Half-year Report

For Immediate Release 3 August 2016

MILLENNIUM & COPTHORNE HOTELS plc

INTERIM MANAGEMENT REPORT

Half year and second quarter results to 30 June 2016

 Highlights for the first half 2016:

Highlights for the second quarter 2016:

· Group RevPAR in constant currency fell by 4.2% in the first half of 2016 compared to the same period last year. This is due to decreases in both occupancy and average room rate of 1.4% points and 2.2% respectively.

· Total revenue for the first six months grew by 3.5% to £418m, in part reflecting higher land sales.

· Hotel revenue declined by 1.4% to £360m during the first six months of 2016. In constant currency, hotel revenue declined by 4.3% during the same period. This was due to deterioration of trading in our key gateway cities of New York, London and Singapore.

· Hotel operating profit fell by 21.7% to £47m (H1 2015: £60m).

· The Board has declared an interim dividend of 2.08p per share. The final dividend for the year, however, remains under review.

Mr Kwek Leng Beng, Chairman commented:

"We are disappointed by our hotel operating performance during the first half of 2016, particularly in New York and Singapore, which remain areas of focus for the Group. The UK referendum vote to leave the European Union, together with recent terrorist activity, has further intensified uncertainty over the direction of the global economy.

The Group has a history of successfully navigating difficult economic environments given its broad geographic exposure and strong balance sheet. Against a backdrop of economic uncertainty, we are adopting a prudent strategy to protect the Group's strong financial position, including a review of capital expenditure, whilst taking appropriate steps to strengthen areas of operating weakness."

Enquiries

Millennium & Copthorne Hotels plc Tel: +44 (0) 2078722444

Aloysius Lee, Group Chief Executive Officer

Jonathon Grech, Group General Counsel and Company Secretary

Peter Krijgsman, Financial Communications (Media)

FINANCIAL PERFORMANCE

For the six months ended 30 June 2016, Group revenue increased by 3.5% to £418m (H1 2015: £404m). This was a result of higher property revenue, increased contribution from the REIT and a weaker pound sterling versus other currencies, compared to the same period last year. The Group's reported revenue benefitted from a positive foreign exchange impact of £14m during the first half of 2016.

Hotel revenue fell by 1.4% to £360m during the first half of 2016 as compared to the same period last year, mainly because of weaker performance in the key gateway cities of New York, London and Singapore, partially offset by foreign currency gains. In constant currency, hotel revenue was down by 4.3% or £16m.

Property revenue for the period increased by 70.6% to £29m (H1 2015: £17m), mainly because of increased land sales in New Zealand and an increased contribution from Millennium Mitsui Garden Hotel Tokyo.

Revenue from the REIT increased by 31.8% to £29m (H1 2015: £22m) mainly because of the contribution from its first UK hotel, Hilton Cambridge City Centre which was acquired in October 2015.

Hotel Operations

In constant currency, Group RevPAR for the first half of 2016 fell by 4.2% to £67.91 (H1 2015: £70.88) due to decreases in both occupancy and average room rate of 1.4% points and 2.2% respectively.

# In constant currency whereby 30 June 2015 RevPAR and average room rates have been translated at average exchange rates for the period ended 30 June 2016.

The Group continues to focus on upselling opportunities, further developing our digital platform and online presence, and accessing inbound customers from new growth markets.

US

US RevPAR for the first half of 2016 was down by 8.2% to £72.89 (H1 2015: £79.36) resulting from decreases in both occupancy and average room rate.

In New York, RevPAR fell by 15.8% as a result of a 7.6% point fall in occupancy and 6.7% fall in average room rate. Room rates in the Times Square market continue to be impacted by the influx of new inventory. In addition, the strengthening US dollar dampened leisure travel demand, especially from the UK and Europe. Excluding ONE UN New York where the east tower is currently closed for refurbishment, RevPAR for US and New York fell by 3.6% and 8.6% respectively

RevPAR for the Regional US increased by 2.1% to £51.57 (2015: £50.49) reflecting a pick-up in trading in the Group's hotels in Los Angeles and Boston.

Europe

Europe RevPAR for the first half of 2016 dropped by 4.1% to £71.24 (H1 2015: £74.28) in part due to continued effects from recent terrorist attacks. Both London and Paris have seen a significant reduction in tour groups and individual travellers visiting the cities compared to previous years.

London RevPAR fell by 5.3% with a 1.6% point drop in occupancy and 3.3% reduction in average room rate. Similar to Q1 2016, the main exception for the Group's London properties was The Bailey's Hotel London where, following completion of its refurbishment at the end of 2015, higher room rates drove a 21.8% increase in RevPAR for the period.

RevPAR for the Rest of Europe increased slightly by 0.5% mainly due to the inclusion of Hard Days Night Hotel Liverpool which was acquired in August 2015.

Excluding The Bailey's Hotel London and Hard Days Night Hotel Liverpool, RevPAR for Europe, London and Rest of Europe decreased by 5.2%, 7.1% and 1.6% respectively.

Asia

Asia RevPAR for H1 2016 fell by 3.4% to £64.06 (H1 2015: £66.34) driven by lower room rate and occupancy. Singapore RevPAR was 10.2% lower as a result of continued weak demand in the corporate travel segment coupled with increases in room inventory.

Rest of Asia RevPAR grew by 3.1% in H1 2016, driven by an increase in both occupancy and average room rate. Millennium Seoul Hilton increased RevPAR by 18.1% for the six months compared to last year, having completed its guest room refurbishment programme.

Australasia

Australasia RevPAR grew by 14.7% in H1 2016 with average room rate increasing by 9.0% to £62.73 (H1 2015: £57.56) and occupancy up by 4.1% points reflecting operational improvements and growth in New Zealand visitor arrivals. International visitor numbers to New Zealand have reached 3.3m up by 10.6% on June 2015.

Development

Further to the planning approval obtained from the Urban Environmental Improvement authority in April 2016 for the proposed hotel and serviced apartments to be developed on the Group's land in Seoul, South Korea, the development proposal was subsequently presented to the South Korean Construction Deliberation Committee ("CDC") in May 2016 for building plan approval. The CDC has signalled that it is in broad agreement with the development proposal, subject to a small number of additional compliance items. The Group is updating its proposal to accommodate these items and plans to re-present the proposal for CDC clearance in September 2016. Thereafter, the building permit is expected to be lodged with the Urban Environmental Improvement authority before commencing construction by the end of this year. Tender award for the main construction work is pending the outcome of the approval from CDC.

The Sunnyvale project in California is expected to commence towards the end of 2016, once all relevant approvals are received. In the meantime management is conducting a value engineering exercise. The proposed development comprises a 263-room hotel and a 250-unit residential apartment block on the 35,717m2 mixed-use freehold landsite.

Hotel refurbishments

The Group is reviewing the timing and scope of work of the previously announced refurbishment programmes for Millennium Hotel London Mayfair and Millennium Hotel London Knightsbridge, which may impact overall capital expenditure allocated to these projects.

The refurbishment of the guest rooms located in the east tower of ONE UN New York is on track to be substantially completed in Q3 of this year.

Work on the main lobby and food and beverage outlets on the main entrance level of the Grand Copthorne Waterfront in Singapore, which started in December 2015, was substantially completed in May 2016 and the outlets opened for business in June 2016. Remaining works left under the current contract relate to the tea lounge and some function rooms on level two. That work is scheduled to start in August 2016, so as to accommodate hotel convention business and occupancy, and is expected to complete before the end of the current year.

Soft refurbishment of the guestrooms at Grand Millennium Kuala Lumpur ("GMKL") and M Hotel Singapore ("MHS") is ongoing. The work is being carried out in phases so as to minimise business disruption. At GMKL, 10 floors have been completed with the remaining 3 floors scheduled for completion around the end of 2016. At MHS, 13 floors out of 17 floors have been completed with the remaining 4 floors to be completed in phases by the end of 2016.

Copthorne Hotel Auckland Harbour City in New Zealand, which was closed for a major NZ$40m (£21m) refurbishment programme in Q3 2015, is now in the construction stage, with 50% of the internal partitions and services having been installed to date and the earthquake strengthening and new window installations nearly complete. The hotel will be rebranded under the Group's M Social brand and is expected to re-open at the end of Q1 2017.

In June 2016, it was announced that the Group would assume the lease of Rendezvous Grand Hotel Auckland from September 2016. The hotel, the largest in New Zealand with a total of 452 guestrooms, is owned by CDL Hospitality Trusts ("CDLHT"). It will be the Group's first Grand Millennium hotel in Australasia.

Asset disposals

The Group has in place a number of contractual arrangements with the developer of Birmingham's Paradise Circus redevelopment scheme pursuant to which the developer has a right to acquire the existing site of the Copthorne Hotel Birmingham in accordance with an agreed process and the Group has an option to sell the existing site to the developer and, as applicable, an option to acquire an alternative site in the redevelopment area for the construction of a new hotel. The Group continues to review its options and discussions with the developer are ongoing.

With regard to the Millennium Hotel Glasgow, it was previously reported that in September 2015 the Group received notice of an application from Network Rail Infrastructure Limited ("Network Rail") for an order to temporarily close and possess the Millennium Hotel Glasgow, and permanently take a portion of the hotel, in connection with the redevelopment of the Queen Street Station in Glasgow. The Group objected to various components of the application and a public inquiry was held in May and June 2016. A final decision on the proposed order is awaited from the Scottish Ministers. Pending that, the Group continues to pursue commercial discussions with Network Rail and will assess options once the decision has been issued.

Other Group Operations

Joint ventures and associates contributed £5m to profit in the first half of 2016 (H1 2015: £6m). The Group has an effective interest of 36% in First Sponsor Group Limited, which is listed on the Singapore Exchange and reports its results publicly.

Financial Position

At 30 June 2016, the Group had net debt of £709m (Dec 2015: net debt £605m).  Excluding CDLHT, the net debt was £241m (Dec 2015: net debt £201m).

The Group has a total of £394m of undrawn committed bank facilities at 30 June 2016 (Dec 2015: £406m). Excluding CDLHT, the total undrawn committed bank facilities was £244m (Dec 2015: £280m). Most of the facilities are unsecured, with unencumbered assets representing 93% of fixed assets and investment properties.

Dividend

The Board has declared an interim dividend of 2.08p per share. The final dividend for the year, however, remains under review.

Current Trading

In constant currency, Group RevPAR was up by 2.4% for the three weeks ended 21 July 2016, with London up by 9.1%, in part a result of the timing of the Muslim month of Ramadan and other events such as the Farnborough Airshow, Singapore up by 1.3% and New York down by 12.0%. Excluding acquisition and closures, Group RevPAR remained at 2.4% with London up by 4.1%, New York down by 6.4% and no change to Singapore RevPAR.

This interim management report 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.

Condensed consolidated income statement (unaudited)

for the half year ended 30 June 2016

The financial results above were derived from continuing activities.

Condensed consolidated statement of comprehensive income (unaudited)

for the half year ended 30 June 2016

Condensed consolidated statement of financial position (unaudited)

as at 30 June 2016

Condensed consolidated statement of cash flows (unaudited)

for the half year ended 30 June 2016

Condensed consolidated statement of changes in equity (unaudited)

for the half year ended 30 June 2016

Notes to the condensed consolidated financial statements

1. General information

Basis of preparation

The consolidated financial statements in this interim management report for Millennium & Copthorne Hotels plc ("the Company") as at and for the half year ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as "the Group") and the Group's interests in joint ventures and associates.

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2015.

The comparative figures for the financial year ended 31 December 2015 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor 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.

These interim financial statements were authorised for issue by the Company's Board of Directors on 2 August 2016.

Use of judgements and estimates

The financial statements were prepared on a going concern basis supported by the Directors' assessment of the Group's current and forecast financial position, and forecast for the foreseeable future; and are presented in the Company's functional currency of sterling, rounded to the nearest millions.

In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2015.

Significant accounting policies

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2015.

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.

Notes to the condensed consolidated financial statements

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.

The results of CDLHT have been incorporated within the existing geographical regions. In addition, CDLHT operations are reviewed separately by its board on a monthly basis.

Notes to the condensed consolidated financial statements

3. Operating segment information (continued)

1 Hotel fixed charges include depreciation, amortisation of lease premium prepayments, property rent, taxes and insurance, operating lease rentals and management fees.

2 See Note 4 for details of other operating income and expense.

3 EBITDA is earnings before interest, tax and, depreciation and amortisation.

Notes to the condensed consolidated financial statements

3. Operating segment information (continued)

Segmental assets and liabilities

(a) Gain on insurance claim

In May 2016, a settlement was reached with the insurers in relation to Millennium Hotel Christchurch which was one of the hotels affected by the 2011 New Zealand earthquake. A gain of £2m in respect of material damage claim relating to fixtures, fittings and equipment was recognised by the Group in the first half of 2016. The lease for this property has expired and this 2016 settlement is the last insurance claim relating to the Christchurch earthquake damage.

(b) Revaluation gain of investment properties

At the end of 2015, a revaluation gain of £41m was recorded for the REIT properties and Millennium Mitsui Garden Hotel Tokyo.

Notes to the condensed consolidated financial statements

4. Other operating income and expense (continued)

(c) Revaluation deficit of investment properties

Based on the Singapore retail price index at June 2016, the Directors consider it appropriate to record a revaluation deficit of £4m in relation to Tanglin Shopping Centre which is an investment property (H1 2015: £nil). At the end of 2015, a revaluation deficit of £8m was recorded for the REIT properties, Tanglin Shopping Centre and Biltmore Court & Tower.

(d) Impairment of property, plant & equipment

In 2015, a total impairment charge of £76m consisting of £23m in New York, £15m in Rest of Europe, £37m in Rest of Asia and £1m for New Zealand was made.

5. Income tax expense

The Group recorded a tax expense of £8m for the first half of 2016 (2015: £10m) excluding the tax relating to joint ventures and associates.

Income tax expense for the period is the expected income tax payable on the taxable income for the period, calculated at the estimated average underlying annual effective income tax rate applied to the pre-tax income for the period, and further adjusted to take into account the impact of over or under-provision adjustments for prior years.

6. Earnings per share

Earnings per share are calculated using the following information:

7. Dividends

Dividends paid to equity holders in the first half of 2016 totalled £14m (2015: £37m).

8. Significant related parties' transactions

Identity of related parties

Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below. All transactions with related parties were entered into in the normal course of business and at arm's length.

The Group has a related party relationship with its joint ventures, associates and with its Directors and executive officers.

Notes to the condensed consolidated financial statements

Significant transactions with ultimate holding company and other related companies

The Group has a related party relationship with certain subsidiaries of Hong Leong Investment Holdings Pte. Ltd. ("Hong Leong"), which is the ultimate holding and controlling company of Millennium & Copthorne Hotels plc and holds 64.9% (31 December 2015: 65.3%) of the Company's shares via City Developments Limited ("CDL"), the intermediate holding company of the Group. During the half year ended 30 June 2016, the Group had the following significant transactions with those subsidiaries.

The Group deposited certain surplus cash with Hong Leong Finance Limited, a subsidiary of Hong Leong, on normal commercial terms. As at 30 June 2016, £3m (2015: £5m) of cash was deposited with Hong Leong Finance Limited.

Fees paid/payable by the Group to CDL and its other subsidiaries were £1m (2015: £1m) which included rentals paid for the Grand Shanghai restaurant and Kings Centre; property management fees for Tanglin Shopping Centre; charges for car parking, leasing commission and professional services.

As at 30 June 2016, City e-Solutions Limited ("CES"), a fellow subsidiary of CDL held 1,152,031 (2015: 1,152,031) ordinary shares in M&C.

9. Risks and uncertainties

The interim management report has been prepared on the basis set out in Note 1. The risks and uncertainties facing the Group are consistent with those outlined in the Annual Report and Accounts for the year ended 31 December 2015 except for the uncertainties resulting from UK's plan to leave the European Union. While we have not seen any immediate or material impacts from that decision aside from exchange rate fluctuations, we recognise that the coming years will be challenging in UK and are monitoring political and macro-economic developments closely.

10. Financial commitments, contingencies and subsequent events

Except as stated below, there have been no material changes to commitments, contingencies and subsequent events as disclosed in the annual report and accounts for the year ended 31 December 2015:

Capital commitments

Contracts placed for future capital expenditure not provided in the financial statements amount to £48m at 30 June 2016 (31 December 2015: £44m).

Subsequent events

There are no events subsequent to the balance sheet date which require adjustments to or disclosure within these consolidated financial statements.

MILLENNIUM & COPTHORNE HOTELS PLC

Responsibility statement of the Directors in respect of the interim management report

We confirm that to the best of our knowledge:

• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

• the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the board

Aloysius Lee

Group Chief Executive Officer

2 August 2016

Independent review report to Millennium & Copthorne Hotels plc

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity, condensed consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion