Half Yearly Report

For Immediate Release 31 July 2013

MILLENNIUM & COPTHORNE HOTELS PLC

INTERIM MANAGEMENT REPORT

Half year and second quarter results to 30 June 2013

Highlights for the first half 2013:

Highlights for the second quarter 2013:

·; Revenue is down £4.8m in the first half of 2013 year-on-year. This is due to a combination of factors affecting performance in the first two quarters of this year:

- Trends in Asia remain subdued, because of economic uncertainty, greater hotel capacity and increasing costs, particularly in Singapore, where an increased supply of competitor hotel rooms has impacted trading;

- Local factors affecting Rest of Asia destinations, including loss of customers in Manila and Seoul;

- The Group's refurbishment programme, which has seen a net 181,000 room nights removed from the inventory during the six-month period;

- US is benefiting from improvements at ONE UN and Minneapolis. However refurbishment programme will reduce regional capacity and revenue in the short-term; and

- European trading is steady.

·; RevPAR is up by 4.1% to £67.27 in the first half of 2013 due to increases in both occupancy to 70.5% (2012: 69.8%) and average room rate to £95.45 (2012: £92.54).

·; Profit before tax has fallen by 29.7% to £55.5m (2012: £79.0m) in the first half of 2013, reflecting lower operating profit and the absence of £9.1m share of profit from First Sponsor recognised in the first half of 2012 relating to the Chengdu Cityspring project. 

·; Interim dividend declared at 2.08p per share.

·; Revenue in the second quarter of 2013 has increased by 0.8% year-on-year to £199.9m (2012: £198.4m). Despite better trading performance in London and New York regions, the Group still faces challenging trading conditions in Singapore and Seoul.

·; Profit before tax in the second quarter of 2013 has declined by £14.5m year-on-year.

 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.

Commenting today Mr Kwek Leng Beng, Chairman said:

"Overall, trading is in line with management's expectations although we remain cautious on the outlook for hospitality markets. London faces a tough comparative third quarter mainly because of its success during last year's Olympics, whilst our Singapore hotels are competing with an increasing supply of rooms offered by competitors, as well as higher labour costs. These challenging short-term trading conditions will not deflect us from pursuing our strategic objective to improve the competitive position of our hotels."

Enquiries

Millennium & Copthorne Hotels plc

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

John Chang, Chief Financial Officer

Alan Scott, Company Secretary

Peter Krijgsman, Financial Communications (Media)

This interim 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.

BUSINESS REVIEW

Financial Performance

For the first six-month period of 2013, total revenue decreased by 1.3% year-on-year to £369.1m (2012: £373.9m). Operating profit was down by 24.1% to £45.4m (2012: £59.8m).

Both revenues and profits were adversely affected by challenging conditions in some of our key markets, in particular the continuing slowdown in Singapore corporate business and the lower number of Japanese visitors in Seoul arising from the geo-political tensions between Japan and South Korea over Dokdo Island. In Singapore, the hospitality sector also faces increasing cost pressure as a result of government policies restricting the use of foreign labour.

In the second quarter, revenue increased by 0.8% to £199.9m (2012: £198.4m). The weaker UK Pound boosted reported currency revenues by £5.5m, but also increased costs in reported currency terms. Operating profit for the quarter fell by 11.3% to £34.7m (2012: £39.1m), and by 13.0% on a constant currency basis.

Revenues and profits were further impacted by the Group's refurbishment programme, which saw a net 181,000 room nights removed from the inventory during the six-month period.

Operating Performance

Group RevPAR increased by 4.1% to £67.27 (2012: £64.62) for the first six months of the year. Average room rate increased by 3.1% to £95.45 (2012: £92.54) and occupancy increased by 0.7 percentage points to 70.5% (2012: 69.8%). RevPAR improved in New York, up 8.6% to £125.63 (2012: £115.66), and London, up 3.4% to £99.03 (2012: £95.76), but declined in Singapore, where RevPAR fell by 5.2% to £97.54 (2012: £102.92).

RevPAR performance in the Rest of Asia region was mixed, but adversely affected on aggregate by the fall in Japanese visitor numbers to Seoul and a slower hospitality market in Beijing. Across the region, RevPAR fell by 3.8% to £62.08 (2012: £64.56) for the six-month period.

Regional US and Australasia properties saw a second consecutive quarter of improvement in RevPAR in the second quarter of the year. For the six month period, Regional US delivered a 9.5% increase in RevPAR to £40.95 (2012: £37.39), whilst Australasia RevPAR rose by 14.5% to £39.90 (2012: £34.84).

In the Rest of Europe, RevPAR increased by 0.5% to £47.03 (2012: £46.79), largely attributed to the uplift in RevPAR from Millennium Hotel Paris Opera and Copthorne Aberdeen.

Financial Position

The Group's financial position remained strong with net cash at 30 June 2013 of £43.9m (31 December 2012: £52.2m). At the end of the first half of last year, gearing was 0.5%. At 30 June 2013 the Group had cash reserves of £397.9m and £259.5m 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

Refurbishment programme

The £240m programme of investment in the Group's existing hotels, which is in addition to underlying run rate capital expenditure, is making progress with several initiatives under way and a number of others in the planning stage. Timing of investment remains dependent on planning and other consents. Since the programme commenced in 2011 £77.8m of the £240m had been spent up to 30 June 2013.

£31.6m was spent under the programme in the first half of 2013, of which £19.6m was spent in the second quarter. Most of this was accounted for by works undertaken at Millennium Minneapolis and Grand Hyatt Taipei. A further £30.4m is anticipated to be spent in the second half of 2013, with c.£100m estimated to be spent in 2014.

During the second quarter, the Group completed renovation of the west wing of the Grand Hyatt Taipei, which re-opened in June 2013. The next phase will be renovation of the 392-room east wing earmarked to commence in August 2013. Completion of this is scheduled for the middle of 2014. As previously disclosed, total capital expenditure of approximately £60m is anticipated for the room renovations of Grand Hyatt Taipei, of which the Group had spent £24.4m at 30 June 2013. Further investment is planned for the lobby and food and beverage outlets.

In the US, Millennium Minneapolis reopened in May 2013 after the successful completion of its £15m refurbishment. Since re-opening trading has been in line with management expectations, with positive comments from customers. The Group is planning a number of refurbishment projects, both back-of-house and client-facing, at other regional US hotels, including Millennium St Louis, Millennium Scottsdale Resort and Villas, Millennium Hotel Durham and Millennium Hotel Cincinnati. The Group considers such investment essential for the regional hotel portfolio to participate in any sustained upturn in US hospitality markets.

We remain in discussions with Grosvenor Estates regarding the refurbishment programme for Millennium Hotel London Mayfair. In addition, we are considering design concepts for the refurbishment of Millennium Hotel London Knightsbridge. The timing and cost of both these developments remain dependent on the outcome of negotiations and obtaining necessary planning consents.

New hotel development 

Construction of the Group's new hotel in Tokyo's Ginza district continues to proceed according to plan. Design proposals for the façade have been approved and demolition work is expected to complete in August 2013 for construction to commence as scheduled.

The Group is currently developing detailed plans, in relation to the land purchased adjacent to the Seoul Hilton hotel. The Group is looking to build hospitality facilities on the site which will complement the hotel, following further studies with architects and other external consultants.

Development properties

Of the 150 apartments for sale at our Glyndebourne development, buyers have signed sales and purchase agreements for 144 units up to 30 June 2013, with sales value of S$522.5m (£271.9m). Sales proceeds collected total S$275.5m (£141.6m) representing approximately 53% of the sales value. Revenue and development costs will appear in the income statement on completion which is expected to be no later than 2014. We are making every effort to achieve this earlier.

First Sponsor Capital Limited ("FSCL")

FSCL is making good progress. The inauguration of the 196-room M Hotel Chengdu, part of the Cityspring project, was announced on 2 July 2013 and the hotel is scheduled to soft-open in the third quarter of this year. It will be managed by the Millennium & Copthorne Group.

Development of FSCL's latest project, Millennium Waterfront in Chengdu is proceeding satisfactorily. Of the 7 blocks comprising 1,155 residential units launched since 24 November 2012, 970 units have been sold either under option agreements or sale and purchase agreements, with approximately 67.2% of the sales proceeds collected. FSCL launched a further 55 commercial units for sale on 29 June 2013, of which 11 units have been sold either under option agreements or sale and purchase agreements. Further development and sales launches will be phased according to demand. FSCL plans to commence construction of a Millennium-branded hotel with convention facilities at Millennium Waterfront in the second half of 2013 which will be financed by cash flows from residential sales.

FSCL was not affected directly by the April 2013 earthquake in Sichuan.

Dividend

In line with the Group's usual policy, the Board has declared an interim dividend of 2.08p per share. The interim dividend will be paid on 4 October 2013 to shareholders on the register at the close of business on 16 August 2013. The ex-dividend date of the Company's shares is 14 August 2013.

Outlook

Trading in the first half of 2013 was challenging, especially in the first quarter. Whilst the Group is mindful that the world economic and political environment remains uncertain, particularly in Asia, the Group has adopted appropriate trading strategies for the current market conditions. The Group's strong financial position also enables us to take these conditions in our stride whilst continuing to invest in the fabric of the business.

Group RevPAR was up 1.6% 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 2.5%, New York up 15.6% and Singapore down 12.6%. Rest of Asia was down 8.9%.

PERFORMANCE REVIEW

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

EUROPE

* % points

Europe saw an overall increase in RevPAR of 2.1% for the six-month period. Following a difficult start to the year, performance in the second quarter was more encouraging with RevPAR growth of 6.6% across the region, driven mainly by an increase in occupancy of 4.4 percentage points.

RevPAR in London grew by 3.4% to £99.03 (2012: £95.76). Occupancy increased by 3.3 percentage points to 81.1% (2012: 77.8%) whilst average room rate was £122.19 - down 0.7% on 2012. Performance improved in the second quarter with RevPAR in London up 9.0% to £118.32 (2012: £108.57).

RevPAR at the Group's regional UK hotels was marginally down on the prior period.

ASIA

* % points

Asia hotel revenue fell by 8.3% to £151.0m (2012: £164.6m). Guestroom inventory was considerably reduced during the six- month period as a result of the planned partial closure for refurbishment of Grand Hyatt Taipei. This had a negative revenue impact of approximately £5m over the six-month period.

Millennium Seoul Hilton remains affected by the reduction in Japanese visitor numbers earlier this year as a result of political tensions, with occupancy down in the first six months by approximately 20% compared to 2012.

The slowdown in the Singaporean economy and an increase in hotel capacity on the island continue to impact the hospitality sector, with lower occupancy and room rates both contributing to a reduction in RevPAR of 8.8% over the six-month period. The corporate market remains soft.

RevPAR for the Rest of Asia decreased by 6.5% to £62.08 (2012: £66.43), mainly as a result of Millennium Seoul Hilton and slower hospitality markets impacting Grand Millennium Beijing. Grand Millennium Kuala Lumpur performed well.

UNITED STATES

* % points

In the 6 months to 30 June 2013, US regional RevPAR increased by 9.5% to £63.65 (2012: £58.15). However revenue was down by £1.5m due to the temporary closure of 135,000 room nights during the period. This was mainly a result of refurbishments at Millennium Hotel Minneapolis, which was fully closed for most of the period before re-opening in May 2013. 616 of the 780 rooms available at Millennium Hotel St Louis were also closed over the period.

New York RevPAR increased by 6.1% in the first six months. This was principally due to ONE UN, where room rate increased significantly following renovation of the hotel's west tower last year. New York RevPAR growth accelerated to 10.6% in the second quarter.

Regional US performance continues to show signs of recovery with solid RevPAR growth at Millennium Knickerbocker Hotel Chicago and Millennium Biltmore Hotel Los Angeles. Regional RevPAR performance is impacted by guest room closures at St Louis, where closed guestrooms have been removed from the hotel and regional RevPAR calculation.

AUSTRALASIA

* % points

The strong performance during the first quarter by the Group's Australasian hotels continued over the second three months of the year. RevPAR grew by 9.6% for the 6 months to 30 June 2013, mainly as a result of increased occupancy.

Total revenue fell marginally due to the inclusion of Kingsgate Hotel Parnell Auckland (closed in August 2012), and increased insurance receipts relating to the Christchurch earthquake in the 2012 comparatives. On a like-for-like basis revenues increased by 5.1%.

Demolition of the Copthorne Hotel in Victoria Square, Christchurch, damaged in the Christchurch earthquake of 2012, has begun. The Group is in discussion with local 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

for the half year ended 30 June 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 half year ended 30 June 2013

Condensed consolidated statement of financial position

as at 30 June 2013

Condensed consolidated statement of cash flows

for the half year ended 30 June 2013

Condensed consolidated statement of changes in equity

for the half year ended 30 June 2013

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 2013 comprise the Company and its subsidiaries (together referred to as "the Group") and the Group's interests in joint ventures and associates.

These primary statements and selected notes comprise the unaudited interim consolidated financial results of the Group for the half years ended 30 June 2013 and 2012, together with the audited results for the year ended 31 December 2012. This half year interim management statement does not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006 but represents extracts from them. These extracts do not provide as full an understanding of the financial performance and position, or financial and investing activities, of the Company as the complete Annual Report. 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 2012.

The comparative figures for the financial year ended 31 December 2012 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 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. 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/investors/financial-results.html

This set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU. The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Services Authority, the financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2012.

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 hundred thousand.

In preparing these interim financial statements, management make 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 that applied to the consolidated financial statements as at and for the year ended 31 December 2012.

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.

There are no IFRS accounting standards and interpretations, which have been endorsed by the EU, but not yet effective as at 30 June 2013.

Except as described hereinafter, 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 2012:

IAS 1 - Financial Statement Presentation

IAS 19 Revised - Employee Benefits

IFRS 13 - Fair Value Measurements

The adoption of these accounting standards has not had a significant impact on the consolidated financial statements of the Group.

The financial statements were approved by the Board of Directors on 30 July 2013.

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)