Interim Results

14 September 2012

The Hotel Corporation plc

Unaudited Interim Results for the period ended 30 June 2012

The Hotel Corporation PLC (the Company), an AIM listed investment company owning 49.9%1 of Puma Hotels plc and its subsidiaries (PHP), announces its unaudited interim results for the period ended 30 June 2012.

The Company's half year results have been split between discontinued and continuing operations reflecting the period to 25 April 2012 when the hotel leases were taken over from Barceló, as previously reported, and thereafter when Puma Hotels took on direct operational control for the hotels. The overall result for the Company on a consolidated basis was a profit of £19.5m, including the early termination payment from Barceló.

EXTRACTS FROM PUMA HOTELS' RESULTS

·; Profit of £16.0m (2011 H1 Loss of £0.3m), including the lease termination fee.

·; Encouraging performance from a strengthened Puma Hotels' team in taking over and stabilising the management of the hotels in a relatively short period.

·; Relaunching the hotels as the "Puma Hotels Collection" - to align operating standards and achieve sales and marketing synergies whilst emphasising unique nature of each property.

The Hotel Corporation Chairman Barclay Douglas said: "The handover from Barceló presented a tough challenge for the Puma management team to re-establish itself against a backdrop of severe trading conditions in the UK regional hotel sector. We look towards progress being made by the Puma management team in restoring the trading performance of the business."

1HCP holds 11,770,000 convertible preference shares in PHP. If in the future all the convertible preference shares are converted into ordinary shares, HCP will, on a fully converted basis, own 53.28% of PHP.

Press enquiries

The Hotel Corporation 01624 626586

Barclay Douglas

Buchanan

Richard Oldworth 020 7466 5000

Shore Capital and Corporate Ltd 020 7408 4090

Dru Danford / Anita Ghanekar

Notes to Editors

1. Puma Hotels plc ("Puma Hotels") acquired 13 Paramount branded hotels in July 2004. Following further acquisitions it now owns 20 four-star hotels across Scotland, Northern England, Central England, Southern England and Wales. See the table below for a full list of hotels.

2. The hotels offer extensive banqueting, conference and leisure facilities and many of them have architectural and historical significance. The Group has 2,875 bedrooms and around 20,000 square metres of conference and meeting space and offers extensive facilities to both corporate and leisure guests.

3. Since 25 April 2012, Puma Hotels has taken over the direct management of the 20 hotels. The Puma Hotels Collection website can be found at http://www.pumahotels.co.uk/

4. Puma Hotels' locations are shown below:

*Operate as two hotels

Chairman's Statement

I write to report on the unaudited interim results for the first six months of the current year of The Hotel Corporation plc ("the Company"), its subsidiary Puma Hotels plc and its subsidiaries ("PHP" or "Puma"), together "the Group".

The Company's principal asset comprises its interest in PHP and this statement therefore addresses the results of both the Company and the Group. For consistency with previous periods, the consolidated balance sheet of PHP, as at 30 June 2012, the consolidated profit and loss account, the consolidated statement of total recognised gains and losses and the consolidated cash flow statement of PHP for the six months ended 30 June 2012 are also provided as an appendix to this report. I recommend that they be read in conjunction with the results that follow.

The overall result for the Group for the first six months of the current year was a profit of £19.5m reflecting the receipt of the net early termination fee of £20.3m (£22.3m less £2m business purchase cost) from Barceló and approximately two months of subsequent operational trading results from PHP after acquiring back the operational control of its hotels on 25th April 2012. The comparison with the prior year/period results for the Group is therefore complicated by such events.

Results of the Company

Revenue for the period, including bank interest, bond interest and dividends receivable from the investment in PHP, was £1.4m (2011H1: £1.4m). Actual income received from PHP was however nil, following the decision by PHP in December 2011 to defer shareholder bond interest and preference share dividends until further notice. A provision of £1.4m has therefore been made within administrative expenses. Following administrative expenses, operating losses including bank interest was £0.1m (2011H1: £1.3m profit). Results for the period led to both basic and diluted loss per share of 0.17p (2011H1: total earnings per share ("eps"), both basic and diluted of 2.64p).

The Company's net asset value per share ("NAV"), as at 30 June 2012 is 1.84p (2011H1: 131.4p). The Company continues to value its investment in PHP at nil.

Consolidated Results of the Group

Since 25 April 2012 the Group's principal activities have changed from receiving rental lease income from Barceló to taking back the operational control of the hotels. This makes it difficult to compare the results between the first six months of 2012 and 2011 as it will not be comparing like with like. As the lease operations are now discontinued, lease income from Barceló and related lease exit costs have been presented under discontinued operations (see note 3). It is noted that the comparative statement of comprehensive income is re-presented as if the lease operation had been discontinued from the start of the comparative year.

Revenue from discontinued operations for the period to 24 April includes £8.5m (2011H1: £15.4m) rental income and £22.3m (2011H1: £nil) gross early termination fees. Operating profit for the period for discontinued operations, including lease exit costs of £0.9m (2011H1: £nil), was £29.8m (2011H1: £15.4m). Basic earnings per share for discontinued operations was 29.9p (2011H1: 15.4p) and diluted earnings per share was calculated as anti-dilutive (2011H1: anti-dilutive).

Following the resumption of operational control of the hotels, revenue was £17.5m (2011H1: £nil) with costs of sales £1.8m (2011H1: £nil). After deducting administrative expenses of £12.4m (2011H1: £1.7m) operating profit amounted to £3.3m (2011H1: £1.7m loss). After finance costs, interest income, a write down in goodwill and the movement in interest rate swaps the total loss before tax was £10.3m (2011H1: £12.5m loss). Basic loss per share for continuing operations was 9.0p (2011H1: (8.2p)) and diluted loss per share was calculated as 9.9 p (2011H1:9.1p).

As required by International Financial Reporting Standards (IFRS), the consolidated statement of financial position of the Group takes account of the fair value of interest rate swaps. The resultant Consolidated Net Liabilities as at 30th June 2012 are £(149.4m) (2011H1: Net Assets of £77.0m).

Dividend

The Directors do not recommend an interim dividend (2011H1: 2.0p).

Prospects

The upheaval associated with the handover from Barceló has presented a tough challenge for the Puma management team to re-establish itself during a time of severe trading conditions in the UK regional hotel sector. Puma has also agreed with its Bankers, IBRC (formerly Anglo Irish Bank Limited), an option to extend its current debt facility until 31 December 2013, subject to meeting certain conditions which, against the backdrop of an uncertain market the Board of Puma Hotels is actively working to seek to meet. We look towards progress being made by the Puma management team in restoring the trading performance of the business.

Barclay Douglas

Chairman

14 September 2012

Extract from The Review of Operations and Financial Performance of

Puma Hotels plc

Six Months Ended 30 June 2012

Introduction

The period under review saw significant changes in the operations of Puma Hotels plc ("Puma Hotels" or "the Group"). As previously reported, the leases with Barceló Hotels and Resorts ("Barceló") were terminated on 25 April 2012 and from this time the hotels have been operated by the Group. This statement comments on the activities of the Group both pre and post the lease termination.

Financial Performance

I am pleased to report that the Group generated a profit of £16.0m for the first half (2011H1: Loss of £0.3m). This significant increase in profitability was driven by the lease termination fee of £22.3m2 received from Barceló. The receipt of this termination fee allowed the Group to reduce its senior debt facility by approximately £20m. In making further comment on the Group's performance, the operating activities are broken down to highlight three key areas:

·; The period to 25 April - Lease rental received from Barceló

·; The period from 25 April to 30 June - Hotels directly operated by the Group

·; The termination payment received from Barceló on 25 April

The Group's financial performance during the period was as follows:

Total Group Result

·; The net profit of £16.0m (2011H1: Loss of £0.3m) includes the effect of the termination fee received from Barceló.

·; The increase in interest payable during 2012 resulted from the net impact of:

o The step up of the swap on £182.3m from 3.33% during 2011 to 3.945% in 2012;

o The £0.4m of swap break costs incurred on 25 April;

o The reduction in the principal balance of the facility from 25 April by £19.8m.

·; Shareholder finance costs remained unchanged and comprised £2.0m (2011H1: £2.0m) in relation to bondholders of the Group's deep discounted bonds and £0.7m (2011H1: £0.7m) relating to interest on the convertible preference shares.

·; The shareholder finance amounts due on 30 June 2012 were not paid due to the reduction in income to the Group. As with the shareholder payments due on 31 December 2011, these amounts have been deferred until further notice.

Lease Income

·; The lease income received by the Group up to 25 April was on the basis of a reduced annual rental at a rate of £27.0m (2011H1: £31.0m). As previously announced, this reduced rent level was agreed with Barceló in the standstill agreements signed on 16 December 2011 and 17 February 2012.

Termination of Leases

·; On completion of the lease transfer agreement on 25 April, a net lease termination fee of £20.3m3 was paid by Barceló. This termination fee was utilised by the Group to reduce the balance of the senior debt facility due to Irish Bank Resolution Corporation Limited ("IBRC") by £19.8m and to pay £0.4m of interest rate swap break costs associated with the reduction in the facility.

·; These swap break costs and the bank arrangement fees payable during the period of £0.25m are included in the "Bank interest payable and similar charges".

·; Lease termination costs included:

o Legal, accounting and tax fees incurred by the Group and IBRC;

o Fees paid to Chardon Management Ltd ("Chardon") for transitional support services.

Hotel Operating Income

·; The results achieved in the period from 25 April to 30 June against the same period in 2011 (under Barceló's management) were:

2012 2011 Variance

Occupancy 69.6% 70.6% (1.5%)

Average Room Rate £69.38 £70.19 (1.1%)

RevPAR £48.26 £49.54 (2.6%)

Total Revenue £17.5m £17.8m (1.7%)

·; These trading results demonstrate that our team has effectively mitigated the operational and logistical challenges that arise in taking over a business of this scale to achieve an encouraging level of performance in an operating environment that has continued to weaken.

Termination of leases with Barceló and new management arrangements

As previously announced the Group was able to successfully negotiate a transfer agreement with Barceló which provided for the termination of the leases on 25 April 2012 and the payment to Puma Hotels of a net sum of £20.3m (excluding VAT) in respect of the early termination of the leases.

The agreement also provided for the orderly handover of the operations of the hotels from Barceló to Puma Hotels. Prior to the grant of the leases in 2007, the Group itself operated the hotels through the head office infrastructure and team which it established in Hinckley. This head office team and all hotel employees were transferred back to the Group upon completion of the agreement. From the date of signing the agreement and the completion date of 25 April, the Puma Hotels' team was on-site, at the head office and at the hotels, to affect an orderly transition.

The existing hotels team has been augmented through a number of key appointments including Paul Nisbett as Commercial and Finance Director and Nick Gamble as Group Operations Director. Paul brings significant experience in the regional UK hotel sector where he has held senior roles such as COO of Principal Hayley and Commercial and Finance Director at Malmaison. Nick also brings excellent operational experience to the Group having held key positions at De Vere Hotels and Malmaison .

We are delighted to have also recently appointed Fredrik Korallus as our new Chief Executive Officer. Fredrik will commence his role on 8 October having previously held a number of senior positions at Rezidor and Carlson, including Carlson's COO for The Americas and EVP Global Revenue Generation. We believe that Fredrik's particular expertise in sales, marketing and revenue management will bring added dimension to the group.

 In addition, Puma Hotels appointed Chardon, a leading UK independent hotel management company, to work with our management team from April to 3 September to assist in managing the transition of operations to Puma Hotels. These transitional arrangements have now been completed.

Since taking over the management of the hotels, we have implemented our operational and branding strategy which is to focus on the individual strengths of each of our hotels in their local and regional markets. We have re-launched the hotels as the "Puma Hotels Collection" allowing the Group to align operating standards and to achieve sales and marketing synergies, whilst emphasising the unique nature of each property.

Despite trading conditions remaining challenging with many provincial UK markets showing a decline year-on-year, our team has been very effective in mitigating the challenges that arise in taking over a business of this scale.

The valuation of the hotel properties remained at the level shown in the 2011 year end accounts which used the external professional valuation completed by Christie + Co at the end of March 2012. It reflected the Group's direct exposure to the UK provincial hotel sector following the termination of the leases to Barceló. Trading in the sector remains challenging, thereby leading to significantly lower cashflows from operations compared with the previous rent level paid by Barceló. The Group's assets comprise a significant portfolio of hotels, some of which occupy large areas of land and many of which are very well located in their regional centres. Given that a large number of the hotels also benefit from substantial

planning consents, the appropriate level of management and investment over time should generate value enhancement as the regional economy improves.

Operating Company Balances

As a result of the Group taking back operational control of the hotels, the Group's Balance Sheet now includes balances associated with hotel operations including trade debtors, stocks, operating fixed assets and a greater level of trade creditors, including tax balances.

The Property assets previously reflected as investment properties are now classified as land and buildings as the Group is now operating the properties.

Senior debt facility arrangements with Irish Bank Resolution Corporation Limited ("IBRC")

When signing the transfer agreement with Barceló, Puma Hotels agreed with its bankers, IBRC (formerly Anglo Irish Bank Limited), an option to extend its current debt facility until 31 December 2013, subject to meeting certain conditions. Against the backdrop of an uncertain market, the Board is actively working to seek to meet these conditions.

The Group utilised the £20.3m payment from Barceló to reduce the balance of the senior debt facility. At the same time, IBRC provided a working capital facility of £7.0m for 2012, rising to £10.3m in 2013 if the option to extend the senior facility is exercised. The purpose of the working capital facility is to fund the Group's working capital and its capital expenditure requirements.

Our employees

On behalf of the Board, I would like to welcome all our employees to the Group and to thank each person for their dedication and commitment during this period of transition and to delivering excellent service to our guests.

Strategy and Prospects

The regional UK hotel sector continues to be impacted by the severe conditions prevailing in the UK and global economies and this challenging trading environment is expected to continue in the near term. I am however very encouraged by our team's performance in taking over and stabilising the management of the hotels in a relatively short period. The team has effectively mitigated the challenges that arise in taking over a business of this scale and we can now look forward to focusing our efforts on enhancing the service provided to our guests and thereby realising the Group's trading potential in this tough economic environment.

Strategically, the Board's priority remains its firm commitment to the task of seeking to re-create shareholder value.

Howard Shore

Chairman - Puma Hotels plc

14 September 2012

INDEPENDENT REVIEW REPORT TO THE HOTEL CORPORATION PLC

We have been engaged by Hotel Corporation PLC ("the Company") and its subsidiaries (together "the Group") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 which comprise the consolidated and company statements of comprehensive income, statements of financial position, statements of changes in equity, cash flow statements and related notes 1 to 18. 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.

This report is made solely to the Company 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. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

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 AIM Rules of the London Stock Exchange.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as issued by the International Accounting Standards Board ("IASB"). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as issued by the IASB.

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.

Scope of 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 United Kingdom. A review of interim financial information consists of making inquiries, 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

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as issued by the IASB and the AIM Rules of the London Stock Exchange. 

Emphasis of Matter - Going Concern of PHP

In arriving at our review conclusion, which is not modified, we have considered the adequacy of the disclosure made in Note 1 to the financial statements considering PHP's ability to continue as a Going Concern.

PHP is in a net liability and net current liability position which results in the Group also being in a net liability and net current liability position. PHP is reliant on continued support from its senior lender. As more fully explained in Note 1 of the financial statements, from the date of signing these financial statements to 31 December 2012, and then beyond that date to 31 December 2013, PHP is required to meet certain conditions in relation to its senior and revolving credit facilities some of which relate to unpredictable market activity.

The existence of these conditions indicates a material uncertainty that may cast significant doubt about PHP's ability to continue as a going concern. The financial statements do not include any adjustments, which would result if PHP was unable to continue as a going concern.

PHP has limited recourse to the Company which is solvent and able to continue trading even in the absence of any income generated from its investment in PHP, and on that basis the Directors of the Company have concluded that it is appropriate to prepare these financial statements on a going concern basis.

Emphasis of Matter - Carrying value of investments in Company financial statements

Also, in arriving at our review conclusion, which is not modified, we have considered the adequacy of the disclosures made in note 11 to the financial statements concerning the fair value estimate in respect of the Company's investment in PHP.

As explained in Note 11, the Directors have estimated the total fair value of the investment to be £nil as of 30 June 2012 in accordance with the valuation methodology detailed in note 11. However, the Directors are of the opinion that significant uncertainty exists in relation to this estimate in the current period, which may be greater than £nil, due to the uncertainty over the going concern considerations of PHP as detailed in Note 1, the future impact of which are currently unknown. The estimated value may therefore differ materially from the value that would have been realised had a disposal of the investment been made between a willing buyer and seller. It is not possible to quantify such uncertainties.

Deloitte LLP

Chartered Accountants

Douglas, Isle of Man

14 September 2012

Notes: A review does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any changes may have occurred to the financial information since first published. These matters are the responsibility of the directors but no control procedures can provide absolute assurance in this area.

Legislation in the Isle of Man governing the preparation of financial information differs from legislation in other jurisdictions.

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30th June 2012

Condensed Consolidated Statement of Financial Position

As At 30 June 2012

……………………………… ………………………………

Barclay Douglas David Craine

Director Director

14 September 2012

Condensed Consolidated Statement of Changes in Equity

As at 30 June 2012

Condensed Consolidated Cash Flow Statement

For the six months ended 30 June 2012

Company Statement of Comprehensive Income

For the six months ended 30 June 2012

Company Statement of Financial Position

As At 30 June 2012

………………………………… ………………………………

Barclay Douglas David Craine

Director Director

14 September 2012

Company Statement of Changes in Equity

For the six months ended 30 June 2012