MCK: 2018 Interim Results Announcement

Full and Half year Preliminary Announcements and Half Year Results
Reporting Period 6 months to 30 June 2018
Previous Reporting Period 6 months to 30 June 2017
127,506NZ$ Up22.4%
30,147NZ$ Up24.4%
30,147NZ$ Up24.4%
19.05cUp24.4%
19.05cUp24.4%
384.34cUp20.2%
N/A
Record DateN/A
Dividend Payment DateN/A
Comments:
Details of the reporting period and the previous corresponding reporting period:
This report is for the 6 months ended 30 June 2018 and should be read in conjunction with the most recent
annual financial report. Comparatives are in respect of the 6 months ended 30 June 2017.
Information prescribed by NZX:
Please refer to “Results for announcement to the market” and below.
--Statement of Financial Performance
Refer to the Condensed Interim Financial Statements.
Imputed amount per security
N/A N/A
Results for announcement to the market
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED
Profit (loss) from ordinary activities after tax
attributable to security holders
Revenue from ordinary activities
Please refer to the attached Chairman's Review.
Net profit (loss) attributable to security holders
Amount (000s)Percentage change
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Net tangible assets per share (cents per share)
Interim/Final Dividend Amount per security

--Statement of Financial Position
Refer to the Condensed Interim Financial Statements.
--Statement of Cash Flows
Refer to the Condensed Interim Financial Statements.
--Details of individual and total dividends or distributions and dividend or distribution payments
On 8 February 2018, the Directors declared a final dividend of 6.00 cents per ordinary and redeemable preference
share. The total dividend of $9.49 million was paid on 18 May 2018. The dividend was fully imputed and supplementary
dividends were paid to non-resident shareholders. Refer to Note 5 in the Condensed Interim Financial Statements.
Distributions declared
N/AN/A
Last distribution paid
9.49NZ$ 6.00c
--Details of Dividend Reinvestment Plans in operation
MCK does not have a Dividend Reinvestment Plan in operation.
--Net Tangible Assets per security (with comparatives for the previous corresponding period)
Ordinary shares384.34c319.68c
Redeemable Preference shares384.34c319.68c
--Details of entities over which control has been gained or lost during the period
Nil.
--Details of associates and joint ventures
% Held
Current Full
Year
% Held Previous
Corresponding Full
Year
Contributions to Net
Profit Current Full Year
Contributions to Net
Profit Previous Full Year
Prestons Road Limited33.33%33.33%-$ -$
Basis of preparation of financial statements:
The condensed interim financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting
Practice (NZ GAAP). They comply with the 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).
Accounting Policies:
Refer to the Condensed Interim Financial Statements.
Changes in accounting policies:
There are no changes to accounting policies during the period.
Audit Report:
Not available as the Condensed Interim Financial Statements are unaudited.
Additional Information:
None.
DATE:2 August 2018
Name
None declared
Final dividend for the 2017 Financial Year (ordinary
and redeemable preference shares)
NZ cents per shareCurrent half yearPrevious half year
NZ$ (million)NZ cents per share

---

2 August 2018



MCK REPORTS ANOTHER INCREASE IN REVENUE AND OPERATING
PROFIT FOR THE FIRST HALF OF 2018

New Zealand hotel owner / operator, Millennium & Copthorne Hotels New Zealand Limited (NZX:MCK),
today announced its (unaudited) results for the six months to 30 June 2018:

In summary:
• Average hotel occupancy across the Group 83.2% (2017: 81.3%)
• Group revenue and other income $127.51 million
(2017: $104.14 million)
• Operating profit before finance income $53.84 million (2017: $42.92 million)
• Profit before income tax and non-controlling interests $54.66 million
(2017: $43.91 million)
• Profit after tax and non-controlling interests $30.15 million (2017: $24.23 million)
MCK Chairman & Independent Director Colin Sim said that the results reflected the steady tourism market
in New Zealand and growth in section sales from CDL Investments.

MCK’s Managing Director Mr. BK Chiu noted that the newly rebuilt and refurbished M Social Auckland
and the recently acquired Millennium Hotel New Plymouth Waterfront had made contributions to the half-
year result.

“We are pleased that these two hotels are performing well and making valuable contributions to our
results”, he said.

Mr Chiu noted that the commercial accommodation market has become more competitive over the past
two years with the entry of several traditional and non-traditional suppliers.

“However, we are confident of our competitive position as we focus on the demand side of the equation
in selected market segments and the guest experience”, he said.

MCK also noted that it is party to a judicial review brought by several Auckland hotel owner / operators
against Auckland Council in relation to the Accommodation Provider Targeted Rate (APTR). The review
seeks to rescind the APTR on the basis of unfairness and lack of consultation by Auckland Council. As
the matter will likely be in 2019, MCK said that it would not have any material impact on its 2018 results.

Looking at the remainder of this year, MCK’s Board said that it expected to better its 2017 performance
in 2018 with both its hotel and residential section sales operations.

ENDS

Issued by Millennium & Copthorne Hotels New Zealand Ltd

Any inquiries please contact:
B K Chiu, Managing Director
Millennium & Copthorne Hotels New Zealand Ltd
(09) 353 5058

---

Millennium & Copthorne Hotels New Zealand Limited and Subsidiaries
Condensed Interim Income Statement
FOR THE SIX MONTHS ENDED 30 JUNE 2018UnauditedUnaudited
6 months6 months
DOLLARS IN THOUSANDSNOTEto 30/06/18to 30/06/17
Revenue127,506 104,141
Cost of sales(49,850) (41,815)
Gross profit77,656 62,326
Other income- -
Administrative expenses(12,408) (9,742)
Other operating expenses(11,413) (9,661)
Operating profit before finance income53,835 42,923
Finance income1,687 1,900
Finance costs(858) (911)
Net finance income829 989
Profit before income tax54,664 43,912
Income tax expense(15,043) (12,071)
Profit for the period39,621 31,841
Profit for the period attributable to:
Equity holders of the parent30,147 24,233
Non-controlling interests9,474 7,608
Profit for the period 39,621 31,841
Basic earnings per share (cents)
419.05c15.32c
Diluted earnings per share (cents)419.05c15.32c
The attached notes form part of, and are to be read in conjunction with, these financial statements.

Millennium & Copthorne Hotels New Zealand Limited and Subsidiaries
Condensed Interim Statement of Comprehensive Income
FOR THE SIX MONTHS ENDED 30 JUNE 2018UnauditedUnaudited
6 months6 months
DOLLARS IN THOUSANDSto 30/06/18to 30/06/17
Profit for the period39,621 31,841
Other comprehensive income
Items that are or may be reclassified to profit or loss
Movement in exchange translation reserve
- Recognised in equity(1,535) 330
Total comprehensive income for the period38,086 32,171
Total comprehensive income for the period attributable to:
Equity holders of the parent28,612 24,563
Non-controlling interests9,474 7,608
Total comprehensive income for the period38,086 32,171
DETAILS OF SPECIFIC RECEIPTS/OUTLAYS,
REVENUES/EXPENSES :
Audit fees(158) (154)
Depreciation(4,186) (3,048)
Interest income1,687 1,895
Net foreign exchange gain/(loss)(15) (5)
Interest expense(843) (901)
Leasing and rental expenses(1,208) (1,168)
The attached notes form part of, and are to be read in conjunction with, these financial statements.

Millennium & Copthorne Hotels New Zealand Limited a
nd Subsidiaries
Condensed Interim Statement of Changes in Equity
FOR THE SIX MONTHS ENDED 30 JUNE 2018
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Share
Revaluation
Exchange
Accumulated
Treasury
Unaudite
d
Non-controlling
Total
DOLLARS IN THOUSANDS
NOTE
Capital
Reserves
Reserves
Losses
Stock
Total
Interests
Equ
ity
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
-

-

330

-

-

330

-

330

Income and expense recognised directly in equity
-

-

330

-

-

330

-

330

Profit for the period
-

-

-

24,233

-

24,233

7,608

31,841

Total comprehensive income for the period
-

-

330

24,233

-

24,563

7,608

32,171

Transactions with owners, recorded directly in equi
ty :
Dividends paid to:
Equity holders of the parent
5
-

-

-

(7,911)

-

(7,911)

-

(7,911)

Non-controlling interests
-

-

-

-

-

-

(3,142)

(3,142)

-

-

-

80

-

80

385

465

Supplementary dividends
5
-

-

-

(221)

-

(221)

-

(221)

Foreign investment tax credits
-

-

-

221

-

221

-

221

Balance at 30 June 2017
383,266

161,370

(2,993)

(35,822)

(26)

505,795

68,069

573,864

Balance at 1 January 2018
383,266

222,465

114

(16,939)

(26)

588,880

74,810

663,690

Movement in exchange translation reserve
-

-

(1,535)

-

-

(1,535)

-

(1,535)

Income and expense recognised directly in equity
-

-

(1,535)

-

-

(1,535)

-

(1,535)

Profit for the period
-

-

-

30,147

-

30,147

9,474

39,621

Total comprehensive income for the period
-

-

(1,535)

30,147

-

28,612

9,474

38,086

Transactions with owners, recorded directly in equi
ty :
Dividends paid to:
Equity holders of the parent
5
-

-

-

(9,493)

-

(9,493)

-

(9,493)

Non-controlling interests
-

-

-

-

-

-

(3,655)

(3,655)

-

-

-

99

-

99

454

553

Supplementary dividends
5
-

-

-

(242)

-

(242)

-

(242)

Foreign investment tax credits
-

-

-

242

-

242

-

242

Balance at 30 June 2018
383,266

222,465

(1,421)

3,814

(26)

608,098

81,083

689,181

Attibutable to Equity Holders of the Group
The attached notes form part of, and are to be read
in conjunction with, these financial statements.
Movement of non-controlling interests without a cha
nge in
controlMovement of non-controlling interests without a cha
nge in
control

Millennium & Copthorne Hotels New Zealand Limited and Subsidiaries
Condensed Interim Statement of Financial Position
AS AT 30 JUNE 2018UnauditedAuditedUnaudited
as atas atas at
DOLLARS IN THOUSANDSNOTE30/06/1831/12/1730/06/17
SHAREHOLDERS' EQUITY
Issued capital3383,266 383,266 383,266
Reserves224,858 205,640 122,555
Treasury stock3(26) (26) (26)
Non-controlling interests81,083 74,810 68,069
Total equity689,181 663,690 573,864
Represented by:
NON CURRENT ASSETS
Property, plant and equipment514,355 505,908 427,016
Development properties 174,747 145,751 130,461
Investment in associates2 2 2
Total non-current assets689,104 651,661 557,479
CURRENT ASSETS
Cash and cash equivalents28,976 34,195 22,035
Short term bank deposits98,749 88,890 104,060
Trade and other receivables14,257 17,729 12,282
Trade receivables due from related parties
615 - -
Loans due from related parties- -
Inventories1,493 1,646 1,417
Income tax receivable163 - 656
Development properties29,229 34,104 28,522
Total current assets172,882 176,564 168,972
Total assets861,986 828,225 726,451
NON CURRENT LIABILITIES
Interest-bearing loans and borrowings66,000 66,000 66,000
Provision for deferred taxation70,596 70,245 58,986
Total non-current liabilities136,596 136,245 124,986
CURRENT LIABILITIES
Trade and other payables21,715 22,442 20,371
Trade payables due to related parties
61,612 1,981 1,254
Loans due to related parties
67,100 - 2,800
Income tax payable5,782 3,867 3,176
Total current liabilities36,209 28,290 27,601
Total liabilities172,805 164,535 152,587
Net assets689,181 663,690 573,864
The attached notes form part of, and are to be read in conjunction with, these financial statements.

Millennium & Copthorne Hotels New Zealand Limited and Subsidiaries
Condensed Interim Statement of Cash Flows
FOR THE SIX MONTHS ENDED 30 JUNE 2018UnauditedUnaudited
6 months6 months
DOLLARS IN THOUSANDSNOTEto 30/06/18to 30/06/17
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers130,779 111,329
Interest received1,871 1,123
132,650 112,452
Cash was applied to:
Payments to suppliers and employees(59,063) (52,404)
Purchase of development land(36,354) -
Interest paid(865) (806)
Income tax paid(13,461) (13,285)
(109,743) (66,495)
Net cash inflow from operating activities22,907 45,957
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was provided from/(applied to):
Purchase of property, plant and equipment(12,635) (7,461)
Increase in short term bank deposits(9,859) (18,462)
Net cash outflow from investing activities(22,494) (25,923)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was provided from/(applied to):
Repayment of borrowings- (4)
Advance/(repayment) of related parties loans
67,100 (3,000)
Dividends paid to shareholders of Millennium & Copthorne
Hotels New Zealand Ltd5(9,493) (7,911)
Dividends paid to non-controlling interests (3,655) (3,142)
Net cash outflow from financing activities(6,048) (14,057)
Net (decrease)/increase in cash and cash equivalents(5,635) 5,977
Add opening cash and cash equivalents34,195 15,520
Exchange rate adjustment416 538
Closing cash and cash equivalents28,976 22,035
The attached notes form part of, and are to be read in conjunction with, these financial statements.

Millennium & Copthorne Hotels New Zealand Limited and Subsidiaries
Condensed Interim Statement of Cash Flows
FOR THE SIX MONTHS ENDED 30 JUNE 2018UnauditedUnaudited
6 months6 months
DOLLARS IN THOUSANDSNOTEto 30/06/18to 30/06/17
RECONCILIATION OF NET PROFIT FOR THE PERIOD
TO CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the period39,621 31,841
Depreciation4,186 3,048
Income tax expense15,043 12,071
Adjustments for movements in working capital:
Decrease in receivables3,457 6,411
Decrease in inventories153 91
(Increase)/Decrease in development properties(25,011) 11,249
Increase/(Decrease) in payables153 (3,685)
Increase/(Decrease) in related parties(369) (883)
Cash generated from operations37,233 60,143
Interest paid(865) (901)
Income tax paid(13,461) (13,285)
Net cash inflow from operating activities22,90745,957
The attached notes form part of, and are to be read in conjunction with, these financial statements.

Millennium & Copthorne Hotels New Zealand Limited and Subsidiaries
Notes to the Condensed Interim Financial Statements
for the six months ended 30 June 2018 (unaudited)


1. 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 Financial Markets Conduct Act
2013 and the Financial Reporting Act 2013. The condensed interim financial statements of the Company for the six
months ended 30 June 2018 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.

The condensed interim financial statements were authorised for issuance on 2 August 2018.

(a) Statement of compliance

The condensed interim financial statements have been prepared in accordance with New Zealand Generally Accepted
Accounting Practice (NZ GAAP). They comply with NZ IAS 34 Interim Financial Reporting. The condensed interim
financial statements do not include all of the information required for full annual financial statements.

The accounting policies and methods of computation applied by the Group in these condensed interim financial
statements are the same as those applied by the Group in its financial statements for the year ended 31 December
2017.


2. Segment reporting

Segment information is presented in the condensed interim financial statements 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.

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 property development, comprising the development and sale of residential apartments.

Geographical segments
The Group operates in the following main geographic segments:
• New Zealand
• Australia

Segment revenue is based on the geographical location of the asset. The Group has no major customer representing
greater than 10% of the Group’s total revenue.

Millennium & Copthorne Hotels New Zealand Limited a
nd Subsidiaries
Notes to the Condensed Interim Financial Statements

for the six months ended 30 June 2018 (unaudited)

2.
Segment reporting -
continued
(a) Operating Segments

Hotel Operations
Residential Land Development
Residential Property
Development
Group

Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
U
naudited
Unaudited
Unaudited

6 months
6 months
6 months
6 months
6 months
6 mont
hs
6 months
6 months
Dollars in thousands
to 30/06/18
to 30/06/17
to 30/06/18
to 30/06/17
to
30/06/18
to 30/06/17
to 30/06/18
to 30/06/17
External revenue
64,267
51,626
60,226
51,039
3,013
1,476
127,506
104
,141
Earnings before interest, depreciation & amortisation
22,534
18,316
34,652
27,317
835
338
58,021
45,971
Finance income
877
833
726
1,000
84
67
1,687
1,900
Finance expense
(858)
(911)
-
-
-
-
(858)
(911)
Depreciation and amortisation
(4,184)
(3,045)
-
(1)

(2)
(2)
(4,186)
(3,048)
Profit before income tax
18,369
15,193
35,378
28,31
6
917
403
54,664
43,912
Income tax expense
(4,883)
(4,028)
(9,908)
(7,928)
(252)
(115)
(15,043
)
(12,071)
Profit after income tax
13,486
11,165
25,470
20,388

665
288
39,621
31,841









Segment assets
587,430
480,328
210,625
179,992
63,766
65,473
861,8
21
725,793
Tax assets
-
-
-
-
163
656
163
656
Investment in associates
-
-
2
2
-
-
2
2
Total assets
587,430
480,328
210,627
179,994
63,929
66,129
861,9
86
726,451









Segment liabilities
(92,477)
(86,732)
(2,766)
(2,501)
(1,184)
(1,192)
(
96,427)
(90,425)
Tax liabilities
(70,766)
(59,443)
(5,438)
(3,154)
(174)
435
(76,378
)
(62,162)
Total liabilities
(163,243)
(146,175)
(8,204)
(5,655)
(1,358)
(757)
(
172,805)
(152,587)









Property, plant and equipment expenditure
12,635
7,
461
-
-
-
-
12,635
7,461
Residential land development expenditure
-
-
12,568

10,159
-
-
12,568
10,159
Purchase of land for residential land development
-

-
36,354
-
-
-
36,354
-

Millennium & Copthorne Hotels New Zealand Limited a
nd Subsidiaries
Notes to the Condensed Interim Financial Statements

for the six months ended 30 June 2018 (unaudited)
2.
Segment reporting -
continued



(b) Geographic Segments
New Zealand
Australia
Group


Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
U
naudited

6 months
6 months
6 months
6 months
6 months
6 mont
hs
Dollars in thousands
to 30/06/18
to 30/06/17
to 30/06/18
to 30/06/17
to
30/06/18
to 30/06/17
External revenue
124,493
102,665
3,013
1,476
127,506
104,141
Earnings before interest, depreciation & amortisation
57,163
45,609
858
362
58,021
45,971
Finance income
1,603
1,833
84
67
1,687
1,900
Finance expense
(858)
(911)
-
-
(858)
(911)
Depreciation and amortisation
(4,184)
(3,046)
(2)
(
2)
(4,186)
(3,048)
Profit before income tax
53,724
43,485
940
427
54,6
64
43,912
Income tax expense
(14,793)
(11,963)
(250)
(108)
(1
5,043)
(12,071)
Profit after income tax
38,931
31,522
690
319
39,62
1
31,841







Segment assets
798,164
660,320
63,657
65,473
861,821
725,793
Tax assets
-
-
163
656
163
656
Investment in associates
2
2
-
-
2
2
Total assets
798,166
660,322
63,820
66,129
861,986
726,451







Segment liabilities
(95,280)
(89,265)
(1,147)
(1,160)
(96,427)
(90,425)

Tax liabilities
(76,199)
(62,600)
(179)
438
(76,378)
(62,162)
Total liabilities
(171,479)
(151,865)
(1,326)
(722)
(172,805)
(152,58
7)







Property, plant and equipment expenditure
12,635
7
,461
-
-
12,635
7,461
Residential land development expenditure
12,568
10,
159
-
-
12,568
10,159
Purchase of land for residential land development
3
6,354
-
-
-
36,354
-

Millennium & Copthorne Hotels New Zealand Limited and Subsidiaries
Notes to the Condensed Interim Financial Statements
for the six months ended 30 June 2018 (unaudited)


3. Share capital


Ordinary shares Redeemable preference shares
Shares $ 000s Shares $ 000s
Total shares issued – fully paid

Balance at 30 June 2017 105,578,290 350,048 52,739,543 33,218
Balance at 30 June 2018 105,578,290 350,048 52,739,543 33,218


Ordinary shares repurchased and held as
treasury stock



Balance at 30 June 2017 (99,547) (26) - -
Balance at 30 June 2018 (99,547) (26) - -


Shares issued – fully paid

Balance at 30 June 2017 105,478,743 350,022 52,739,543 33,218
Balance at 30 June 2018 105,478,743 350,022 52,739,543 33,218



At 30 June 2018, the authorised share capital consisted of 105,578,290 ordinary shares (2017: 105,578,290 ordinary
shares) with no par value and 52,739,543 redeemable preference shares (2017: 52,739,543) with no par value.





4. Earnings per share

The basic earnings per share of 19.05 cents (30 June 2017: 15.32 cents) is based on the profit attributable to ordinary
shareholders of $30.15 million (30 June 2017: $24.23 million) and weighted average number of ordinary shares and
redeemable preference shares outstanding during the period ended 30 June 2018 of 158,218,286 (30 June 2017:
158,218,286).

The redeemable preference shares are included in the computation of earnings per share as they rank equally with
ordinary shares in respect of distributions made by the Company except any distribution in the case of liquidation.

The calculation of diluted earnings per share of 19.05 cents (30 June 2017: 15.32 cents) is the same as basic earnings
per share.



5. Dividends

The following dividends were paid during the interim periods:



Group
Dollars In Thousands
Unaudited
30/06/18
Unaudited
30/06/17


Ordinary dividend: 6.0 cents per qualifying share (2017: 5.0 cents) 9,493 7,911
Supplementary dividend: 1.0588 cents per qualifying share (2017:
0.5524 cents)

242

221

9,735 8,132

Millennium & Copthorne Hotels New Zealand Limited and Subsidiaries
Notes to the Condensed Interim Financial Statements
for the six months ended 30 June 2018 (unaudited)


6. Related party transactions

Millennium & Copthorne Hotels New Zealand Limited is a 75.78% (2017: 75.20%) (economic interests from both
ordinary and preference shares) owned 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 Limited 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 Unaudited
30/06/18
Unaudited
30/06/17
Trade payables and receivables due to
related parties

Millennium & Copthorne Hotels plc Recharge of
expenses
(899) (434)

Millennium & Copthorne International
Limited
Recharge of
expenses
& provision of
management and
marketing support



-



(135)

CDL Hotels Holdings New Zealand Limited Recharge of
expenses
15 -

CDLH (BVI) One Limited Rent payment (713) (685)

(1,597) (1,254)
Loans due to related parties
CDL Hotels Holdings New Zealand
Limited

Inter-company loan
(7,100) (2,800)

(7,100) (2,800)

No debts with related parties were written off or forgiven during the period. No interest was charged on these payables
during 2018 and 2017. There are no set repayment terms. During this period, costs amounting to $125,000 (2017:
$125,000) 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.

As at balance date, CDL Hotels Holdings New Zealand Limited has lent a total of $7.10 million (30 June 2017: $2.80
million) to Millennium & Copthorne Hotels New Zealand Limited. The interest rates are fixed at 2.07% (30 June 2017:
2.06%) until the loans are reviewed on 3 September 2018. The unsecured loans are repayable on demand.

7. Capital commitments

As at 30 June 2018, the Group has entered into contractual commitments for capital expenditure and development
expenditure.


Group
Dollars In Thousands
Unaudited
30/06/2018
Unaudited
30/06/2017
Capital expenditure 3,010 2,360
Development expenditure 26,830 8,730

29,840 11,090


8. Changes in contingent liabilities and contingent assets since last annual balance sheet date

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.

---

CHAIRMAN’S REVIEW

Financial Performance:

Millennium & Copthorne Hotels New Zealand Limited (“MCK”) announced an unaudited profit after tax
and non-controlling interests of $30.15 million for the six month period ended 30 June 2018 (2017: $24.23
million). Profit before income tax and non-controlling interests was $54.66 million (2017: $43.91 million).
Group revenue and other income for this increased to $127.51 million (2017: $104.14 million) and gross
profit for the period also increased to $77.66 million (2017: $62.33 million).

These increases in profit and revenue from the previous year reflect a steady tourism market across
New Zealand as well as additional contributions from M Social Auckland and Millennium Hotel New
Plymouth Waterfront. MCK’s majority-owned land development subsidiary CDL Investments New
Zealand Limited also saw good sales in the first half of 2018 which boosted MCK’s overall results.

Earnings per share for the period increased to 19.05 cents per share (2017: 15.32 cps).

New Zealand Hotel Operations:

The New Zealand hotel operations (14 owned or leased and operated hotels (excluding 5 franchised and
2 managed hotels) continue to perform well. Revenue for the period increased in the past six months to
$64.27 million (2017: $51.63 million). RevPAR also increased by 13.2% to $133.12 (2017: $117.63).
Occupancy for the owned / leased hotels for the period improved to 83.2% (2017: 81.3%).

While demand for accommodation remains steady, the imminent arrival of new competitors in regions
such as Auckland and Queenstown together with non-traditional accommodation supply has seen rate
pressure in certain market segments.

MCK is party to a judicial review action brought by several Auckland hotel owner / operators against
Auckland Council in relation to the Accommodation Provider Targeted Rate (APTR). This High Court
action seeks to rescind the APTR on the basis of unfairness and lack of consultation by Auckland Council
and will likely be heard some time in the first half of 2019. This will have no material impact on MCK’s
2018 results.

CDL Investments New Zealand Limited (‘CDL’):

CDL announced an unaudited operating profit after tax for the six months ended 30 June 2018 of $25.47
million, (2017: $20.39 million). Sales were recorded in Auckland, Hamilton and Canterbury. While it has
noted that market conditions in some areas appear to have peaked, CDL remains on target to better its
2017 results.

Offshore investments – Australia:

Occupancy at the Zenith Residences, Sydney was steady at 88.5% across the complex. Apartment units
are now being put up for sale as the leases expire and one apartment was sold in the first half of 2018.

Outlook:

The outlook for the group as a whole remains positive for the rest of 2018. MCK’s hotels are expected to
continue to see positive occupancy and revenue and with further sales from CDL, the Board expects MCK
to better its 2017 performance this year.



Colin Sim
Chairman
2 August 2018