Millennium & Copthorne Hotels Regulatory News (MLC)

For Immediate Release 2 November 2016

MILLENNIUM & COPTHORNE HOTELS plc

TRADING UPDATE

Nine months and third quarter results to 30 September 2016

Highlights for the nine months 2016:

Highlights for the third quarter 2016:

· The steep fall in the value of sterling after the 23 June 2016 referendum had a significant impact on Group's results, with exchange gains adding £43m and £7m to Group reported revenue and profit before tax respectively for the first nine months of 2016.

· Group RevPAR in reported currency was up 3.5% but in constant currency fell by 3.2% in the first nine months of 2016 compared to the same period last year.

· Total revenue in reported currency for the first nine months grew by 8.1% to £665m, due to higher land sales and REIT revenue and exchange gains; partially offset by lower hotel revenue. In constant currency, revenue grew slightly by 1.1% for the same period.

· Hotel revenue in constant currency declined by 2.8% to £581m during the first nine months of 2016. In reported currency, hotel revenue increased by 3.9% to £581m (2015: £559m).

· Third-quarter occupancy increased by 4.8% points for the Group's London hotels, reflecting higher inbound tourism.

· Profit before tax in constant currency for the third quarter of 2016 increased by 9.5% and by 27.8% in reported currency. For the first nine months of 2016, profit before tax increased by 4.1% in reported currency and decreased by 2.9% in constant currency.

Mr Kwek Leng Beng, Chairman commented:

"Our London hotels have seen some positive benefits from leisure travellers following the EU referendum in June 2016 although the outlook for the UK economy is uncertain. We have also seen an improving trend in the regional US and growth in the New Zealand markets; and benefitted from favourable foreign exchange movements. However, trading of our New York and Singapore hotels was disappointing and we continued to focus on improving margins. We are monitoring the performance in all our markets closely and the Group's financial position remains strong. The Group has a long term perspective and considers asset ownership as key to its strategy."

Enquiries

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

Aloysius Lee, Chief Executive Officer

Jonathon Grech, Group General Counsel and Company Secretary

Peter Krijgsman, Financial Communications (Media)

FINANCIAL PERFORMANCE

For the nine months ended 30 September 2016, Group revenue increased by 8.1% to £665m (2015: £615m). This was a result of higher property revenue, increased contribution from the REIT and a positive foreign exchange impact of £43m. Excluding exchange gains, Group revenue rose by 1.1% (2015: £658m).

Hotel revenue in constant currency fell by 2.8% to £581m (2015: £598m) during the first nine months of 2016, compared to the same period last year. This was due mainly to continued weak trading in New York and Singapore. London recorded a stronger revenue performance in Q3 2016, supported by RevPAR growth of 2.4%.

Property revenue in constant currency for the period increased by 68.0% to £42m (2015: £25m), mainly because of increased land sales in New Zealand primarily during the first half of this year and an increased contribution from Millennium Mitsui Garden Hotel Tokyo. Revenue from the REIT in constant currency increased by 20.0% to £42m (2015: £35m) 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 nine months of 2016 fell by 3.2% to £73.94 (2015: £76.37) due to decreases in both occupancy and average room rate of 0.5% points and 2.4% respectively. In the third quarter of 2016 Group RevPAR decreased by 1.7% in constant currency, with occupancy up by 1.1% points and average room rate down by 3.1%.

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

US

US RevPAR for the first nine months of 2016 was down by 6.6% £82.35 (2015: £88.15) with decreases in both occupancy and average room rate. In the third quarter of 2016, US RevPAR decreased by 4.2%.

In New York, RevPAR fell by 14.8% as a result of a 7.5% points fall in occupancy and 6.3% fall in average room rate. Excluding ONE UN New York whose east tower was closed for refurbishment from November last year to early September 2016, RevPAR for US and New York fell by 2.0% and 7.8% respectively.

RevPAR for Regional US increased by 4.4% to £58.80 (2015: £56.32) for the first nine months of 2016. For the third quarter of 2016, RevPAR increased by 7.8% to £73.10 (2015: £67.79) largely due to positive returns from newly refurbished hotels.

Europe

Europe RevPAR for the first nine months of 2016 dropped by 2.6% to £79.32 (2015: £81.45). In the third quarter Europe RevPAR was marginally lower compared to the same period, reflecting improvement in the London in-bound market, following the sharp fall in sterling against other currencies after the EU referendum on 23 June.

London RevPAR fell by 2.2% for the first nine months of 2016, compared to the same period last year, with a 0.5% point rise in occupancy and 2.9% fall in average room rate. In the third quarter of 2016, London RevPAR grew by 2.4% mainly due to an increase in occupancy of 4.8% points.

RevPAR for the Rest of Europe decreased by 1.4% during the first nine months of 2016 mainly due to lower occupancy.

Asia

Asia RevPAR for the first nine months of 2016 fell by 2.8% to £66.29 (2015: £68.22) driven mainly by lower average room rate. Singapore RevPAR fell by 9.6% with decreases in both occupancy and average room rate.

Rest of Asia RevPAR grew by 3.9% in the nine months of 2016, driven by an increase in both occupancy and average room rate. For the third quarter of 2016, RevPAR increased by 5.4% to £60.07 (2015: 56.97) mainly due to improved performance in Millennium Seoul Hilton following completion of refurbishment of guest rooms.

Australasia

Australasia RevPAR grew by 16.2% in the first nine months of 2016 with average room rate increasing by 9.5% to £65.37 (2015: £59.68) and occupancy up by 4.5% points reflecting positive results from the management of sales channels and market segments. For the third quarter of 2016 RevPAR increased by 19.1% to £52.43 (2015: £44.02) with the continued growth in the number of in-bound tourists into New Zealand.

Development

The building permit application for Seoul Yangdong development project has been lodged and approval is anticipated to be received by the end of this year for the construction work to commence in early 2017. The main contract tender process is expected to be completed by the end of this year and subject to the outcome of the building permit application a recommendation will be made for the award of the main contract.

The Sunnyvale project in California is progressing with continuous effort to improve the design, space planning as well as costing. 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 refurbishment programme for Millennium Hotel London Mayfair is planned to commence around the end of this year. To minimise the impact on London occupancy, there will be a gap of at least 12 months before Millennium Hotel London Knightsbridge undertakes smaller scale refurbishment work.

The refurbishment of guest rooms in the east tower of ONE UN New York was completed in early September 2016 and the tower was re-opened in time for the UN General Assembly.

Work on the main lobby and food and beverage outlets at the main entrance level of the Grand Copthorne Waterfront Hotel in Singapore, which started in December 2015, was substantially completed in May 2016 and the outlets opened for business in June 2016. The remaining works left under the current contract mainly relate to the refurbishment of some function rooms at level two, which started in September and is scheduled for completion by end November 2016.

Soft refurbishment of the guestrooms at Grand Millennium Kuala Lumpur, from level 9 to level 19, has been completed, with the remaining level 7 and level 8 being planned for next year.

Soft refurbishment of the guestrooms at M Hotel Singapore, from level 12 to level 28, has been substantially completed, except for one floor at level 25 which is scheduled for completion by end 2016.

Copthorne Hotel Auckland Harbour City in New Zealand closed for a major NZ$40m (£22m) refurbishment programme in Q3 2015. The construction stage has progressed with seismic strengthening completed, all windows for the 190 guest rooms installed, façade plastering and painting completed and scaffolding taken down to ground level. The installation of major services, fitting of internal partitions, bathroom tiling is progressing well. The hotel will be rebranded under the Group's M Social brand and is expected to re-open in the middle of next year.

The Group assumed the lease of Rendezvous Grand Hotel Auckland with effect from 7 September 2016. The hotel, the largest in New Zealand with a total of 452 guestrooms, is owned by the REIT and is the Group's first Grand Millennium hotel in New Zealand.

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 on-going.

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 £9m to profit in the first nine months of 2016 (2015: £9m). The Group has an effective interest of 36% in First Sponsor Group Limited, which is listed on the Singapore Exchange and reports its results independently.

Board Changes

The Board has agreed to the request of Director and Group Chief Executive Officer, Aloysius Lee to retire from the Group in Q1 2017. His successor will be announced in due course.

Daniel Desbaillets joined the Board as an Independent Non-Executive Director on 14 September 2016. He has been in the hospitality industry since 1973 holding senior positions with InterContinental Hotel Group, Hilton and Shangri-La. He previously served on the boards of CDL Hospitality Trusts as an Independent Non-Executive Director.

Financial Position

At 30 September 2016, the Group had net debt of £720m (Dec 2015: net debt £605m).  Excluding the REIT, the net debt was £230m (Dec 2015: net debt £201m).

The Group has a total of £541m of undrawn committed bank facilities at 30 September 2016 (Dec 2015: £406m). Excluding the REIT, the total undrawn committed bank facilities was £321m (Dec 2015: £280m). Most of the facilities are unsecured, with unencumbered assets representing 92.1% of fixed assets and investment properties.

Current Trading

On a constant currency basis, Group RevPAR fell by 8.6% for the three weeks ended 21 October 2016, with London down by 15.0%, New York down by 14.2% and Singapore down by 14.0%; partially offset by RevPAR growth in Australasia of 17.3%. However on a reported currency basis taking into account exchange gains, Group RevPAR for the same period was down by 2.3%, with London down by 15.0%, New York down by 5.2%, Singapore down by 6.1% and Australasia up by 25.3%.

This trading update 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 nine months ended 30 September 2016

The financial results above were derived from continuing activities.

Condensed consolidated statement of financial position (unaudited)

as at 30 September 2016

Operating Segment Information

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

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

APPENDIX 1: Key OPERATING STATISTICS

for the nine months ended 30 September 2016

For comparability, the 30 September 2015 Average Room Rate and RevPAR have been translated at average exchange rates for the period ended 30 September 2016.

* excluding managed, franchised and investment hotels.

APPENDIX 2: Key OPERATING STATISTICS

for the quarter year ended 30 September 2016

For comparability, the 30 September 2015 Average Room Rate and RevPAR have been translated at average exchange rates for the period ended 30 September 2016.

* excluding managed, franchised and investment hotels.

APPENDIX 3: HOTEL ROOM COUNT AND PIPELINE

as at 30 September 2016

The Group's worldwide pipeline comprises 21 hotels offering 7,386 rooms, which are mainly management contracts.