MCK: 2019 Interim Results Announcement

--CHAIRMAN'S REVIEW-- --Financial Performance: Millennium & Copthorne Hotels New Zealand Limited ("MCK") announced an unaudited profit after tax and non-controlling interests of $23.81 million for the six month period ended 30 June 2019 (2018: $30.15 million). Profit before income tax and non-controlling interests was $41.00 million (2018: $54.66 million). Group revenue and other income for this period was $110.61 million (2018: $127.51 million) and gross profit for the period was $64.10 million (2018: $77.66 million). Earnings per share for the period were 15.05 cents per share (2018: 19.05 cps). The main contributor to these results was CDL Investments' slower section sales reflecting a number of current market factors which are outlined below. --New Zealand Hotel Operations: 2019 has seen increased competition in the New Zealand hotel market across the country with occupancy declining slightly to 82.5% (2018: 83.2%)) but with continued downward pressure on room rates. New additional inventory in Auckland has also contributed to the mix. Revenue from hotels for the period was $64.46 million (2018: $64.27 million) for MCK's 14 owned / leased and operated hotels (excluding 5 franchised and 2 managed hotels). RevPAR (Revenue per available room) was $135.85 (2018: $133.12). MCK is conscious that it must remain competitive in terms of its product and service standards and MCK will continue to invest in refurbishments during the second half of this year with programmes at Millennium Hotel Rotorua and Millennium Hotel Queenstown and the conversion of Kingsgate Greymouth to the Copthorne brand. Further improvements are being planned at other hotels in response to customer demand and guest feedback. The judicial review action brought by several Auckland hotel owner / operators including MCK against Auckland Council in relation to the Accommodation Provider Targeted Rate (APTR) was heard in the High Court in late May. A decision is expected before the end of the year but, as advised previously, will not materially impact on MCK's financial position or the 2019 year end results. --CDL Investments New Zealand Limited ('CDL'): CDL announced an unaudited operating profit after tax for the six months ended 30 June 2019 of $15.10 million (2018: $25.47 million). The results reflect a softer market for residential sections in some areas and CDL's management are focused on a sales strategy to maximise sales from areas which are selling well for the remainder of 2019. --Offshore investments - Australia: Occupancy at the Zenith Residences, Sydney was steady at 94.2% across the complex. Three apartments were sold in the first half of 2019. Further sales are expected before the end of the year. --Outlook: The current competitive environment will continue for the rest of the year but we expect our hotels to perform well against their competitors despite increasing input and utility costs which are having an impact on operational performance. We are confident that CDL Investments' sales will improve before the end of 2019 as they optimize their sales programmes for the remainder of the year. The Board believes that a year-end result for 2019 in line with 2018 is achievable and has directed Management to focus on maintaining market share and improving productivity as well as careful cost management across all operations over the coming months. Colin Sim Chairman 1 August 2019 --MEDIA RELEASE-- INCREASING COSTS AND SLOWER SECTION SALES IMPACT ON MCK'S INTERIM RESULTS 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 2019: MCK Chairman & Independent Director Colin Sim said that majority-owned CDL Investments slower sales coupled with a highly competitive environment for the company's hotels was reflected in the results announced today. "Our hotels are holding their own despite a more challenging market but the results clearly reflect the softer market for our land development operations and that was the biggest factor which affected our 2019 interim results", he said. MCK's Managing Director Mr. BK Chiu also noted that the increasing input costs were being seen and felt within MCK's operations. "Already apparent are the first impacts of a cost-price squeeze cycle and it is impossible to ignore these cost increases. But we are dealing with these challenges just like every other business in New Zealand and we are making the necessary adjustments effectively", he said. In this regard, MCK was continuing with its continuous capital expenditure programme of refurbishing its hotels and announced that work was being done at Millennium Hotel Rotorua, Millennium Hotel Queenstown and the conversion of Kingsgate Hotel Greymouth to a Copthorne-branded property. "To be competitive means reinvesting in our product and service standards and we are sensitive to customer demand and guest feedback. We are confident that this work will deliver improved rates in the future", said Mr. Chiu. MCK also noted that the judicial review brought by several Auckland hotel owner / operators including MCK had been heard in late May with an decision expected before the end of the year. Looking at the remainder of this year, Mr. Sim said that MCK's Board remained positive about the outlook "The Board believes that a year-end result in line with the last two years is achievable. We are confident that CDL Investments sales will improve and our hotels team is focused on what it takes to maintain our market share, lift our productivity and carefully manage our costs at all of our properties", he said. Summary of results: --Average hotel occupancy across the Group 82.5% (2018: 83.2%) --Group revenue and other income $110.61 million (2018: $127.51 million) --Operating profit before finance income $40.57 million (2018: $53.84 million) --Profit before income tax and non-controlling interests $41.00 million (2018: $54.66 million) --Profit after tax and non-controlling interests $23.81 million (2018: $30.15 million) 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 End CA:00338429 For:MCK Type:HALFYR Time:2019-08-01 08:57:22