MCK Annual Meeting 2020 Presentations

35
th
Annual General Meeting
26
th
May 2020
WELCOME TO
OUR WORLD OF
HOSPITALITY

WELCOME
•Welcome to this Virtual Meeting
•The Meeting Chair is Graham McKenzie
•Board of Directors are attending remotely:
Colin Sim (Chairman)
B K Chiu (Managing Director)
Kevin Hangchi (Director)
Eik Sheng Kwek (Director)
Richard Bobb (Independent Director)
2

WELCOME
•Quorum
•Apologies will be recorded in the minutes
•Proxies
•Minutes of the 34
th
Annual Meeting
•Notice of Meeting taken as read
3

Tribute to Mr Wong Hong Ren
4

Annual Report and Financial Statements
2019 Annual Report presented.
For 2019, MCK reported:
•An increased profit after tax of $49.7 million
•Increased revenue to $229.7 million
•Increased earnings per share to 31.39 cps
•Better RevPAR of $132.46
•Dividend maintained at 7.5 cents per share
5

Effect of COVID-19
•The Board has been monitoring the situation carefully.
•New Zealand’s borders remain closed, will have huge impact
•Recovery will be long and slow -TransTasman bubble some time away
•Guest experience will be different
•Over 70% of MCK work force affected
•2020 will be the most challenging year for MCK
6

7

MCK 2019 Group Results
Best year in MCK’s history.
20192018
Group Revenue ($m): 229.7218.8
EBITDA ($m):94.091.3
Profit Before Tax ($m):85.485.1
•Contributions from hotel operations, residential land
development (CDL Investments New Zealand Ltd)
and residential property development (KIN Holdings
Ltd).
8

Statement of Value Added & Distribution
(Year ended 31 December 2019)
Group
Dollars in millions2019
Revenue229.7
(-) Less purchase of goods & services(88.9)
140.8
(+) Add interest income & dividend received3.9
144.6
% of value
Appropriated as follows:
To employees46.832.3%
To government taxes & rates23.518.7%
To suppliers of capital:
-Dividends to shareholders11.98.2%
-Interest cost, lease liabilities2.71.9%
-Dividends to non-controlling interests4.33.0%
Retained for future requirements51.835.8%
Total Value Added144.6100.0%
9

MCK 2019 Results
•Hotel Revenue:$126.6m ($126.5m in 2018)
•Occupancy:80.8% (80.9% in 2018 )
•Average Room Rate: $163.97 ($161.54 in 2018)
•RevPAR:1.4% increase
•Softer trading year with lower arrivals from China
•Domestic business & leisure is MCK’s largest source of rooms
revenue followed by China & Australia
•New hotel inventory in Auckland & Wellington
•Market share ahead of competitor set
•Productivity challenges with cost increases
10

•Incorporated in August 2019.
•Represents over 100 hotels, large and small in cities, regions and resorts
nationwide. MCK is a founding member.
•Only dedicated body providing leadership and advocacy for the hotel sector.
•Advocacy includes:
–Hotel wage subsidy and extension
–Taxation relief
–Hotel local government rates grant
–Removal of the Accommodation Provider Targeted Rate in Auckland and
future discriminatory local government taxes e.g. bed tax in Queenstown.
nzhoa.com
11

Does it have to take pandemic carnage going viral to show the
wide and deep linkages tourism brings to the NZ economy?
•From airlines, airports, rental vehicles, taxis, shuttles,
travel agencies, tour operators, petrol stations, cafes,
restaurant, retail, accommodation..... to tourist
attractions in cities and rural towns.
•Employment and business losses from SMEs to large
corporations in NZ.
12

Where is the fairness and wisdom in public policies relating to
local council rates?
•Accommodation Providers Targeted Rate (APTR), Auckland
–we commend the council’s proposal to suspend the
APTR for part of this rating year and next. But we urge
it to abandon the APTR.
•Queenstown Bed Tax
–an ill-advised, poorly researched & discriminatory
local body tax
13

April 2020 YTD Trading
•Hotel Revenue:$31.6m ($47.6m in 2019)
•Occupancy:57.5% (89.1% in 2019 )
•Average Room Rate: $183.58 ($176.40 in 2019)
•RevPAR:$105.47 ($157.11 in 2019)
14

COVID-19 and Border closure impact
Occupancy %Average Room Rate ($)
Month2019202020192020
January89.887.5178.55184.10
February91.987.7189.01186.82
March91.053.2177.39176.71
April83.71.5159.97219.94
•20 March 2020: Borders closed to all visitors
•26 March 2020: Alert Level 4
•27 April 2020: Alert Level 3
•14 May 2020: Alert Level 2
15

What Matters Now and Next
MCK has sufficient cash to meet obligations.
•Actively Conserving Cash
Current Ratio (April 2020) 4.7
Quick Ratio 4.6
Debt Equity (%)11.7
•No plans to:
Increase bank borrowings
Raise capital
Rights issue
16

Cash Flow Management
•Resizing and rescaling operations
–Retain experience, expertise
•Applied & received 12 week wage subsidy
to June 21, 2020
•Debtor management
•Delay/Defer major capexes
•Actively market Zenith Apartments, Sydney
17

Hotel Reopening
•Strict COVID-19 protocols at all hotels and corporate office
•Comply with all Ministry of Health requirements
•We Care. We Clean. We Welcome
•Hotels Open:
18

CDL Investment 2019 Sales
Best year in CDI’s history despite the softening
property market in 2019.
20192018
Sales ($m)91.885.0
Profit before tax ($m)47.346.7
Section sales similar to 2018 from:
Greville Road, Auckland
Magellan, Hamilton
Prestons Park, Christchurch
Lower margin sales at Northwood, Hawkes Bay
19

April 2020 YTD Sales
Well designed, constructed and located CDI sections meet market demand
despite a sobering economic outlook.
Sales $18.8m ($14.9 in 2019)
Sales from:
Greville Road, Auckland
Magellan Heights, Hamilton
Prestons Park, Christchurch
Steady demand for CDI sections in Christchurch and Auckland.
Pre-titled sales at KewaRoad and Dominion Road –both in
Auckland are encouraging with settlements in 2020 and 2021.
20

Economic downturn and unemployment will
eventually impact demand for residential property.
However a low interest environment (OCR 0.25%),
lower mortgage rates, removal of 20% LVR are all
positive for home ownership aspirations.
There is selective demand for well located and
reputable subdivisions with CDI sections priced at
different points.
Manage works in progress for these markets.
CDI organization remains at three FTEs.
21

•MCK has sufficient cash to meet obligations.
•Resized, Rescaled model of hotel operations.
•CDI section sales tracking positively to date.
•Actively market Zenith Apartments sales.
•Hotel operation will make a loss in 2020. But
overall Group will make a profit.
SUMMARY
22

ELECTION OF DIRECTORS
Election of Mr Eik Sheng KWEK as a Director
Re-election of Mr Boo Keng CHIU as a Director
Each Director needs to be individually elected
All resolutions are being conducted by way of poll
23

Election of Director
Election of Mr Eik Sheng KWEK as a Director
24

Re-election of Director
Re-election of Mr Boo Keng CHIU as a Director
25

AUDITORS APPOINTMENT & REMUNERATION
No other nomination received -KPMG are
reappointed as the Company’s auditors
Resolution that the Directors be empowered to
fix the remuneration of the Auditors for the
year ending 31 December 2020.
26

General
Business
27

CLOSE OF MEETING
Thank you for attending
28

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MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED
STOCK EXCHANGE ANNOUNCEMENT
2020 ANNUAL SHAREHOLDER MEETING – REMARKS BY THE CHAIR

Passing of Wong Hong Ren
Before I turn to the main business of the meeting, I would like to mention and note the recent passing of our
former Chair Mr. Wong Hong Ren.

I am sure that many of you have met or have heard from Mr. Wong over many annual meetings across his
long involvement with this company, CDL Investments New Zealand Limited and Kingsgate International
Corporation Limited from the early 1990s through to his retirement in 2017.

As our longest-serving Chairman, he also held the most senior positions within the Millennium & Copthorne
Hotels Group serving as CEO and Executive Director for many years until his retirement in 2015 from the
plc board.

He held a very keen and active interest in our New Zealand operations visiting nearly all of our hotels
during his tenure and knew the financial performance of our businesses extraordinarily well.

Sadly, due to the COVID-19 lockdowns in both New Zealand and Singapore, we were unable to
acknowledge his passing properly but I am sure that all shareholders will join with me in sending sincere
condolences to his family and colleagues and that we mark his contributions to MCK in this way.


Annual Report and Financial Statements
On behalf of the Directors, I present the Annual Report and the Statement of Financial Accounts to 31
December 2019.

MCK’s financial and trading performance in 2019 was positive and reflected the pre-COVID-19 positive travel
and tourism conditions in New Zealand.

In 2019, MCK recorded:

• recorded an increased profit after tax of $49.7 million;
• increased revenue of $229.7 million;
• an increase in earnings per share to 31.39 cents per share; and
• a better RevPAR of $132.46

These results allowed the Board to maintain the dividend to shareholders at 7.5 cents per share which was
paid to you on 15 May.

All of that is now in the past. Obviously the situation for this year is extremely different given COVID-19 and
Mr, Chiu will speak to that in detail.

From the Board’s perspective, we have been monitoring the situation very carefully. We have been receiving
regular updates from Management on the operational and financial position but also on what measures MCK
is looking to put in place to ensure guest and staff safety.

The continued closure of New Zealand’s borders, which we understand is necessary to keep New Zealand
and New Zealanders safe, will nevertheless have a huge impact given that about half of our pre-COVID
business was from overseas. There will not be a sudden recovery. Flights will resume slowly and
international visitors will be understandably cautious. Even a Trans-Tasman bubble will be some time away.

Conferencing and meetings will also not be as they were. Our restaurants and bar areas will need to change
to accommodate new rules on seating and safe distancing. The whole guest experience will be very different.

I also want to make some brief remarks on behalf of the Board on the steps the Company has taken with
regard to its business operations and its staff.

To deal with this crisis head-on, Management has had to make decisions about MCK’s workforce which have
affected over 70 percent of the company’s total head count. Prior to COVID-19, we had over 1,300
employees working for us at our various hotels.

As a Board, we recognise that the decisions that Management has had to make are very difficult but we
agree with our Management team that these have been necessary to ensure that the Company is able to
survive now and into the future.

We have lost and will be losing many long-serving and very loyal employees as a direct result of this crisis.
We are sorry to see them go and hopefully we will see some of them again when tourism gets back to more
normal levels.

To conclude, this year will be the most challenging year that MCK has ever faced in its history. None of us
have ever experienced a crisis of this nature. Your Board and the Management team are absolutely focused
on ensuring that MCK is not only able to survive this year but able to be ready when tourism to New Zealand
starts to grow again.