MCK: 2021 ASM Presentation Slides and Chair’s Remarks

MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND LIMITED
STOCK EXCHANGE ANNOUNCEMENT
2021 ANNUAL SHAREHOLDER MEETING – REMARKS BY THE CHAIR

Retirement of Richard Bobb:
Before I turn to the main business of the meeting, I would like to mention that this will be Richard Bobb’s last
annual meeting as a director of MCK.

Richard advised the Board of his decision to retire last week. As Colin noted in the announcement we made,
Richard has made some very important contributions in the time he has been with MCK.

He has been the Chair of the Audit Committee since he was appointed and has brought his extensive knowledge
of accounting and taxation to the Committee and to the Board.

Richard has also been a director of our Australian subsidiaries as well. He has helped us weather a number of
difficult events internationally and in both New Zealand and Australia.

Thank you, Richard, for your service as an Independent Director since 2004 and we all wish you well for the
future.


Presentation of Annual Report and Financial Statrements:
On behalf of the Directors, I present the Annual Report and the Statement of Financial Accounts to 31 December
2020.

All of us have our own memories and experiences from a year that we have called both “unforgettable”,
“abominable” and “devastating” in the same breath. While I am sure that most of us would like to put the past year
behind us, I would like to recap a few of the good things from the Board’s perspective in 2020.

We all saw the best of our people during the worst of times. In our annual report, we featured a few of the stories
from 2020 and you saw the “can do” attitude, the positive spirit and the determination to provide the best possible
service with warmth and professionalism.

On behalf of the Board, I would like to publicly thank all of our staff at all of our hotels and our corporate office once
again for all of their work during 2020 and now. I am sure all of our shareholders feel the same way and would like
to extend their thanks as well.

Our results for 2020 were better than forecast when you consider that when the initial impact of the pandemic was
felt, we were certain that the outcome at half year and year end would be a substantial loss. As we have pointed
out before, the overall result was helped by a one-off non-cash tax-credit and strong contributions from CDL
Investments and from our Australian operations.

Our core hotel operations in 2020 were in fact profitable and recorded a small profit of $1.9 million. Our total
occupancy over last year was 39.2% and we managed to maintain a Revenue Per Available Room (RevPAR) of
$66.17 which we think is a very positive achievement and the result of careful and targeted domestic marketing.

All of this is good news. But we need to remember that even though New Zealand might be mostly back to “normal”,
industries such as tourism are not yet out of the woods.

In our results announcement and in the Annual Report, we noted that the impact of the pandemic will continue to
be felt in 2021 given the fact that our international borders will stay closed to all except those within the Trans-
Tasman and Pacific Travel Bubbles. We still think that will be the case now.

We have seen a small pick up in Australian visitors as a result of the Trans-Tasman Bubble, most noticeably in
Queenstown, but the reality is that the Bubble is fragile and travel between Australia and New Zealand could be,
and has been, suspended at a moment’s notice.

While the reasons for any suspension are completely understandable, there will inevitably be disruptions during a
suspension period and those disruptions will lead to cancellations and impact on present and future revenue. If
those suspensions get more frequent, it will impact on public confidence and we believe that even if things go
smoothly over the coming months, it will still be some time before there is enough trust amongst the public to
resume travelling as they did pre-pandemic.

We therefore cannot see a resumption of long-haul international travel to New Zealand until some time next year
at the earliest and we have made our forecasts on that basis. With COVID-19 still very much a major issue around
the world, it seems inevitable that our borders will remain shut for this year and for a part of 2022.

MCK’s conservative approach means that we have the financial resources and balance sheet strength to endure
these ongoing difficulties. This strength does allow your Board to focus on the path ahead.

We are therefore asking a lot of questions of our management team about future revenue, our strategies, our
refurbishment plans and how they see the markets post-pandemic. As we have our operational expenditure under
control, we have the ability to look beyond the current situation and to see how we can build our core business
back.

For example, at our Board Meeting yesterday, we approved an extension to the refurbishment plans for Millennium
Hotel Queenstown and Millennium Hotel Rotorua. These destinations would be the first to recover when more
borders are open. Initially, we had provided for a small-scale refurbishment of a small number of rooms to meet
client demand but we now feel confident enough to justify increasing both projects to accommodate additional
anticipated demand.

So even though times continue to be tough for now, we do believe there is reason to be positive about the future.
Our priority now is to position MCK to be able to take every advantage of growth when it returns and to translate
that growth into returns to shareholders.

By reinvesting in our portfolio now, we will secure a competitive advantage with newer product and with our network
of hotels across New Zealand, we believe that we will be ready to welcome the world once more when the time
comes.

---

25/05/21
1
36
th
Annual General Meeting
25
th
May 2021
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)
Richard Bobb (Independent Director)
Kevin Hangchi (Director)
Eik Sheng Kwek (Director)
Leslie Preston (Independent Director)
2
•Quorum.
•Apologies will be recorded in the minutes.
•Proxies.
•Minutes of the 35
th
Annual Meeting.
•Notice of Meeting taken as read.
3
Richard Bobb retiring from the Board
4
2020 – the year of the pandemic
5
“Bend........don’t break”
We saw the best of our people in 2020
6

25/05/21
2
Thank you to all MCK staff across New Zealand
for all your work in 2020
7
Summary of MCK’s 2020 Results
•Our results for 2020 were better than forecast.
•Overall result was helped by a one-off non-cash tax-credit.
and strong contributions from CDL Investments and from our
Australian operations.
•Core hotel operations in 2020 recorded a small profit of $1.9
million.
•Total occupancy over last year was 39.2%.
•Revenue Per Available Room (RevPAR) of $66.17.
8
Outlook for 2021
•Impact of the pandemic will continue to be felt in 2021.
•International borders will stay closed for now.
•Small pick up in Australian visitors as a result of the
Trans-Tasman Bubble.
•Disruptions will lead to cancellations and impact on
present and future revenue.
•Seems inevitable that our borders will remain shut for
this year and for a part of 2022.
9
Outlook for 2021 (cont...)
•We have the financial resources and balance sheet
strength to endure these ongoing difficulties.
•We have the ability to look beyond the current
situation.
•Board has approved an extension to the refurbishment
plans for Millennium Hotel Queenstown and
Millennium Hotel Rotorua.
•Priority now is to position MCK to be able to take every
advantage of growth when it returns.
10
11
MCK 2020 Group Results
202020192018
Group Revenue ($m): 172.0229.7218.8
EBITDA ($m):60.494.091.3
Profit Before Tax ($m):50.985.485.1
•Border closure and lockdowns impacted sales in hotels.
•Deferred tax credit ($20m) from reintroduction of tax
depreciation on buildings was booked into profit and loss.
•Property interests in CDL Investments and KIN Holdings,
Australia cushioned the group’s results.
12

25/05/21
3
Hotels: April YTD Trading
202120202019
•Hotel Revenue:$20.1m $31.6m$47.6m
•Occupancy:39.9% 57.5%89.1%
•Average Room Rate: $158 $184$176
•RevPAR:$63 $105 $157
•April 2019 should be the benchmark.
•Two hotels remain closed.
•Revenue loss from 2 lockdowns in February and March .
•Copthorne Hotel Palmerston North, Copthorne Hotel Wellington Oriental Bay, Millennium
Hotel New Plymouth and Kingsgate Hotel Dunedin all traded better than 2020.
•M Social and Grand Millennium Auckland remain managed isolation facilities.
•Trading improvement trends seen at Copthorne Hotel Bay of Islands, Millennium Hotel
Rotorua and Copthorne Hotel Queenstown, Lakeview.
13
•Positive cash flow April YTD.
•Cash / term deposits $39m.
•Bank line of credit $60m ($56m unused).
•Current Ratio 1.9.
•LVR 2.03%.
•Debt to asset ratio 2.6%.
•Proceeds from sale of Christchurch land received in May.
•MCK has ability to access extra bank funding for growth
opportunities.
14
Cash Management
•Retaining experience and expertise as selective recruiting commence.
•Trans-Tasman border opening will benefit upcoming ski season and
group tours in summer.
•Skills shortage an issue notably in Queenstown.
•Encouraging sales from domestic direct bookings, Away To Go
vouchers and from marketing partnerships.
•More but smaller residential meetings across locations versus large
conferencing events at one venue.
15
Recovery Runway
•Major Capex plan tailored to recovery by 2024. Paced approach recognising the
fragility of border openings.
•Stage 1, Millennium Hotel Queenstown refurbishment to be ready for summer.
•Stage 1, Millennium Hotel Rotorua refurbishment to be ready for summer.
•Kingsgate Hotel Greymouth, demolition of 1906 wing completed. Reception,
restaurant to relocate to Tower wing. Hotel to be a 4 star Copthorne.
•Copthorne Hotel Queenstown, Lakefront, roof and strengthening works
completed.
16
Recovery Runway (cont...)
1718

25/05/21
4
CDL Investments 2020 Sales
Increased demand for residential sections saw
more sales in Christchurch.
2020 2019 2018
Sales ($m)88.8 91.8 85.0
Profit before tax ($m)41.8 47.3 46.7
Section sales were from:

Prestons Park, Christchurch

Magellan Heights, Hamilton

Kewa Road & Dominion Road, Auckland
19
April 2021 YTD Sales
Sections developed in late 2020 enabled a large lift in sales in
first four months of 2021.

Sales $35.7m ($18.8m in 2020)

Sales were from:
Prestons Park, Christchurch
Dominion Road, Papakura
Kewa Road, Auckland

Last section sold at Magellan Heights, Hamilton.
20

Cash & term deposits: $122m
(as at 30 April 2021)

Quick ratio*10.7

No bank borrowings
*
Total current assets less Inventory
Total current liabilities
21
WORK IN PROGRESS
Christian/Tram Valley Road,
Swanson, Auckland
•Earthworks drainage & utility services completed.
•Subdivision roads being constructed
•Titles to issue in Q1, 2022
Prestons Park, Marshlands /
Burwood, Christchurch
•Stage 4:
- C1-C2, construction completed. Titles in July
2021. All sold pre-title.
- D1-D3, construction underway. Titles in
September 2021.
•Stage 5: Earthworks underway.
Prestons Commercial
(15 units, F&B + Retail)
•Construction progressing.
•Completion Q4, 2021
Stonebrook, Rolleston, Selwyn
•Last stage 27 all sold bar 1
Stonebrook Commercial
(5 units F&B)
•Construction completed.
•3 units leased
Roscommon Road, Wiri
South Auckland Commercial site
•Lot 1: Warehouse under construction. Leased.
•Lot 2: Sold.
•Lot 3: Sold.
22
CDL Hamilton Subdivisions
109 hectares for
residential development
Gordonton Road, Hamilton
•Awaiting Hamilton Council decisions.
Hobsonville Road, Auckland
•Awaiting W henuapai plan change by Auckland
Council.
Arataki Road, Havelock North
•Final decision from Hastings Council forthcoming.
24

25/05/21
5

Low mortgage rates and availability have increased demand
for property including sections.

New housing policies, border closure and migration policies
will temper housing demand going forward.

CDI pipeline supply development will continue with works in
progress for 2022 sales.

Progress at Auckland, Hamilton and Havelock North
development dependent on speed of local council consents.

Continue to increase land portfolio for development.

CDI to deliver a profitable 2021.
25
•Hotel financials stable.
•Cash flow positive results.
•Cost price squeeze and fragility of open borders call for optimising versus
maximising strategies.
•Trans-Tasman border opening positive for Queenstown.
•Growth trend in smaller but more domestic business meetings across
regions, positive for MCK.
•Recovery plan with hiring and refurbishments paced to a 2024 recovery.
•Lift in CDL Investment section sales April YTD will assist MCK group
earnings in 2021.
26
Summary
Election of Directors

Election of Leslie Preston as a Director

Re-election of Kevin Hangchi as a Director

Re-election of Colin Sim as a Director
Each Director needs to be individually elected.
All resolutions are being conducted by way of poll.
27
Election of Director
Election of Leslie Preston as a Director
28
Election of Director
Election of Kevin Hangchi as a Director
29
Election of Director
Election of Colin Sim as a Director
30

25/05/21
6
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 2021.
31
General
Business
32
CLOSE OF MEETING
Thank you for attending
33