The Hotel Corporation - Interim Results

29 September 2011

The Hotel Corporation plc

Interim Results for the Six Months ended 30 June 2011

The Hotel Corporation plc (the "Company"), an AIM listed investment company owning 49.9%1 of Puma Hotels plc ("PHP"), announces its interim results for the six months to 30 June 2011. PHP is today separately announcing interim results for the six months to 30 June 2011.

1 On 29 June 2009, when the PHP 20 million convertible preference share equity raise was completed, HCP subscribed to 11,770,000 convertible preference shares. Therefore, 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.

Highlights

·; Group turnover for the period up by 3.3% representing increased rental income

·; Increase in operating profit of 4.8% reflects both increased rental income and lower administrative expenses

Barclay Douglas, Chairman of The Hotel Corporation plc, said:

"The global economic environment remains uncertain, thereby significantly impacting hotel sector performance and the hotel investment market. Against this backdrop, we are however encouraged that the Company's investment, PHP, holds an attractive portfolio of hotels let to a progressive tenant."

Press enquiries

The Hotel Corporation 01624 626586

Barclay Douglas

Puma Hotels plc

Howard Shore 020 7468 7911

Peter Procopis 020 7468 7913

Shore Capital and Corporate Ltd 020 7408 4090

Anita Ghanekar

Toby Gibbs

Notes to Editors

1. The Group 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. From July 2004 until September 2007, the Group also operated each of the 20 hotels. From September 2007 the Group granted 45 year FRI leases for each hotel to Barceló Group, a leading Spanish operator with substantial global operations. Since 1 January 2008 all 20 hotels carry the Barceló brand.

4. The Group's hotel locations are shown below:

* Barceló Premium Hotels

+ Operationally, Barceló split this property into a Barceló Premium Hotel, Barceló Walton Hall and a Barceló Hotel, Barceló Walton Hotel

Chairman's Statement

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

The Company's principal asset comprises its interest in PHP and this statement therefore discusses the results of both the Company and also of PHP.

For consistency with previous periods, the consolidated balance sheet of PHP, as at 30 June 2011, the consolidated profit and loss account and consolidated cash flow statement of PHP for the six months ended 30 June 2011 are also provided as an appendix to this report. I recommend that they be read in conjunction with the results that follow.

I am pleased to see that PHP's turnover has increased against the prior period and that its administrative expenses have reduced.

I will comment upon the Company results and the consolidated results separately. Comparatives shown below relate to the period ended 30 June 2010 and have been restated as described in note 2.

Results of the Company

Revenue for the period, including bank interest and dividends received from the investment in PHP Convertible Shares, was £1.4m (2010: £1.4m) and following administrative expenses, operating profit including bank interest was £1.3m (2010: £1.3m). No tax is payable reflecting the zero corporate taxation provisions in the Isle of Man. Results from operations and bank interest and dividends received for the period led to both basic and diluted earnings per share of 2.64p (2010: total earnings per share ("eps"), both basic and diluted of 2.61p).

The Net Asset Value per share at 30 June 2011 is 131p (2010: 131p). The Company has valued its shareholding in PHP on the basis of the discounted future net cash flow from PHP. PHP's accounts, prepared under UK Generally Accepted Accounting Principles, include a valuation of its portfolio of 20 hotels of £458.5m (2010: £463.3m). This valuation includes £2.8m (2010: £3m) of land and other assets, at PHP Directors' valuation, not subject to the Barceló lease. The valuation of the assets subject to the Barceló lease was carried out by Colliers Robert Barry & Co, independent valuers for the purposes of the 31 December 2010 year end accounts. The directors believe that the valuation remains relevant for the interim financial report.

Consolidated Results of the Company

The Group revenue for the period, including bank interest received, was £15.4m (2010: £14.9m) and, following administrative expenses and interest expense but before unrealised gains and losses, the profit amounted to £1.3m (2010: £1.7m). After a gain on change in fair value of interest rate swaps of £1.6m (2010: loss £10.5m) the total profit before tax was £2.9m (2010: £8.9m loss). A deferred taxation credit of £2.9m (2010 £0.4m) increases the profit after tax to £5.8m (2010 £8.5m loss), which has been further detailed in Note 5. Basic and diluted earnings per share were 7.17p (2010: both basic and dilutedloss of 7.17p restated). In the six months ended 30 June 2010, the convertible preference shares, to the amount of £8,230,000, have been restated to remove them from non-controlling interest and include them within liabilities in line with IAS 32 "Financial Instruments: Presentation". See Note 2 to the financial statements for further details).

As required by IFRS, the consolidated statement of financial position of the Group takes account of goodwill, the fair value of interest rate swaps and deferred tax adjustments on consolidation. The resulting consolidated NAV per share is 136.3p (2010: 126.8p).

Dividend

The Company has today declared an interim dividend of 2.0p per ordinary share (2010H1: 2.6p). The ex-dividend date will be 12 October 2011 and the record date 14 October 2011. Payment will be made to shareholders on 7 November 2011.

Prospects

The global economic environment remains uncertain, thereby significantly impacting hotel sector performance and the hotel investment market. Against this backdrop, we are however encouraged that the Company's investment, PHP, holds an attractive portfolio of hotels let to a progressive tenant.

Barclay Douglas

Chairman

29 September 2011

Puma Hotels plc Review of Operations and Financial Performance

Introduction

The Group's hotels are let on full repairing and insuring ("FRI") leases (with 31 years remaining along with two, 5-year tenant extension options) to Barceló, a leading Spanish hospitality group with substantial global hotel and other leisure related operations.

Financial Performance

Turnover for the six months ended 30 June 2011 of £15.4m represents rent received from Barceló (2010H1: £14.9m). The operating profit of £13.6m (2010H1: £13.0m) is ahead of the prior year reflecting the increased level of rent and lower administrative expenses.

After deducting bank interest payable on its senior facility, net profit before Shareholder Finance Costs was £2.4m (2010H1: £2.9m). The Shareholder Finance Costs comprise £2m of payments to bondholders of the Group's deep discounted bonds and interest of £0.7m relating to the convertible preference shares issued in June 2009. After deducting the Shareholder Finance Costs, the loss on ordinary activities for the period was £0.3m (2010H1: profit of £0.1m).

Net bank interest payable (2011H1:£11.2m vs 2010H1:£10.1m) was 10% higher against the same period in the prior year. This was due to the SWAP rate on £182.345m of the facility stepping up from 2.23% in 2010 to 3.33% from 1 January 2011.

The tangible asset values on the consolidated balance sheet of the Group reflect the lease arrangements with Barceló. These leases provided guaranteed rental growth over the first four years and then provide for annual RPI increases during the rest of the term, subject to an annual cap on the increase of 5.5%. The September 2011 RPI increase of the rent is at 5.0% thereby increasing the annual rent from £31m to £32.55m.

The leases also place FRI obligations on the tenant. In addition to the tenant's FRI obligation, the agreement with Barceló also provides for annual capital expenditure contributions to be made by Puma Hotels plc ("PHP") in the first 10 years of the leases. These contributions have been spent on structural and mechanical improvements by Barceló.

For the purpose of preparing its 30 June 2011 interim financial statements, PHP has used the external professional valuation completed by its valuers Colliers Robert Barry on 25 January 2011 for the purposes of the 31 December 2010 year end accounts. This valuation of each hotel in the portfolio, which excludes property not leased to Barceló, is at £455.6m. The Board of PHP considers that the current value of this property amounts to a further £2.75m. As at 30 June 2011, the total value of tangible assets was at £458.4m (2010H1:£463.3m).

Planning Update

The Group continues with its strategy to add value by securing additional planning consents and seeking ways of maximising the value of these consents.

The Group has the potential to add over 700 bedrooms (excluding the bedrooms relating to the agreement for lease between Paramount Hotels and Premier Inn referred to below) of which 472 have already received the necessary planning or listed building consent. There are also schemes for over 3,000 sq m (of which over 70% have planning consent) of additional meeting rooms and upgrades for several leisure clubs. The economics of adding these rooms and other facilities can be highly attractive for both the Group and Barceló.

Agreement for Lease

As previously reported, on 4 August 2011 Paramount Hotels Limited, a subsidiary of PHP, has entered into an agreement for a lease with Premier Inn Hotels Limited and Whitbread Group Plc, in relation to a 107 bedroom Premier Inn Hotel in Harrogate. Premier Inn is the largest and fastest-growing hotel brand in the UK, with 600 Premier Inn hotels comprising more than 44,000 rooms.

The arrangement with Premier Inn follows the agreement signed with Harrogate Borough Council in 2010, which provides, inter alia, for the proposed lodge hotel to be directly linked into a new 3,400 sq m exhibition facility which is being built as part of the first phase in the redevelopment of the Harrogate International Centre.

Fire at Harrogate Majestic Hotel

On 5 May 2010, the east wing of the Majestic Hotel was partially damaged by fire. The entire hotel remained closed until 5 September 2010 whilst the necessary rectification works were carried out so as to enable a partial reopening on that date. On 5 September, Barceló took possession of 88 of the 170 bedrooms and the majority of the supporting conference and other facilities. Additional bedrooms and other facilities were progressively handed back to Barceló with the full rectification works certified as being completed on 17 May 2011.

The Group's insurance policies cover the property reinstatement costs and loss of rent.

Strategy and Prospects

The Group continues to focus on unlocking value by gaining additional planning consents, and considering selective asset disposals as the UK provincial hotel investment market recovers.

INDEPENDENT REVIEW REPORT TO THE HOTEL CORPORATION 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 2011 which comprise the consolidated and company statements of comprehensive income, statements of financial position, statements of changes in equity, and cash flow statements and related notes 1 to 16. 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 2011 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.

Deloitte LLP

Chartered Accountants

Douglas, Isle of Man

29 September 2011

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 2011

Condensed Consolidated Statement of Financial Position

As At 30 June 2011

(Based on number of shares in issue at period/year end)

……………………………… ………………………………

Barclay Douglas David Craine

Director Director

29 September 2011

Condensed Consolidated Statement of Changes in Equity

As at 30 June 2011

Condensed Consolidated Cash Flow Statement

For the six months ended 30 June 2011

Company Statement of Comprehensive Income

For the six months ended 30 June 2011

Company Statement of Financial Position

As At 30 June 2011

………………………………… ………………………………

Barclay Douglas David Craine

Director Director

29 September 2011

Company Statement of Changes in Equity

For the six months ended 30 June 2011

Company Cash Flow Statement

For the six months ended 30 June 2011