3rd Quarter Results

For Immediate Release 6 November 2013

MILLENNIUM & COPTHORNE HOTELS PLC

INTERIM MANAGEMENT STATEMENT

Third quarter and nine months results to 30 September 2013

Highlights for the third quarter 2013:

Highlights for the nine months 2013:

· Revenue increased by 3.1% to £197.1m in the third quarter of 2013 when compared to the same period last year (2012: £191.2m). The improvement in revenue was attributed by:

· Revenue improvement from New York hotels;

· Improved trading in regional US despite partial closure of Millennium Hotel St Louis;

· Return to rooms inventory of recently refurbished hotels; and

· Sale of land in New Zealand.

· European hotels, particularly those in London, benefited from an occupancy-led strategy that resulted in performance holding up well in the third quarter compared to last year which benefited from the Olympic effect. 

· Challenging trading conditions persist in most Asian destinations as a result of economic uncertainty and local factors such as lower Japanese visitor numbers in Seoul. 

· RevPAR for the third quarter rose by 3.4% to £73.68 (2012: £71.23) with occupancy growing to 76.5% (2012: 73.4%), offsetting a slight fall in average room rate to £96.35 (2012: £97.08).

· Operating profit in the third quarter fell year-on-year by 6.6% to £31.2m (2012: £33.4m), principally reflecting higher operating costs. Profit before tax recorded a 6.0% increase to £40.4m (2012: £38.1m) contributed by a higher share of profit from First Sponsor in the third quarter. 

· For the first nine months of 2013, total revenue increased by 0.2% to £566.2m year-on-year (2012: £565.1m). RevPAR grew 3.9% to £69.42 (2012: £66.81). Profit before tax fell year-on-year by 18.1% to £95.9m (2012: £117.1m) reflecting lower operating profit and lower share of profit from joint ventures and associates.

Commenting today Mr Kwek Leng Beng, Chairman said:

"By adapting our sales approach to reflect prevailing trading conditions, the Group kept revenue steady during the third quarter of 2013. Performance has been supported by reinstated room sales from recently refurbished hotels together with land sales in New Zealand."

Enquiries

Millennium & Copthorne Hotels plc

Wong Hong Ren, Chief Executive Officer Tel: +44 (0) 20 7872 2444

John Chang, Chief Financial Officer

Jonathon Grech, Company Secretary

Peter Krijgsman, Financial Communications (Media)

¹ The Directors have reassessed the presentation of the income statement in light of the Group's continuing evolution and best reporting practice and have made a number of disclosure and categorisation amendments to the income statement, together with relevant comparatives. The Directors consider that these adjustments better reflect the commercial dynamics of the Group and facilitate comparison with peers. The amendments have no impact on revenue, profit before tax or profit for the period.

This interim management statement contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of Millennium & Copthorne Hotels plc. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Undue reliance should not be placed on forward looking statements which speak only as of the date of this document. The Group accepts no obligation to publicly revise or update these forward-looking statements or adjust them to future events or developments, whether as a result of new information, future events or otherwise, except to the extent legally required.

BUSINESS REVIEW

Financial Performance

For the first nine-month period of 2013, total revenue increased by 0.2% year-on-year to £566.2m (2012: £565.1m). Operating profit was down by 17.8% to £76.6m (2012: £93.2m).

In the third quarter, total revenue increased by 3.1% to £197.1m (2012: £191.2m). Operating profit for the quarter fell by 6.6% to £31.2m (2012: £33.4m).

RevPAR increased by 3.9% to £69.42 (2012: £66.81) for the first nine months of the year. Average room rate increased slightly to £95.77 (2012: £94.10) and occupancy increased by 1.5 percentage points to 72.5% (2012: 71.0%). In the third quarter, RevPAR increased by 3.4%, driven by a 3.1 percentage points increase in occupancy to 76.5%. This offset a slight reduction in average room rates which fell by 0.8% to £96.35 over the same period (2012: £97.08). The Group shifted its strategic emphasis towards occupancy as a result of more challenging trading conditions in Asia. An occupancy-led strategy was also prevalent in Europe, after the rate-led strategy adopted for last year's London Olympic Games. US markets continued to recover in the third quarter, allowing more upward flexibility on average room rates.

Revenues were affected by the Group's refurbishment programme which saw a net 240,000 room nights removed from the inventory during the nine month period.

The Group's financial position remained strong with net cash at 30 September 2013 of £74.8m (31 December 2012: £52.2m). The Group had cash reserves of £418.1m and £244.8 undrawn committed bank facilities. Most of the facilities are unsecured with unencumbered assets representing 87.5% of our fixed assets and investment properties.

Asset Management

Hotel refurbishment programme

The Group's refurbishment programme for its existing hotels is making progress. Since the current programme commenced in 2011, £84.1m had been spent up to 30 September 2013, mainly on the refurbishment of several key hotels including ONE UN New York, Millennium Seoul Hilton, Millennium Hotel Minneapolis and Grand Hyatt Taipei.

£38.1m was spent under the programme in the first nine months of 2013, of which £6.3m was spent in the third quarter, mainly on the east wing of Grand Hyatt Taipei. A further £16.8m is anticipated to be spent in the final quarter of 2013, which means that total spending for 2013 will be lower than previously estimated. However, asignificant number of refurbishment projects is ready to commence, subject to relevant consents.

New hotel development

Construction of the Group's new hotel in Tokyo's Ginza district continues to proceed according to plan. Demolition work completed on schedule in August 2013 and construction has commenced.

In Seoul, in addition to the second phase of refurbishment of Millennium Seoul Hilton, architectural detailing is underway for construction of the Group's first mixed-use development incorporating a business hotel and purpose-built serviced apartments on land acquired in April 2013.

Whilst the Group continues to analyse acquisition opportunities, asking prices in gateway cities are not currently supported by underlying profitability.

Other properties

Of the 150 apartments for sale at our Glyndebourne development, buyers have signed sales and purchase agreements for 147 units up to 30 September 2013, with gross sales value of S$539.1m (£277.9m). Sales proceeds collected total S$296.5m (£152.8m) representing approximately 55% of the sales value. Revenue, development costs and profit will be recognised and disclosed once the local authorities have granted occupation permits to purchasers. Barring unforeseen circumstances, this is expected in the last quarter of 2013.

The Group recognised profit of £4.0m from land sales in New Zealand during the third quarter of 2013.

We announced today that the Group has signed a Collective Sale Agreement ("CSA") with other unit-holders in Tanglin Shopping Centre, a shopping-cum-office complex situated within the Orchard Road tourist district in Singapore, in which the Group has approximately a 34% interest. This process will be directed by an independent sales committee, representing all unit-holders. In common with other unit-holders, the Group is bound by a confidentiality agreement with respect to the proposed disposal, which is highly conditional.

First Sponsor Capital Limited

The 196-room M Hotel Chengdu, part of the Cityspring project, soft-opened on 20 September 2013. It is managed by the Millennium & Copthorne Group. Construction of a Group-branded and managed hotel and conference centre at Millennium Waterfront has commenced.

Outlook

The Group held a steady course during the third quarter despite more competitive conditions in Singapore and South Korea, and the impact of refurbishments in Taipei. Current trading is broadly in line with management expectations.

Group RevPAR was up 5.8% in the first three weeks of trading in the current quarter on a reported currency basis, compared to the same period last year, with London up 12.6%, New York up 4.6% and Singapore down 4.6%. Rest of Asia was up 10.0%.

PERFORMANCE REVIEW

For comparability, the following regional review is based on calculations in constant currency whereby 30 September 2012 average room rate and RevPAR have been translated at average exchange rates for the period ended 30 September 2013. Full details are given in Appendices 1 and 2 of this statement.

EUROPE

* % points

Europe saw an overall decrease in RevPAR of 0.4% for the nine-month period to 30 September 2013, when compared to the same period in 2012. In the third quarter of 2013, RevPAR was down 4.3% year-on-year, which in part reflected the strong performance of London during the corresponding Olympics quarter in 2012. Occupancy in the third quarter was up 3.7 percentage points at 84.3% (2012: 80.6%), whilst average room rate fell by 8.5% to £101.62 (2012: £111.06).

London RevPAR was down 4.3% to £122.74 in the third quarter (2012: £128.31), with occupancy up 8.0 percentage points on the corresponding period last year and average room rate down 12.7% at £133.38, again reflecting the absence of the Olympic Games in the current year. London has succeeded in attracting a greater number of visitors from China and the Middle East during 2013, which accounted for a significant proportion of the increase in occupancy.

RevPAR in Rest of Europe was down year-on year by 4.2% in the third quarter to £50.55 (2012: £52.76). Occupancy was down 0.4 percentage points, whilst average room rate fell by 3.7% to £65.67 (2012: £68.18).

ASIA

* % points

Guestroom inventory was reduced throughout the nine-month period as a result of the refurbishment of Grand Hyatt Taipei.

Asia RevPAR fell by 4.2% year-on year in the third quarter of 2013 to £71.74 (2012: £74.91), with occupancy up by 0.1 percentage point at 75.2% (2012: 75.1%). Average room rate for the region for the three months in 2013 fell by 4.3% to £95.44 (2012: £99.72).

Whilst there are signs that the decline in the Singapore hospitality sector has slowed, there continues to be concern about rising labour costs as a result of current government policy. Lower occupancy and room rates contributed to a reduction in RevPAR of 7.1% to £93.14 over the third quarter (2012: £100.31).

Third quarter RevPAR for the Rest of Asia decreased by 1.8% to £56.64 (2012: £57.66). Millennium Seoul Hilton continues to be affected by the reduction in Japanese visitor numbers as a result of political tensions. Third quarter occupancy for Seoul was 3% down on the comparative period in 2012, whilst average room rate was down by 12%. This is, however, a significant improvement on performance during the first six months, when occupancy was down by 20%. Grand Hyatt Taipei was adversely affected by refurbishment of the east wing whilst Heritage Hotel Manila is seeing fewer guests following the closure of its casino in July 2013.

UNITED STATES

* % points

In the nine months to 30 September 2013, US RevPAR increased year-on-year by 10.9% to £68.64 (2012: £61.87) mainly as a result of the higher room rate at ONE UN New York and Millennium Hotel Minneapolis.

In the 3 months to 30 September 2013, US RevPAR increased by 13.5% to £78.57 when compared to the same period in the prior year (2012: £69.21). New York RevPAR increased by 11.5% to £147.59 (2012: £132.41) in the third quarter principally due to ONE UN New York.

Regional US performance continues to show signs of recovery with RevPAR growth of 9.2% to £52.86 in the third quarter over last year (2012: £48.40), with a strong performance from Millennium Maxwell House Nashville and Millennium Hotel Minneapolis. Regional hotel revenue was lower than prior year because of room closures pending refurbishment at some hotels, the largest of which was Millennium Hotel St Louis.

AUSTRALASIA

* % points

The Group's Australasian hotels enjoyed their third consecutive quarter of RevPAR growth. RevPAR increased by 2.5% for the three months to 30 September 2013 over the prior year comparative period, due to increased occupancy.

The fall in total revenue for the nine-month period when compared to the same period in 2012 is due to the inclusion of Kingsgate Hotel Parnell Auckland (closed in July 2012), and increased insurance receipts relating to the Christchurch earthquake in the 2012 comparatives. On a like-for-like basis, revenue increased by 2.4%.

Demolition of Copthorne Hotel Christchurch Central has begun and is substantially complete. The Group is in discussion with territorial authorities as to the future of the site, freehold of which is owned by the Group, but no conclusion has been reached.

Condensed consolidated income statement (unaudited)

for the nine months ended 30 September 2013

The financial results above derive from continuing activities.

¹ The Directors have reassessed the presentation of the income statement in light of the Group's continuing evolution and best reporting practice and have made a number of disclosure and categorisation amendments to the income statement, together with relevant comparatives. The Directors consider that these adjustments better reflect the commercial dynamics of the Group and facilitate comparison with peers. The amendments have no impact on revenue, profit before tax or profit for the period.

Condensed consolidated statement of comprehensive income

for the nine months ended 30 September 2013

Condensed consolidated statement of financial position

as at 30 September 2013

Condensed consolidated statement of cash flows

for the nine months ended 30 September 2013

Condensed consolidated statement of changes in equity

for the nine months ended 30 September 2013

Notes to the condensed consolidated financial statements

1. General information

Basis of preparation

The third quarter results announcement for Millennium & Copthorne Hotels plc ("the Company") as at and for the period ended 30 September 2013 comprise the Company and its subsidiaries (together referred to as "the Group") and the Group's interests in joint ventures and associates.

The financial information set out in this interim management statement does not constitute the Group's statutory accounts for the period ended 30 September 2013. Statutory accounts for 2012 has been delivered to the registrar of companies following the Annual General Meeting held on 2 May 2013. The auditors have reported on those accounts; their reports were (i) unqualified; (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Whilst the financial information included in this interim management statement has been prepared in accordance with IFRS as adopted by the EU, this statement does not itself contain sufficient information to comply with all disclosure requirements of IFRS. Information contained in this statement relating to the year ended 31 December 2012 has been extracted from the full IFRS compliant Annual Report and Accounts that was approved on 21 February 2013.

The results have been prepared by applying the accounting policies and presentation that were used in the preparation of the Group's published consolidated financial statements for the financial year ended 31 December 2012 and which were prepared in accordance with IFRS as adopted by the EU. The consolidated financial statements of the Group for the financial year ended 31 December 2012 are available from the Company's website http://www.millenniumhotels.com/corporate/news-and-regulatory-announcements.html

The nine months results were approved by the Board of Directors on 5 November 2013.

The financial statements are presented in the Company's functional currency of sterling, rounded to the nearest hundred thousand.

The Directors have reassessed the presentation of the income statement in light of the group's continuing evolution and best reporting practice and have made a number of disclosure and categorisation amendments to the income statement, together with relevant comparatives. The Directors consider that these adjustments better reflect the commercial dynamics of the Group and facilitate comparison with peers. The amendments have no impact on revenue, profit before tax or profit for the year.

Non-GAAP information

Net cash/debt and gearing percentage

An analysis of net cash/debt and calculated gearing percentage is provided in note 7 'Non-GAAP measures'.

Notes to the condensed consolidated financial statements

2. Foreign currency translation

The Company publishes its Group financial statements in sterling. However, the majority of the Company's subsidiaries, joint ventures and associates report their revenue, costs, assets and liabilities in currencies other than sterling. The Company translates the revenue, costs, assets and liabilities of those subsidiaries, joint ventures and associates into sterling, and this translation of other currencies into sterling could materially affect the amount of these items in the Group's financial statements, even if their values have not changed in their original currencies. The following table sets out the sterling exchange rates of the other principal currencies of the Group.

3. Operating segment information

Disclosure of segmental information is principally presented in respect of the Group's geographical segments.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items principally comprise: interest-bearing loans, borrowings, cash and cash equivalents, net finance expense, taxation balances and corporate expenses.

Geographical segments

The hotel and property operations are managed on a worldwide basis and operate in seven principal geographical areas as follows:

· New York

· Regional US

· London

· Rest of Europe (including the Middle East)

· Singapore

· Rest of Asia

· Australasia

The segments reported reflect the operating segment information included in the internal reports that the Chief Operating Decision Maker ("CODM"), which is the Board, regularly reviews.

The reportable segments are aligned with the structure of the Group's internal organisation which is based according to geographical region. Discrete financial information is reported to and is reviewed by the CODM on a geographical basis. Operating segments have Chief Operating Officers ("COOs") or equivalent who are directly accountable for the functioning of their segments and who maintain regular contact with the Chief Executive Officer and Chairman of the CODM to discuss the operational and financial performance. The CODM makes decisions about allocation of resources to the regions managed by the COOs.

Notes to the condensed consolidated financial statements

3. Operating segment information (continued)

Notes to the condensed consolidated financial statements

3. Operating segment information (continued)