Millennium & Copthorne Hotels Regulatory News (MLC)

For Immediate Release 22nd February 2012

MILLENNIUM & COPTHORNE HOTELS PLC

FINAL RESULTS ANNOUNCEMENT

Full year and fourth quarter results to 31 December 2011

Highlights for the full year 2011:

·; Overall RevPAR (in constant currency terms) rose by 5.8% primarily driven by an increase in room rate.

·; On a like-for-like basis1 Group RevPAR increased by 5.5% with London RevPAR increasing 8.8% and Singapore and New York both increasing by 6.1%.

·; Headline profit before tax increased by 43.7% to £184.7m (2010: £128.5m), including a gain of £34.0m from the sale of development land in Kuala Lumpur (KL). Excluding KL land, headline profit before tax increased by 17.3% to £150.7m (2010: £128.5m).

·; The sale and leaseback of Studio M to CDL Hospitality Trusts REIT resulted in a £17.4m gain.

·; Profit before tax increased by 50.3% to £193.3m (2010: £128.6m), including KL land and Studio M profits.

·; Strong cash flows from operating activities of £166.6m (2010: £166.9m). Net debt reduced to £100.2m (31 December 2010: £165.7m) and gearing was 4.8% (31 December 2010: 8.5%).

·; Dividends of 16.5p per share for the year, up 65%.

Highlights for the fourth quarter 2011:

·; Overall RevPAR (in constant currency terms) rose by 4.6%, primarily driven by an increase in room rate.

·; On a like-for-like basis2 Group RevPAR increased by 3.9% with New York increasing by 4.7% and Singapore and London increasing by 4.3% and 3.4%, respectively.

·; Total revenue was near constant at £207.8m (2010: £207.3m); the growth of the underlying business and consolidation of Beijing were largely offset by the closure of the three Christchurch hotels and Copthorne Orchid and expiry of the lease in Stuttgart.

·; Headline operating profit increased by 16.0% to £53.0m (2010: £45.7m).

·; Profit before tax increased by 19.1% to £43.7m (2010: £36.7m).

Commenting today Mr Kwek Leng Beng, Chairman said:

"The Group performed well in 2011, with a robust performance from hotel operations and gains from asset management activities.

The Board is recommending a dividend of 14.42p per share comprising a final dividend of 10.42p (2010: 7.92p) per share plus a special dividend of 4.0p per share. Together with the interim dividend of 2.08p per share (2010: 2.08p), the total dividend of 16.5p per share represents an increase of 65.0% over last year's total of 10.0p. The dividend reflects both growth in profit after tax and the Group's future investment needs.

In 2012, the Group will deploy its balance sheet to continue its investment programme in key gateway cities, enhancing both our brands and the yield on our assets. One of the year's highlights was the Group's success in seizing a rare opportunity to secure prime-location land in Ginza, Tokyo.

The economic outlook continues to be uncertain. However the global distribution of our business and the strength of our management provide a stable base from which we can respond quickly to economic conditions. We are focused on increasing sales whilst maintaining strict control of costs. We expect the Group's debt level to increase over time as we continue to invest in our properties and take advantage of other opportunities as they arise."

1 For the full year, like-for-like Singapore RevPAR excludes Studio M hotel for the first six months of 2011 and 2010 (Studio M hotel opened in March 2010, but is not fully comparable for the full year) and Copthorne Orchid (closed in April 2011 for development into condominiums) and for the Group like-for-like also excludes Group Millennium Hotel & Resort Stuttgart (lease expired in August 2011) and the three Christchurch hotels (closed in February 2011 due to earthquake damage) and includes Grand Millennium Beijing for both years (although only fully consolidated from 15 November 2010 when the Group's interest increased from 30% to 70%).

2 For the quarter, like-for-like Singapore RevPAR excludes Copthorne Orchid (closed in April 2011 for development into condominiums) and for the Group like-for-like also excludes Group Millennium Hotel & Resort Stuttgart (lease expired in August 2011) and the three Christchurch hotels (closed in February 2011 due to earthquake damage) and includes Grand Millennium Beijing for both quarters (although only fully consolidated from 15 November 2010 when the Group's interest increased from 30% to 70%).

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Enquiries

Millennium & Copthorne Hotels plc

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

Adrian Bushnell, Company Secretary

Beng Lan Low, Senior Vice President Finance

Peter Krijgsman, Financial Communications (Media)

CHAIRMAN'S STATEMENT

2011 was a record year for the Group in terms of revenues and profits. This was a result of a strong hotel operating performance combined with significant gains from asset management activities. Profit before tax rose by 50.3% to £193.3m (2010: £128.6m). Basic earnings per share increased by 65.0% to 51.0p (2010: 30.9p).

As in past years, our hotel operating strategy concentrated on maximising revenues from each hotel by achieving an optimal balance between occupancy and room rate, whilst maintaining strict control of cost. This is reflected in the Group's hotel gross operating margin increasing by 1.6 percentage points to 38.7% (2010: 37.1%). In constant currency terms global RevPAR grew by 5.8% to £64.81 (2010: £61.28), driven primarily by an increase in room rate. Like for like, RevPAR increased by 5.5%.

Our gateway cities performed well. Like-for-like RevPAR grew by 8.8% in London, 6.1% in Singapore (excluding Copthorne Orchid for the full year and Studio M for the first half of the year) and 6.1% in New York. RevPAR increased in every region, with the exception of the UK outside of London, where trading conditions continued to be challenging. The Rugby World Cup in New Zealand helped Australasia to increase RevPAR by 5.3%, excluding the impact of three hotel closures in Christchurch due to earthquake damage in February 2011.

The Group recorded two significant asset management gains during the year. The sale of Studio M in Singapore to the real estate investment trust associate, CDL H-REIT, was completed in May 2011, resulting in a £17.4m pre-tax profit and we completed the sale of land adjacent to the Grand Millennium Kuala Lumpur in August 2011, providing a pre-tax profit of £34.0m. Other asset management initiatives are proceeding well, as detailed below.

Financial Performance

Headline profit before tax increased by 43.7% to £184.7m (2010: £128.5m) and headline operating profit increased by 38.7% to £199.8m (2010: £144.1m). Both these measures of profit performance were buoyed by the £34.0m profit from sale of land in Kuala Lumpur.

A number of additional factors affected year-on-year comparisons. These include the following:

·; Closure of the Copthorne Orchid on 1 April 2011, prior to its demolition and redevelopment of the site into a condominium complex;

·; Consolidation of the results of the Grand Millennium Beijing since November 2010 (when the Group's stake was increased from 30% to 70%);

·; Closure of the three Christchurch hotels following the New Zealand earthquake;

·; Opening of Studio M towards the end of the first quarter of 2010 and its subsequent sale and leaseback to the REIT in May 2011; and

·; Expiry of the lease in Stuttgart in August 2011 which included a £10.1m year-on-year impact of the release of a dilapidation provision.

Excluding all of these factors, headline operating profit increased by 8.0% to £160.0m (2010: £148.2m), reflecting improved hotel trading performance coupled with tight cost control. 

Financial Position

The Group strengthened its financial position during the year with net debt falling to £100.2m (2010: £165.7m) principally through strong cash flows from operating activities. Gearing improved to 4.8% (2010: 8.5%) At 31 December 2011, the Group had cash reserves of £332.2m and total undrawn committed bank facilities of £184.3m. Most of the facilities are unsecured with unencumbered assets representing 87.3% of the Group's fixed assets and investment properties.

Dividend

The Board is recommending a dividend of 14.42p per share comprising a final dividend of 10.42p (2010: 7.92p) per share plus a special dividend of 4.0p per share. Together with the interim dividend of 2.08p per share (2010: 2.08p), the total dividend of 16.5p per share represents an increase of 65.0% over last year's total of 10.0p. The dividend reflects both growth in profit after tax and the Group's future investment needs.

Asset Management

The Group completed the acquisition of a prime-location land site in the Ginza district of Tokyo, Japan on 30 September 2011, where it intends to construct a 325-room deluxe hotel. Construction of the hotel is expected to complete by 2014. An agreement has been entered into with Mitsui Fuodosan Co., Ltd ("MFC") setting out the indicative principal terms by which MFC is granted a fixed-term master lease of the hotel. The purchase price for the site was ¥9.5bn (£79.6m), and with construction and other related costs estimated at a preliminary ¥5.06bn (£39.9m), results in a total cost for land site and development of the investment property of ¥14.56bn (£119.5m).The acquisition is significant for the Group, and will add a further gateway city destination to our global hospitality portfolio.

Development of The Glyndebourne, a condominium project in Singapore, started in the second quarter of 2011, following closure of the Copthorne Orchid Hotel on 1 April 2011. Of the 150 apartments for sale since the end of October 2010, buyers have signed sales and purchase agreements for 144 units as at 20 February 2012 with sales value of S$522.5m (£257.5m), representing a price of over S$2,000 (£985) per square foot. Sales proceeds collected to date total S$138.2m (£68.1m) representing circa 27% of the sales value. Revenue and development costs will appear in the income statement on completion, which is expected to be no later than 2015. Including land costs, development projects of this nature in Singapore typically attract an average profit margin of circa 20%.

The Millennium Seoul Hilton completed the first phase of its refurbishment programme - the renovation of 249 rooms - at the end of the second quarter 2011. RevPAR performance by the hotel accelerated as a result of this investment, with quarterly RevPAR increasing by 8.4% to £113.10 in the last three months of the year. The renovation of the ballroom at Grand Hyatt Taipei is completed. It is undergoing re-cladding of its façade and will commence renovation of the guest rooms in the third quarter of 2012. The refurbishment at Orchard Hotel Singapore was completed at the end of the third quarter of 2011. We are close to awarding construction contracts for the west wing refurbishment at the Millennium UN Plaza, with completion expected by September 2012. Refurbishment plans for the Millennium Mayfair are being developed.

A collective sales agreement with other unit-holders in the Tanglin Shopping Centre, Singapore expired on 26 September 2011. The Group will, together with other unit-holders, re-consider its position at a later date.

In August 2011, the Group completed the sale of 29,127 square feet of development land adjacent to the Grand Millennium Kuala Lumpur to Urusharta Cemerlang (KL) Sdn Bhd for a consideration of RM215.1m (£44.2m), and this resulted in a pre-tax profit of £34.0m.

First Sponsor Capital Limited ("FSCL")

In November 2011, FSCL successfully tendered for two parcels of land in Chengdu at an all in net cost of approximately US$130 million. The total area of land is approximately 270,500 square metres and will be developed as a residential and commercial development, including a hotel and convention centre.

As at 12 February 2012, 711 out of 726 residential units of the Chengdu City Spring project have been sold either under sale and purchase or option agreements. 98.6% of the sales proceeds have been collected for those residential units sold under sale and purchase agreements. In addition, 527 of the 709 commercial units launched for sale in July 2011 have been sold either under sale and purchase or option agreements with 65.1% of the sales proceeds having been collected. Revenue and profit recognition requirement for the residential units is expected to be met in 2012. Proceeds from the residential and commercial sales will finance the development of a 195-room hotel, M Hotel Chengdu, which will be franchised by the Group.

At 31 December 2011, the investment properties of FCSL were subject to external professional valuation on an open-market existing use basis. The Group's share of the uplift in the value of the transferred properties and the investment properties at the end of the year was £9.2m (2010: £4.8m).

CDL Hospitality Trusts REIT

On 3 May 2011, the Group completed the sale and leaseback of the Studio M hotel to the REIT associate, CDLHT, for a cash consideration of S$154.0m (£75.7m). This gave rise to a total realised pre-tax profit from the disposal of S$35.4m (£17.4m). Total unrealised pre-tax profit from the disposal is S$19.1m (£9.4m) which has been credited to the balance sheet as investment in joint ventures and associates, arising from the Group's then 35.2% interest in the stapled securities of CDLHT.

For the year ended 31 December 2011, the Group's share of CDLHT's net revaluation surplus of investment properties was £10.5m (£4.4m).

CDLHT is continuing its strategy to opportunistically pursue acquisitions while maintaining a disciplined approach to investment activities.

Pipeline

The Group opened two hotels in the Middle East, both under management contract. The Group's worldwide pipeline has 30 hotels offering 6,607 rooms, which are mainly management contracts.

Directors and Management

Wong Hong Ren was appointed as Chief Executive Officer of the Company on 27 June 2011, succeeding Richard Hartman. Richard Hartman has announced his intention not to stand for re-election to the Board at the Annual General Meeting in May 2012. The Board extends its thanks for his valuable contribution to the Group.

Kwek Leng Joo retired as a non-executive Director on 6 May 2011. He was replaced by Kwek Eik Sheng, who had been an alternate Director to Kwek Leng Joo since April 2008.

Connal Rankin retired from the Board for health reasons on 27 June 2011. Mr. Rankin had been an independent non-executive Director on the Company's Board since December 2007 and latterly served as Chairman of the Remuneration Committee. We thank Mr Rankin for his services. On the same date, Alexander Waugh, an independent non-executive Director of the Company since June 2009, was appointed Chairman of the Remuneration Committee.

Ian Batey, 75, was appointed an independent non-executive Director of the Company on 15 August 2011 to replace Mr. Rankin. Mr Batey was the founder of Batey Ads, a prominent Asian advertising agency, and brings a wealth of experience to the Board in the field of brand development.

The Company is in the process of recruiting a Chief Financial Officer, following Wong Hong Ren's appointment as Chief Executive Officer.

Employees

The Group's employees have worked hard throughout the year to help us a deliver a robust performance in a challenging year. On behalf of the Board, I would like to thank them for their contribution to the business.

Outlook

The results for 2011 reflect the hard work and expertise of our management, driving the owner/operator strategy that has been a hallmark of the Group since its creation in 1996. We will continue to deploy this strategy in the current year, exploiting asset management opportunities and managing the operation of our hotels in a disciplined, analytical and profitable manner thereby optimising total long-term returns for our shareholders. In 2012 we are focused on improving customer service and driving sales across the Group through enhanced yield management and cross-regional collaboration. The Group is implementing plans to improve trading performance in those hotels that are currently generating weaker returns, especially in parts of the US.

Refurbishment of key properties, which has already yielded trading benefits as a result of work completed at the Millennium Seoul Hilton, will continue over the next two years, with the aim of developing our brands and enhancing yield. These and other asset management initiatives will help the Group to sustain and build financial performance.

We see signs that the US market is improving slowly. Europe is facing a difficult period, although we do not anticipate significant declines in trading. On a like-for-like basis, Group RevPAR in the first six weeks of this year increased by 3.4% with London increasing by 10.6%, Singapore (like-for-like excluding Copthorne Orchid) increasing by 8.9% and New York decreasing by 1.6%, although the performance in the first six weeks is not indicative for the year.

Kwek Leng Beng

CHAIRMAN

21 February 2012

Financial and Operating Highlights

Notes

1. The Group believes that headline EBITDA, headline operating profit, headline profit before tax, headline profit after tax, headline earnings per share, net debt and gearing provide useful and necessary information on underlying trends to shareholders, the investment community and are used by the Group for internal performance analysis. Reconciliation of these measures to the closest equivalent GAAP measures are shown above and in notes 3 and 9 to these financial statements.

Financial Performance - fourth quarter overview

For the fourth quarter to 31 December 2011, total revenue was near constant at £207.8m (2010: £207.3m). The growth of the underlying business and consolidation of Beijing since November 2010 were largely offset by the closure of the three Christchurch hotels in February 2011 and Copthorne Orchid in April 2011 as well as the expiry of the lease in Stuttgart in August 2011.

Profit before tax increased by 19.1% to £43.7m (2010: £36.7m). Headline operating profit, the Group's measure of underlying operating profit, increased by 16.0% to £53.0m (2010: £45.7m). Headline profit before tax increased by 26.9% from £38.6m to £49.0m.

Financial Performance - year end overview

For the year ended 31 December 2011, profit before tax increased by 50.3% to £193.3m (2010: £128.6m). The headline operating profit increase of 38.7% to £199.8m (2010: £144.1m) was impacted by several factors. These include the following:

·; The sale of development land in Kuala Lumpur;

·; Closure of the Copthorne Orchid on 1 April 2011, prior to its demolition and redevelopment of the site into a condominium complex;

·; Consolidation of the results of the Grand Millennium Beijing since November 2010 (when the Group's stake was increased from 30% to 70%);

·; Closure of the three Christchurch hotels following the New Zealand earthquake;

·; Opening of Studio M towards the end of the first quarter of 2010 and its subsequent sale and leaseback to the REIT in May 2011; and

·; Expiry of the lease in Stuttgart in August 2011 which included a £10.1m year-on-year impact of the release of a dilapidation provision.

Excluding these factors, the headline operating profit increased by 8.0% to £160.0m (2010: £148.2m), which reflects both improved hotel trading performance coupled with tight cost control.

Basic earnings per share increased by 65.0% to 51.0p (2010: 30.9p), reflecting both higher profit and a lower effective tax rate.

The impact of foreign exchange movements are shown below and in constant currency terms, the operating profit variance of £53.9m represents a 75.8% profit conversion rate. The conversion masks the impact of items noted above. Excluding the revenue and operating results of these factors, the conversion rate is 38.5%. At the hotel level, the GOP conversion is 77.2% and if similarly adjusted to exclude these factors is 66.1%.

The difference between the operating profit and hotel GOP conversion rates is principally attributable to variable rentals charged to the five Singapore hotels owned by CDLHT. These rentals are determined by both revenue and profit streams of the properties.

Taxation

The Group recorded a tax expense of £28.2m (2010: £30.7m) excluding the tax relating to joint ventures and associates, giving rise to an effective tax rate of 18.1% (2010: 29.6%). The effective tax rate has been affected by a number of factors which include the following items:

·; Separately disclosed items of the Group.

·; Sale of Kuala Lumpur land.

·; Release of a dilapidation provision for the Stuttgart hotel whose lease expired on 31 August 2011.

·; A change in 2010 of New Zealand tax legislation, which removed the ability to depreciate buildings for tax purposes that resulted in an increased deferred tax liability in that year.

·; Reduced tax rates applied to brought forward net deferred tax liabilities in the UK and additional for 2010 in Taiwan and New Zealand.

·; Tax adjustments in respect of previous years.

Excluding the impact of the items noted above, the Group's underlying effective tax rate is 27.7% (2010: 28.9%).

A tax charge of £5.4m (2010: £4.4m) relating to joint ventures and associates is included in the reported profit before tax.

Earnings per share

Basic earnings per share was 51.0p (2010: 30.9p) and headline earnings per share increased to 45.7p (2010: 30.1p). The table below reconciles basic earnings per share to headline earnings per share.

Dividends

The Board is recommending a dividend of 14.42p per share comprising a final dividend of 10.42p (2010: 7.92p) per share plus a special dividend of 4.0p per share. Together with the interim dividend of 2.08p per share (2010: 2.08p), the total dividend of 16.5p per share represents an increase of 65.0% over last year's total of 10.0p. The dividend reflects both growth in profit after tax and the Group's future investment needs. Subject to approval by shareholders at the Annual General Meeting to be held on 3 May 2012, the final and special dividend will be paid on 18 May 2012 to shareholders on the register on 23 March 2012.

PERFORMANCE BY REGION

For comparability, the following regional review is based on calculations in constant currency whereby 31 December 2010 average room rates, RevPAR, revenue and headline operating profit have been translated at 2011 average exchange rates.

UNITED STATES

New York

RevPAR increased by 6.1% to £132.44 (2010: £124.83) for the full year ended 31 December 2011. Room rate was the driver for this growth showing a 5.7% increase to £154.86 (2010: £146.51) with occupancy increasing by 0.3 percentage points to 85.5% (2010: 85.2%). All three hotels saw an upturn in RevPAR with the highest RevPAR growth produced by the Millennium UN Plaza by 7.4%.

In the fourth quarter ended 31 December 2011, RevPAR increased by 4.7% to £154.31 (2010: £147.44) over the same three months in 2010 as a result of a mixture of improved room rates and occupancy.

Regional US

RevPAR growth for the full year was 5.7% to £37.91 (2010: £35.87). This growth was mainly driven by an increase in room rate of 4.3% to £66.00 (2010: £63.25) while occupancy improved by 0.7 percentage points to 57.4% (2010: 56.7%). The top RevPAR performers were Minneapolis and Lakeside, Orlando while at the bottom end were Anchorage and Durham.

The fourth quarter saw a decrease in RevPAR of 1.6% to £34.08 (2010: £34.63). Occupancy was down 3.5 percentage points to 48.8% (2010: 52.3%) while room rates increased 5.6% to £69.88 (2010: £66.16). Regional US continues to produce mixed results with Minneapolis as the top performer and Biltmore, Los Angeles showing the biggest decline due to a reduction in citywide group business as well as a drop in room rates across the city.

EUROPE

London

London saw a growth in RevPAR in the full year of 8.8% to £97.92 (2010: £90.02). This was a result of a rate-led strategy which succeeded in achieving an 11.8% increase in room rates to £120.10 (2010: £107.45). There was a decrease in occupancy of 2.3 percentage points to 81.5% (2010: 83.8%).

London registered 3.4% RevPAR growth to £101.12 (2010: £97.75) for the fourth quarter. Room rate was the primary driver for this growth with an increase of 3.3% to £119.89 (2010: £116.04) while occupancy grew by 0.1 percentage points to 84.3% (2010: 84.2%).

Regional UK

For the full year, RevPAR fell by 5.1% to £42.48 (2010: £44.77) with occupancy decreasing 2.0 percentage points to 70.9% (2010: 72.9%) and average room rate falling by 2.5% to £59.92 (2010: £61.45). With the exception of one hotel, all Regional UK hotels experienced RevPAR declines and remain a challenge due to increased competition and pressure on room rates and occupancy.

Regional UK experienced a decrease in RevPAR in the fourth quarter with a fall of 5.9% to £42.15 (2010: £44.78).

France & Germany

For the full year, RevPAR grew by 0.9% to £62.34 (2010: £61.78). On a like-for-like basis, excluding Stuttgart where the lease expired on the 31 August 2011, RevPAR increased by 0.6% to £65.19 (2010: £64.83). This was due to an increase in occupancy of 3.1 percentage points to 67.7% (2010: 64.6%) while room rate fell by 4.0% to £96.23 (2010: £100.28).

In the fourth quarter, RevPAR decreased by 6.2% to £60.54 (2010: £64.56). On a like-for-like basis, which excludes Stuttgart, RevPAR decreased by 8.8% to £60.99 (2010: £66.84). A large contributing factor has been the Euro crisis. Room rate decreased by 8.8% to £92.44 (2010: £101.38) while occupancy grew by 0.1 percentage points to 66.0% (2010: 65.9%).

ASIA

For the full year, RevPAR increased by 3.6% to £72.58 (2010: £70.07). However, the two years are not directly comparable. Beijing was consolidated on 15 November 2010 following the acquisition of the Group's additional 40% interest, Studio M opened at the end of quarter one in 2010 and the Orchid closed on 1 April 2011. On a like-for-like basis, which includes Beijing and the latter six months of Studio M and excludes Orchid, RevPAR increased by 5.0% to £72.91 (2010: £69.44). This was mainly driven by a 4.6% increase in average room rate to £94.48 (2010: £90.31) while occupancy grew by 0.3 percentage points to 77.2% (2010: 76.9%).

In the fourth quarter, RevPAR increased by 8.0% to £78.29 (2010: £72.48). On a like-for-like basis, which includes Beijing and excludes Orchid, RevPAR increased by 6.6% to £78.29 (2010: £73.42) due to room rate increase of 3.4% to £95.85 (2010: £92.66) as well as a 2.5 percentage points increase in occupancy to 81.7% (2010: 79.2%).

Singapore

For the full year, Singapore reported 11.5% increase in RevPAR to £95.20 (2010: £85.41). On a like-for-like basis, including the latter six months of Studio M and excluding Orchid, RevPAR increased by 6.1% to £99.15 (2010: £93.41). This was driven by a 6.7% increase in average room rate to £113.03 (2010: £105.94) and occupancy dipped by 0.5 percentage points to 87.7% (2010: 88.2%).

RevPAR growth for the fourth quarter was 12.9% to £97.63 (2010: £86.44). On a like-for-like basis, excluding Orchid, RevPAR grew 4.3% to £97.63 (2010: £93.58). This was mainly driven by average room rate growth of 6.3% to £110.56 (2010: £103.99) with an occupancy dip of 1.7 percentage points to 88.3% (2010: 90.0%).

Rest of Asia

RevPAR for the full year was almost flat with a 0.2% increase to £57.60 (2010: £57.47) whereas for 2010, similar to the fourth quarter comparisons noted above, Beijing is only included for six weeks. On a like-for-like basis, including Beijing for a full year in both periods, RevPAR grew by 3.8% to £57.60 (2010: £55.47), while the room rate increased by 2.8% to £81.10 (2010: £78.89). Occupancy increased by 0.7 percentage points to 71.0% (2010: 70.3%). There are two other factors impacting results: firstly, the aforementioned guest room renovations at the Seoul Hilton which overall resulted in a 4.8% fall in its RevPAR and, secondly, new competition opened in Taipei resulting in RevPAR falling by 2.8%.

RevPAR in Asia increased by 7.9% in the fourth quarter to £66.05 (2010: £61.22). On a like-for-like basis, RevPAR grew by 8.9% if Beijing is included for a full quarter in 2010. The increase was partly driven by increase in RevPAR at the Millennium Seoul Hilton following the guest room renovations in the first half of 2011.

AUSTRALASIA

For the full year, RevPAR at £37.56 was 2.1% up on last year (2010: £36.80). RevPAR excluding the three Christchurch hotels that were closed following an earthquake was up 5.3% from last year at £37.02 (2010: £35.17), the main driver being growth of 7.6% in average room rate to £58.05 (2010: £53.97). Occupancy declined by 1.4 percentage points to 63.8% (2010: 65.2%).

The fourth quarter benefitted from final stages of the Rugby World Cup. RevPAR increased by 6.1% to £41.54 (2010: £39.14) mainly driven by an increase in room rate of 9.2% to £62.29 (2010: £57.05). On a like-for-like basis, which excludes the three Christchurch hotels, RevPAR increased by 14.2% to £41.53 (2010: £36.37). This was mainly due to the increase of 12.9% in room rate to £62.28 (2010: £55.18).

As previously mentioned, the earthquake resulted in three Christchurch hotels namely Millennium Hotel Christchurch (leased), Copthorne Hotel Christchurch Central (owned) and Copthorne Hotel Christchurch City (leased) being closed down by Civil Defence Emergency Management. Copthorne Hotel Christchurch City was demolished in late 2011 and, accordingly, the net book value was fully written down. A settlement was reached with the insurers on the building and assets and the funds were received in the fourth quarter. In relation to the Millennium Hotel Christchurch and Copthorne Hotel Christchurch Central, management is still awaiting the structural engineering reports as these hotels remain inaccessible. The impact on the two hotels cannot yet be reasonably quantified and consequently no provision for asset write-off has yet been made. Both hotels are insured for material damage and business interruption.

Financial Position and Resources

Financial Position

The Group's balance sheet strengthened during 2011 with net debt reducing to £100.2m at 31 December 2011 from the 31 December 2010 position of £165.7m.

Non-current assets

Property, plant, equipment and lease premium prepayment

Property, plant and equipment and lease premium prepayment decreased by £165.8m. The main contributors to the decrease were: £31.7m adverse exchange movements; sale of Studio M Hotel with a net book value of £48.4m; disposal of a leasehold interest in Copthorne Hotel Christchurch with a net book value of £2.3m; £47.0m transfer of Copthorne Orchid Hotel into development properties following its closure on 1 April; depreciation and amortisation charges of £33.4m; and impairment charge of £29.4m in relation to eight hotels in Regional UK, four hotels in Regional US, one hotel in New Zealand and land in India. These were partially offset by £26.4m in hotel portfolio improvements.

The Group states land and building at depreciated deemed cost, being their UK GAAP carrying value, including revaluations as at 1 January 2004 together with additions thereafter less subsequent depreciation or provision for impairment. Since 2005, external professional open market valuations on certain of the Group's hotel portfolio have taken place at each year end covering the entire Group's hotel portfolio over a three-year period. Based on external valuations conducted at 31 December 2011 on 32.5% (based on net book value) of the Group's hotel portfolio, a valuation surplus of £90.5m is estimated but this has not been recorded in the accounts.

Investment Properties

Investment properties increased by £79.0m due to additions of £81.3m of which £81.1m relates to acquisition of a land site in the Ginza district of Tokyo, Japan, £0.9m of net revaluation gain and £3.2m of adverse exchange movement.

Investments in and loans to joint ventures and associates

The table below reconciles the movement of investments in joint ventures and associates of £76.9m.

(a) The Group injected a further US$30m (£19.3m) of capital into First Sponsor Capital Limited (FSCL) through its 70.22% owned Millennium & Copthorne Hotels New Zealand Limited sub-group. This resulted in the Group's effective interest in FSCL falling to 39.3%. In addition, the Group also provided loans totalling US$80.0m (£50.9m) which, in conjunction with the capital injection, has been used to fund the purchase and development of land sites in China.

Not shown in the movement table above, the Group also made a £18.1m short-term loan to FSCL which is shown in current assets, and subsidiaries of FSCL provided a loan via an entrustment loan agreement of £11.8m to Beijing Fortune Co Limited (a 70% subsidiary of the Group) which is shown in non-current liabilities.

(b) In line with the Group's accounting policy, transactions with associates are eliminated to the extent of the Group's interest in the entity. The £9.4m deduction from the Group's share of associate net assets represents the unrealised profit element from disposing of Studio M Hotel to CDLHT in which the Group had a 35.2% interest at the relevant time. The total pre-tax profit from the sale of Studio M Hotel was £26.8m of which £17.4m has been recorded in the consolidated income statement under non-operating income.

Liquidity and Capital Resources

Cash flow and net debt

At 31 December 2011, the Group's net debt was £65.5m lower than 2010 at £100.2m (2010: £165.7m). A summary of the consolidated cash flow is set out below:

The net cash inflow from operating activities before changes in working capital and provisions was £207.8m, an increase of £60.9mreflecting higher profit before tax.

Changes in working capital and provisions include the impact of redeveloping the Orchid hotel in Singapore into condominiums, with deposits and stage payments from the buyers on the 96% of the apartments now sold. As the development unfolds further cash calls on the buyers will be forthcoming under terms of the sale and purchase agreements. The project is expected to be self-funding.

Acquisition of property, plant and equipment, lease premium prepayment and investment properties includes a £81.1m acquisition of a land site in the Ginza district of Tokyo, Japan, other investment properties of £0.2m and £26.4m in hotel portfolio improvements.

Analysis of net debt and gearing is provided below. Gearing is defined as net debt as a percentage of total equity attributable to equity holders of the parent.

A summary reconciliation of movements in net debt is shown below.

Financial structure

Group interest cover ratio, excluding share of results of joint ventures and associates, other operating income and expense, non-operating income and separately disclosed items of the Group improved to 25.5 times from 19.5 times in 2010. The increase in net finance cost of £0.8mprincipally reflects interest on Beijing's net external debt acquired on acquisition in November 2010 offset by the repayment of borrowings.

At 31 December 2011, the Group had £332.2m cash and £184.3m of undrawn and committed facilities available, comprising revolving credit facilities which provide the Group with financial flexibility. Most of the facilities are unsecured with unencumbered assets representing 87.3% of fixed assets and investment properties. At 31 December 2011, total borrowing amounted to £432.4m of which £83.5m was drawn under £112.4m of secured bank facilities.

Future funding

Of the Group's total facilities of £666.8m, £192.0m matures during the next 12 months comprising £37.0m committed revolving credit facilities, £105.5m of uncommitted facilities and overdrafts subject to annual renewal, £42.3m unsecured bonds and £7.2m secured term loans. Plans for refinancing the maturing facilities are underway.

Treasury risk management

Group treasury matters are governed by policies and procedures approved by the Board of Directors. The treasury committee monitors and reviews treasury matters on a regular basis. A written summary of major treasury activity is presented at each Board meeting.

Consolidated income statement

for the year ended 31 December 2011

 The financial results above all derive from continuing activities.

Consolidated statement of comprehensive income

for the year ended 31 December 2011

Consolidated statement of financial position

as at 31 December 2011

* Certain amounts previously included in the trade and other payables have now been represented as provisions. The comparatives have been represented accordingly. This has no impact on the net assets in either 2010 or 2011.

Consolidated statement of cash flows

for the year ended 31 December 2011

Consolidated statement of changes in equity

for the year ended 31 December 2011

Notes to the consolidated financial statements

1. General information

Basis of preparation

The consolidated financial statements in this preliminary results announcement for Millennium & Copthorne Hotels plc ('the Company') as at and for the year ended 31 December 2011 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 audited consolidated financial results of the Group for the years ended 31 December 2011 and 2010. The information set out in this final results announcement does not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006.

With exception of certain amounts included in trade and other payables which have now been represented as provisions and have no impact on the net assets in either 2010 or 2011, the comparative figures as at 31 December 2010 have been extracted from the Group's statutory Annual Report and Accounts for that financial year but do not constitute those accounts. Those accounts have been reported on by the auditors and delivered to the Registrar of Companies. The report of the auditors 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 as at and for the financial year ended 31 December 2010 are available from the Company's website www.millenniumhotels.com/corporate/investor_relations/financiallibrary.html.

The results have been prepared applying the accounting policies and presentation that were used in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2011 and which were prepared in accordance with IFRSs as adopted by the EU.

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting'. They do not include all the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2011.

The financial statements were approved by the Board of Directors on 21 February 2012.

The financial statements are presented in the Group's functional currency of sterling, rounded to the nearest hundred thousand.

Non-GAAP information

Presentation of headline operating profit, headline EBITDA, headline profit before tax, headline profit after tax and headline earnings per share.

Reconciliation of headline operating profit, headline EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) and headline profit before tax to the closest equivalent GAAP measure, profit before tax, is provided in note 3 'Operating segment information'. Reconciliation of headline profit after tax is provided in note 9 'Non-GAAP measures' and headline earnings per share is provided in note 7 'Earnings per share'.

Net debt and gearing percentage

An analysis of net debt and calculated gearing percentage is provided in note 9.

Like-for-like growth

The Group believes that like-for-like growth, which is not intended to be a substitute for or superior to reported growth, provides useful and necessary information to investors and interested parties for the following reasons:

·; it provides additional information on the underlying growth of the business without the effect of factors unrelated to the operating performance of the business; and

·; it is used by the Group for internal performance analysis.

Notes to the 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 financial statements, even if their value has not changed in their original currency. 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 and net finance expense, taxation balances and corporate expenses.

Geographical segments

The hotel and operations are managed on a worldwide basis and operate in seven principal geographical areas as follows:

·; New York

·; Regional US

·; London

·; Rest of Europe #

·; Singapore

·; Rest of Asia

·; Australasia

# includes Middle East

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. Each operating segment has a Chief Operating Officer ("COO") or equivalent who is directly accountable for the functioning of the segment and who maintains 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 based on all five reported segment profits contained in the segmental results to the regions managed by the COO.

Notes to the consolidated financial statements

3. Operating segment information (continued)