKY HILL LIMITED1,648,4941.56
7.ZETA BETA LIMITED1,550,5861.47
8.ACCIDENT COMPENSATION CORPORATION - NZCSD <ACCI40>1,440,4591.36
9.LENG BENG KWEK906,0000.86
10.HSBC NOMINEES (NEW ZEALAND) LIMITED - NZCSD <HKBN90>758,1390.72
11.AMALGAMATED DAIRIES LIMITED684,9800.65
12.KAY HONG CHIAM475,2510.45
13.CUSTODIAL SERVICES LIMITED <A/C 6>398,2380.38
14.MFL MUTUAL FUND LIMITED - NZCSD <MFLA90>363,2970.34
15.JALAER INVESTMENTS LIMITED268,9770.25
16.CASTLE POINT FUNDS - NZCSD169,2750.16
17.GEOK LOO GOH168,0020.16
18.ASB NOMINEES LIMITED <707112 A/C ML>166,9530.16
19.SITA SINGH151,0000.14
20.ASB NOMINEES LIMITED <129244 ML A/C>140,0000.13
RankNameUnits%
1.CDL HOTELS HOLDINGS NEW ZEALAND LIMITED45,224,09585.75
2.BNP PARIBAS NOMINEES (NZ) LIMITED - NZCSD2,945,6715.59
3.HSBC NOMINEES (NEW ZEALAND) LIMITED - NZCSD <HKBN90>1,690,3423.21
4.ACCIDENT COMPENSATION CORPORATION - NZCSD <ACCI40>1,002,0751.90
5.LENG BENG KWEK453,0000.86
6.NATIONAL NOMINEES NEW ZEALAND LIMITED - NZCSD <NNLZ90>344,2260.65
7.KAY HONG CHIAM211,3240.40
8.ASB NOMINEES LIMITED <707112 A/C ML>136,4250.26
9.ALAN DAVID WHITE101,1000.19
10.CUSTODIAL SERVICES LIMITED <A/C 4>36,4000.07
11.THEODORE JOHN VAN GELDERMALSEN + MARGARET GAY FREEMANTLE <GOLDEN
DOWNS S/F A/C>
35,0000.07
12.CUSTODIAL SERVICES LIMITED <A/C 3>31,6000.06
13.HOWARD CEDRIC ZINGEL31,5920.06
14.JOAN LESLEY THOMPSON30,2000.06
15.ROGER EDWARD HAYWARD + SUSAN ELIZABETH HAYWARD <TENANTS IN COMMON>28,9090.05
16.JOHN WILSON24,1600.05
17.SEA AND PEAK EQUITIES LIMITED23,4000.04
18.LYNNE MARIE MARX-SHEATHER + WALTER BRENT SHEATHER + PATRICIA VERA
SHEATHER + SIMON MIDDLETON PALMER <SHEATHER FAMILY A/C>
22,2630.04
19.RICHARD ALEXANDER COUTTS22,2280.04
20.JENNIFER GAYE SIMPSON21,3000.04
RangeTotal HoldersNumber of sharesPercentage of Issued Capital
1 - 9952080.00
100 - 199274,0900.00
200 - 499470162,5470.15
500 - 999339241,6850.23
1,000 - 1,999224319,1330.30
2,000 - 4,999215655,7460.62
5,000 - 9,999114806,5670.76
10,000 - 49,999851,715,5941.62
50,000 - 99,99914947,6400.90
100,000 - 499,999102,134,8362.02
500,000 - 999,99921,590,9801.51
1,000,000+496,999,26491.87
Rounding–
–
0.02
Total1,509105,578,290100.00
NZCSD is the New Zealand Central Securities Depository and provides a custodial depositary service to its clients and does not
have a beneficial interest in the shares held in its name.
NZCSD is the New Zealand Central Securities Depository and provides a custodial depositary service to its clients and does not
have a beneficial interest in the shares held in its name.
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 32
REGULATORY DISCLOSURES
WAIVERS FROM NZX LIMITED
SUBSTANTIAL PRODUCT HOLDERS
HOLDINGS SIZE – REDEEMABLE PREFERENCE SHARES
(as at 28 February 2018)
DOMICILE OF ORDINARY SHAREHOLDERS (as at 28 February 2018)
DOMICILE OF REDEEMABLE PREFERENCE SHAREHOLDERS (as at 28 February 2018)
RangeTotal HoldersNumber of sharesPercentage of Issued Capital
100 - 199385,8940.01
200 - 4994112,6950.02
500 - 9992618,1060.03
1,000 - 1,9992434,1960.06
2,000 - 4,9991347,2210.09
5,000 - 9,9991489,3410.17
10,000 - 49,99920423,8320.80
100,000 - 499,9994901,8491.71
1,000,000 - 251,206,40997.09
Rounding--0.02
Total18252,739,543100.00
NumberNumber of sharesPercentage of Issued Capital
New Zealand1,409100,201,95194.91
Overseas holders1005,376,3395.09
Total1,509105,578,290100.00
NumberNumber of sharesPercentage of Issued Capital
New Zealand16851,959,12898.52
Overseas holders14780,4151.48
Total18252,739,543100.00
SecuritiesClass%
CDL Hotels Holdings New Zealand Limited74,743,077Ordinary Shares70.79%
Aberdeen Asset Management Limited5,427,145Ordinary Shares5.15%
Aberdeen Asset Management Asia Limited5,962,409Ordinary Shares5.65%
On 23 March 2017, NZX Limited (NZX) granted the Company a waiver from NZX Main Board Listing Rule (Listing Rule) 5.2.3 in respect of
its preference shares for a period of twelve months from 23 March 2017 (the Preference Shares Waiver).
Listing Rule 5.2.3 provides that a class of securities will generally not be considered for quotation unless those securities are held by at
least 500 members of the public, holding at least 25% of the number of securities of the class issued, with each member holding at least
a minimum holding.
NZX granted the Preference Shares Waiver on the following conditions:
(a) that the directors of the Company certify to NZX Regulation that allowing the preference shares to remain quoted is in the best interests
of the holders of the preference shares;
(b) the Company clearly and prominently discloses the waiver, its conditions and the implications in its half-year and annual reports;
(c) that the Company consistently monitors the spread of its preference shares and provides NZX Regulation with quarterly updates
during the period of the waiver; and
(d) notifies NZX Regulation of any material change to the total shareholder number or spread of its preference shares.
On 13 April 2017, NZX granted the Company a waiver from Listing Rule 5.2.3 in respect of its ordinary shares for a period of twelve months
from 13 April 2017 (the Ordinary Shares Waiver).
NZX granted the Ordinary Shares Waiver on the following conditions:
(a) that the Company clearly and prominently discloses the waiver, its conditions and the implications in its half-year and annual reports;
(b) that the Company monitors the shareholding the spread of its ordinary shares and provides NZX Regulation with quarterly updates
during the period of the waiver; and
(c) notifies NZX Regulation of any material change to the total shareholder number or spread of its ordinary shares.
The implication of these waivers is that the Company’s preference and ordinary shares may not be widely held and there may be reduced
liquidity in both classes of shares.
As at 31 December 2017, the substantial product holders in the Company are noted below:
CDL Hotels Holdings New Zealand Limited is a wholly owned subsidiary of Millennium & Copthorne Hotels plc. As at 1 March 2018, the
total number of issued voting securities of Millennium & Copthorne Hotels New Zealand Limited (all of which are ordinary shares) was
105,578,290. The Company holds 99,547 repurchased ordinary shares as treasury stock. The total number of non-voting redeemable
preference shares was 52,739,543. As these securities are non-voting securities, there is no requirement to provide substantial security
holder notices.
FIN 33 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
STATUTORY INFORMATION
DIRECTORS (section 211 (1)(i) Companies Act 1993)
As at 31 December 2017, the Company’s Directors were Messrs C Sim, BK Chiu, KS Tan, R Bobb and GA McKenzie. Mr Lee retired on
28 February 2017 and Mr Wong retired on 30 June 2017. Mr Tan was appointed 1 March 2017 and Mr Sim was appointed 14 July 2017.
INTERESTS REGISTER (sections 189 (1) (c) and 211(1)(e) Companies Act 1993)
The Company maintains an Interests Register as required under the Companies Act 1993. For the period under review, the following entries
were recorded:
USE OF COMPANY INFORMATION (section 145 Companies Act 1993)
During 2017, the Board did not receive any notices from any Directors of the Company requesting the use of company information which
they would have received in their capacity as Directors which would not otherwise have been available to them.
SHARE DEALING (section 148, Companies Act 1993)
Mr HR Wong disposed of 604,000 ordinary shares and 302,000 redeemable preference shares of the Company on 11 September 2017.
DIRECTORS’ AND ASSOCIATED PERSONS SHAREHOLDINGS (as at 31 December 2017)
Director2017
C SimNil
HR WongNil
B K ChiuNil
KS TanNil
ATS Lee Nil
K HangchiNil
R BobbNil
GA McKenzieNil
REMUNERATION (section 161 and 211(1)(f), Companies Act 1993)
The total remuneration and value of other benefits earned received by each of the Directors of the Company for the year ending
31 December 2017 was:
Director2017
C Sim17,500
HR Wong17,500
B K Chiu (*)532,307
KS Tan (*)Nil
ATS Lee (*)Nil
K Hangchi35,000
R Bobb42,000
GA McKenzie38,500
(*) Mr Lee was Chief Executive and Executive Director of Millennium & Copthorne Hotels plc until his retirement on 28 February 2017. Mr
Tan is the Interim Group Chief Executive Officer of Millennium & Copthorne Hotels plc and Mr Chiu an employee of the Company. None of
these persons received remuneration as a director of the Company or of any of the Company’s subsidiaries.
INDEMNITY AND INSURANCE (section 162, Companies Act 1993)
In accordance with the Company’s constitution, the Company has insured all its Directors and the Directors of its subsidiaries against
liabilities to other parties (except the Company or a related party of the Company) that may arise from their positions as Directors. The
insurance does not cover liabilities arising from criminal actions.
GENERAL DISCLOSURES OF INTEREST (section 140(2), Companies Act 1993)
As at 31 December 2017, the Directors of the Company have made general disclosures of interest in the following companies:
C SIM
Chairman / Director of:
CDL Investments New Zealand Limited
Director of:
Autocaps (Aust) Pty Ltd Autocaps Pastoral Division Pty Limited
Autocaps Vogue Pty Limited Bathurst Range Investments Pty Limited
Builders Recycling Properties Pty Ltd Builders Recycling Operations Pty Ltd
CS Investments No. 1 Pty Ltd Desert Rose Group Pty Limited
Desert Rose Holdings Pty Limited DMM Investments (NSW) Pty Ltd
Dockside Parramatta Pty Limited Dockside Venues Pty Ltd
East Quarter Hurstville Pty Limited EQ Constructions Pty Ltd
EQ Equity Pty Ltd EQ Finance Services Pty Limited
EQ Gosford Pty Ltd EQ Projects Pty Ltd
EQ Property Holdings Pty Ltd EQ Revesby Pty Ltd
EQ Riverside Pty Ltd Hurstville NSW Pty Limited
Llenruk Pty Ltd Naxta Pty Ltd
PBD Phoenix Pty Limited PCC Devco 1 Pty Limited
Phoenix Palm Development Pty Limited Preslite Drive Technologies Pty Ltd
Proactive Management Systems Pty Ltd SSK Investments No. 2 Pty Ltd
SSK Investments O/S Pty Ltd Waterbrook Bayview Pty Ltd
Waterbrook Bayview Investment Pty Limited Waterbrook Bayview Village Management Pty Ltd
Waterbrook Bowral Pty Limited Waterbrook Bowral Investment Pty Limited
Waterbrook Brand Pty Limited West Quarter Hurstville Pty Limited
KS TAN
Chairman / Director of:
CDL Entertainment & Leisure Pte Ltd CDL Hotels (Korea) Ltd
City Century Pte. LtdFirst Sponsor Group Limited Grand Plaza Hotel Corporation
Harbour Land Corporation Hong Leong Hotel Development Limited
Millennium & Copthorne Hotels Management (Shanghai) Limited Millennium & Copthorne Hotels New Zealand Limited
Millennium & Copthorne International Limited Rogo Realty Corporation
The Philippine Fund Limited
K HANGCHI
Director of: Hong Leong Nominees (Private) Ltd
Millennium Securities Nominees Pte Ltd Millennium Securities Pte Ltd
Sun Yuan Holdings Pte Ltd Sun Yuan Overseas Pte Ltd
KIN Holdings Ltd CDL Hotels Holdings New Zealand Ltd
Hong Leong Finance Nominees Pte Ltd Hong Leong Finance Ltd
Singapore Nominees Private Ltd
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017 | FIN 34
BK CHIU
Chairman / Director of:
Quantum Ltd Waitangi Resort Joint Venture Committee
Director of:
All Seasons Hotels & Resorts Ltd CDL Land New Zealand Ltd
CDL Land New Zealand Ltd Context Securities Ltd
Hospitality Group Ltd Hospitality Leases Ltd
Hospitality Services Ltd Kingsgate Hotels & Resorts Ltd
Millennium & Copthorne Hotels Ltd QINZ Holdings (New Zealand) Ltd
QINZ (Anzac Avenue) Ltd
R BOBB
Director of:
Bobb Management Pty Ltd Birkenhead Holdings Pty Ltd
Birkenhead Investments Pty Ltd Bobb Nominees Pty Ltd
Continental Investments Pty Ltd EquiOptions Pty Ltd
Furscarbo Pty Ltd Hotelcorp New Zealand Pty Ltd
Kingsgate Hotel Pty Ltd Kingsgate Holdings Pty Ltd
Kingsgate Investments Pty Ltd Melmark Securities Pty Ltd.
Millennium & Copthorne Hotels Pty Ltd. RAB Capital Pty Ltd
Star Securities Australia Pty Ltd Trans National Properties Ltd
G A MCKENZIE
Director of:
CMO Energy NZ GMACK Consulting Ltd
Luxottica Retail New Zealand Ltd McHarry Holdings Ltd
Redbank Energy (NZ) Limited Saw 2015 Ltd
EMPLOYEE REMUNERATION (section 211(1) (g) Companies Act 1993)
The number of employees or former employees of the Company and its subsidiaries (excluding publicly listed subsidiaries) who received
remuneration and any other benefits in their capacity as employees, the value of which was or exceeded $100,000 per annum in 2017
are as follows:
Remuneration and value
of other benefits
Number. of
employees
100,000 – 110,0000
110,001 – 120,0005
120,001 – 130,0002
130,001 – 140,0001
140,001 – 150,0001
150,001 – 160,0002
180,001 – 190,0003
190,001 – 200,0004
200,001 – 210,0002
230,001 – 240,0001
360,001 – 370,0001
530,001 – 540,0001
DONATIONS (section 211(1)(h) and (2)
The Company and its subsidiaries made donations totalling $358.53 during the year.
AUDIT FEES (section 211(1)(j) and (2)
During the period under review, the following amounts were payable to the external auditors KPMG:
2016 ($’000)2017 ($’000)
New ZealandAustraliaNew ZealandAustralia
Annual Audit
2712328323
KPMG Other Services
132Nil52Nil
FIN 35 | MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED ANNUAL REPORT 2017
SUBSIDIARY COMPANIES AND DIRECTORS (section 211(2) of the Companies Act 1993)
The Company’s subsidiaries and their directors as at 31 December 2017 are listed below:
NAMEDIRECTORSOWNERSHIPACTIVITY
All Seasons Hotels and Resorts Ltd
BK Chiu, JB Pua100%Non-trading
Birkenhead Holdings Pty Ltd
R Bobb, JB Pua100%Holding Company (Australia)
Birkenhead Investments Pty Ltd
R Bobb, JB Pua100%Holding Company (Australia)
CDL Investments New Zealand Ltd (
)
C Sim, RJ Austin, BK Chiu,
J Henderson, KS Tan, VWE Yeo
66.56%Holding Company
CDL Land New Zealand Ltd
BK Chiu, DJ Lindsay, JB Pua66.56%Property Investment & Development Company
Context Securities Ltd
BK Chiu, JB Pua100%Investment Holding Company
Hospitality Group Ltd
BK Chiu, N Hood, KF Luxon 100%Holding Company
Hospitality Leases Ltd
BK Chiu 100%Lessee Company
Hospitality Services Ltd
BK Chiu, KF Luxon, JB Pua100%Hotel Management Company
Hotelcorp New Zealand Pty Ltd
R Bobb, JB Pua100%Holding Company (Australia)
KIN Holdings Ltd
JB Pua, K Hangchi,100%Holding company
Kingsgate Holdings Pty Ltd
R Bobb, JB Pua100%Holding Company
Kingsgate Hotels And Resorts Ltd
BK Chiu, JB Pua100%Franchise Holder
Kingsgate Hotels Ltd
JB Pua100%Non-trading
Kingsgate Hotel Pty Ltd
R Bobb, JB Pua100%Non-trading (Australia)
Kingsgate Investments Pty Ltd
R Bobb, JB Pua100%Residential Apartment Owner (Australia)
Kingsgate International Corporation
Ltd
JB Pua100%Holding Company
Millennium & Copthorne Hotels Ltd
BK Chiu, JB Pua100%Non-trading
Millennium & Copthorne Hotels Pty
Ltd
R Bobb, JB Pua100%Non-trading (Australia)
QINZ (Anzac Avenue) Ltd
BK Chiu, JB Pua100%Hotel Owner
QINZ Holdings (New Zealand) Ltd
BK Chiu, JB Pua100%Holding Company
Quantum Ltd
BK Chiu, KF Luxon, JB Pua, 100%Holding company
() Listed on the New Zealand Stock Exchange
--Where the directors of the Company’s subsidiaries are employees of the Company, they do not receive any remuneration or other
benefits as a director. Their remuneration and other benefits are received as employees and are included in the relevant banding under
Employee Remuneration.
--Mr. HR Wong retired as a director of Birkenhead Holdings Pty Ltd, Birkenhead Investments Pty Ltd, CDL Land New Zealand Limited,
Hotelcorp New Zealand Ltd, KIN Holdings Limited, Kingsgate Holdings Pty Ltd, Kingsgate Hotel Pty Ltd, Kingsgate International
Corporation Limited, Kingsgate Investments Pty Ltd, Millennium & Copthorne Hotels Pty Ltd., and Quantum Limited on 28 February 2015.
Mr. CHL Ho retired as a director of Birkenhead Investments Pty Ltd, KIN Holdings Limited, Kingsgate International Corporation Limited and
Kingsgate Investments Pty Ltd. on 27 February 2015. Mr. HK Ho retired as a director of KIN Holdings Limited on the same date.
--The following persons received remuneration as Directors of the Company’s subsidiaries during 2017: VWE Yeo ($30,000), RJ Austin
($35,000), J Henderson ($30,000), C Sim ($15,000), HR Wong ($15,000).
BOARD OF DIRECTORS
Colin Sim (Chairman)
BK Chiu (Managing Director)
Kian Seng Tan (Non-Executive Director)
Kevin Hangchi (Non-Executive Director)
Richard Bobb (Independent Director)
Graham McKenzie (Independent Director)
SENIOR MANAGEMENT
Greg Borrageiro (Director, Information Technology)
Evette Chauvineau (New Zealand Marketing Manager)
Troy Dandy (Group Company Secretary & Legal Counsel)
Brendan Davies (Director, International Sales & Marketing)
Craig Fletcher (Director, Property Management)
Karl Luxon (Vice President Operations)
Boon Pua (Vice President Finance)
Kim-Marie Rixson (Director, Human Resources)
Alison Smith (National Director of Sales, Conferences
and Incentives)
Josie Wilson (National Distribution & Revenue Manager)
REGISTERED OFFICE & CONTACT DETAILS
Level 13, 280 Queen Street, Auckland, New Zealand
PO Box 5640, Wellesley Street, Auckland 1141
Telephone: (09) 353 5010
Facsimile: (09) 309 3244
Website: www.millenniumhotels.com
Email: sales.marketing@millenniumhotels.co.nz
AUDITORS
KPMG, Auckland
BANKERS
ANZ Bank New Zealand Limited
Hong Kong & Shanghai Banking Corporation Limited
SOLICITORS
Bell Gully
SHARE REGISTRAR
Computershare Investor Services Limited,
Level 2, 159 Hurstmere Road, Takapuna,
Private Bag 92119, Auckland 1020, New Zealand
Telephone: +64 9 488 8700
Facsimile: +64 9 488 8787
email: enquiry@computershare.co.nz
STOCK EXCHANGE LISTING:
New Zealand Exchange (NZX)
Company Code: MCK
HEAD OFFICE
Head Office Tel: (09) 353 5010
Level 13, 280 Queen Street
PO Box 5640, Wellesley St, Auckland
NATIONAL CONFERENCE OFFICE
Ph: 0800 4 MEETINGS (0800 4 633 846)
Email: meetings@millenniumhotels.co.nz
www.meetingsnz.co.nz
SALES
Email: sales.marketing@millenniumhotels.co.nz
International Sales Tel: (09) 353 5085
Corporate Sales Auckland Tel: (09) 353 5010
Corporate Sales Wellington Tel: (04) 382 0770
CENTRAL RESERVATIONS
Ph: 0800 808 228
Email: central.res@millenniumhotels.co.nz
www.millenniumhotels.com
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.