Millennium & Copthorne Hotels Regulatory News (MLC)

For Immediate Release 31 July 2014

MILLENNIUM & COPTHORNE HOTELS PLC

INTERIM MANAGEMENT REPORT

Half year and second quarter results to 30 June 2014

Highlights for the first half 2014:

Highlights for the second quarter 2014:

· Revenue, profit and earnings per share decreased in the first half of 2014, compared to the same period last year, due to the strengthening pound sterling, challenging Asian markets - in particular Singapore - and higher costs.

· Group RevPAR fell by 2.4% mainly as a result of foreign currency impact and reduced RevPAR in Asia.

· In constant currency, Group RevPAR grew by 3.6%, with gains in all regions except for Singapore and Rest of Europe.

· In reported currency, US RevPAR was down by 0.3% compared to H1 2013. Excluding the refurbishment effect at Millennium Hotel Minneapolis, closure of Millennium Hotel St Louis and acquisition of Novotel New York Times Square, US RevPAR was down 5.6%.

· In reported currency, London region RevPAR is up by 1.9% compared to H1 2013. Excluding the acquisition of The Chelsea Harbour Hotel, RevPAR was down 0.6%.

· Post balance sheet event: successful initial public offering ("IPO") by First Sponsor Group Limited ("FSGL") and listing on the Main Board of the Singapore Exchange.

Commenting today Mr Kwek Leng Beng, Chairman said:

"It is too early to predict results for the full year, but the Group is cautiously optimistic that with appropriate actions performance will meet management expectations. Group performance was disappointing in the first half of 2014. This was due to a broad range of factors including geopolitical events unsettling the hospitality sector - especially in Asia - and the rapid appreciation of our reporting currency, the pound sterling. Management is adopting a more cautious outlook and increasing its attention to cost control in uncertain markets."

¹ The Group adopted IFRS 10 Consolidated Financial Statements with effect from 1 January 2014. This resulted in the Group consolidating CDL Hospitality Trusts ("CDLHT") which was previously treated as an associate undertaking and not consolidated. The comparatives for 2013 have been restated accordingly. RevPAR will continue to be reported excluding CDLHT's non-M&C managed hotels.

Enquiries

Millennium & Copthorne Hotels plc

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

Jonathon Grech, Company Secretary and General Counsel

Peter Krijgsman, Financial Communications (Media)

This interim management report contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of Millennium & Copthorne Hotels plc. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Undue reliance should not be placed on forward looking statements which speak only as of the date of this document. The Group accepts no obligation to publicly revise or update these forward-looking statements or adjust them to future events or developments, whether as a result of new information, future events or otherwise, except to the extent legally required.

BUSINESS REVIEW

Financial Performance

For the six months ended 30 June 2014 revenue in reported currency fell slightly by 0.4% to £380.6m (H1 2013: £382.2m), while profit before tax decreased by 14.9%. The strength of our reporting currency, pound sterling, continued to have a significant impact on results. On a constant currency basis, revenue increased by 6.0% to £380.6m (H1 2013: £359.1m) and profit before tax decreased by 8.6% to £58.4m (H1 2013: £63.9m). Lower profit reflected mainly higher hotel operating costs, higher central costs and a lower contribution from joint ventures and associates.

The results and comparatives for 2013 include the impact of consolidating CDLHT under IFRS 10. Previously CDLHT's results were included under share of profit of joint ventures and associates. The key impacts on results for the first half of 2014 arising from the adoption of IFRS 10 are increases in revenue and profit before tax of £17.6m and £13.2m respectively. There is no change to the net profit after tax attributable to the equity holders of the parent.

Hotel Operations

For the six month period ended 30 June 2014, Group RevPAR fell by 2.4% to £65.67 (H1 2013: £67.27), partly as a result of the strength of the pound sterling, which appreciated by about 8% against the US Dollar between 30 June 2013 and 30 June 2014. As detailed in the regional performance review below, Group RevPAR increased by 3.6% on a constant currency basis, compared to the same period last year (H1 2013: £63.40). The improvement was driven by increases in both average room rate and occupancy with positive RevPAR performance in the US, London, Australasia and rest of Asia.

Asset Management

Acquisitions & Disposals

The Group completed two acquisitions during the first six months of 2014. The acquisitions of a hotel located at Chelsea Harbour, London for £65.0m and the Novotel New York Times Square for $273.6m (£161.0m) completed on 25 March 2014 and 12 June 2014 respectively. Subject to conditions being met, the acquisition of Boscolo Palace Roma in Italy is scheduled to complete around September 2014.

The Group's property revenue of £22.2m during the first half of 2014 included New Zealand landbank sales and the sale of the last three Glyndebourne condominium units in Singapore.

Hotel Development

Construction of the Group's new hotel in Tokyo's Ginza district is on schedule to complete around September 2014 and the hotel is expected to open in December 2014. While the Group will own the property through freehold and leasehold interests, it is intended that the hotel will be leased to Mitsui Fudosan Co., Ltd. ("Mitsui Fudosan") under a fixed-term lease and licensing arrangement pursuant to which Mitsui Fudosan or one of its affiliates will operate the hotel as the Millennium Mitsui Garden Hotel Tokyo.

In relation to the plot of land measuring 1,563.7m2adjacent to Millennium Seoul Hilton which was acquired in 2013, the Group is currently developing detailed plans to build hospitality facilities to complement the existing product offering.

During the second quarter the Group sold the last remaining penthouse apartment within the Glyndebourne condominium development for S$4.1m (£1.9m), concluding the redevelopment of the former Copthorne Orchid Hotel in Singapore. In total, the Glyndebourne development generated revenues for the Group of £280.3m and operating profit of £142.1m, most of which was recognised in 2013.

The Group is considering a range of options with regard to the future of the freehold site occupied by the Millennium Hotel St Louis, which was closed in January 2014.

Hotel Refurbishment

Since the current refurbishment programme started in 2010, the Group has spent £106m up to 30 June 2014. For the remainder of the year we are expecting a further £31m of refurbishment spending on projects that have already commenced or are approved, with a further £22m of spending on these projects in future years. This includes the ongoing refurbishment of Grand Hyatt Taipei.

Additional projects totalling £214m are also under consideration including projects at Millennium Hotel London Knightsbridge, and Millennium Broadway Hotel New York. In May 2014, the Group announced the closure for refurbishment of the 125-room Millennium Scottsdale Resort and Villas in Arizona from 22 June until 30 September 2014. All projects are subject to relevant consents and phasing to minimise impact on earnings.

In the first six months of 2014, £18m was spent, relating mainly to Grand Hyatt Taipei for renovating the east wing. Total refurbishment cost for this hotel is anticipated to be £62m and up to 30 June 2014, a total amount of £39m has been spent. Guestroom refurbishment is now complete. Further work on the outlets and public areas is scheduled to complete in 2015.

First Sponsor Group Limited

Progress on the Wenjiang development land site in Chengdu, People's Republic of China is on track. The land is designated for residential, commercial and hotel development. Construction of a Millennium branded hotel commenced in 2013 and is scheduled to open in 2017.

FSGL listed on the Main Board of the Singapore Exchange on 22 July 2014. Based on the IPO price of S$1.50 per share, the market capitalisation is S$885m (£417m). The transaction was an important step in the development of FSGL, efficiently migrating the business to a more appropriate domicile for a company serving the China market. Following the IPO the Group owns an effective interest of 35.6% in FSGL, which remains a cornerstone of its China strategy.

Financial Position

At 30 June 2014, the M&C Group excluding CDLHT had net debt of £163.9m (Dec 2013: net cash £81.3m). Including the consolidation of CDLHT's net debt, the cash position of the Group at 30 June 2014 is a net debt of £459.6m (Dec 2013 restated: net debt of £215.3m).

The Group including CDLHT has a total of £131.8m of undrawn committed bank facilities at 30 June 2014 of which £103.6m relates to M&C Group. Most of the facilities are unsecured with unencumbered assets representing 90.8% of fixed assets and investment properties.

Dividend

The Board has declared an interim dividend of 2.08 pence per share. The interim dividend will be paid on 3 October 2014 to shareholders on the register at the close of business on 15 August 2014. The ex-dividend date of the Company's shares is 13 August 2014. The Board will consider the full dividend for the year following the close of the financial year.

Outlook

Whilst it is too early to be certain about trading results for the full year, management is determined to meet expectations. In reported currency, Group RevPAR is down 1.6% for the three weeks ended 21 July, 2014, with Australasia up 9.6%, US up 2.6% (down 4.9% excluding Novotel New York Times Square) and Europe up 5.0% (up 0.7% excluding The Chelsea Harbour Hotel). Our Asian destinations face continuing headwinds with Singapore down 17.1% and Rest of Asia down 12.2%. Excluding acquisitions, Group RevPAR is down by 5.8%.

PERFORMANCE REVIEW

For comparability, the following regional review is based on calculations in constant currency whereby 30 June 2013 average room rate and RevPAR have been translated at average exchange rates for the period ended 30 June 2014. Full details are given in Appendices 1 and 2 of this report.

GROUP

* % points

In constant currency terms, Group hotel revenue for the first six months of 2014 increased by 1.6%, compared to the same period in 2013. RevPAR increased by 3.6% as a result of higher room rates and occupancy levels.

Below is the regional performance review:

ASIA

* % points

· Whilst the long term outlook is favourable, Singapore faced challenging hospitality markets in the first half of 2014, with continuing weakness in the corporate market and a significant reduction in visitor numbers from China in the first half of the year compared to 2013. The supply of Singapore hotel rooms continued to grow, but at a slower rate than last year. Occupancy was down 0.8 percentage points compared to the same period last year, whilst average room rates declined by 2.7%.

· In the rest of Asia, all of the Group's hotels delivered RevPAR gains with the exceptions of The Heritage Hotel Manila, where performance has been affected by the closure of the hotel's casino upon the expiry of the lease in 2013.

· Despite the RevPAR improvement, hotel revenues in Rest of Asia fell as a result of reduced spending on meetings and events in Millennium Seoul Hilton, as well as the reduced rental income relating to The Heritage Hotel Manila mentioned above.

· Grand Hyatt Taipei is benefiting from its ongoing refurbishment, with a double digit growth in RevPAR for the first six months of 2014, compared to the same period last year. The east wing refurbishment of Grand Hyatt Taipei was completed in May 2014.

EUROPE

* % points

· Hotel revenues for the first six months of 2014 grew strongly compared to the same period in 2013, as a result of increased spending by customers on meeting and events.

· RevPAR for Europe increased by 1.3% in the first half of the year, boosted by the acquisition in March 2014 of The Chelsea Harbour Hotel ("Chelsea Harbour") which has the highest RevPAR in the region. Excluding Chelsea Harbour, RevPAR fell 1.1% in the first half of the year. Similarly, London RevPAR increased by 1.9% but fell by 0.6% when Chelsea Harbour is excluded.

· Rest of Europe RevPAR decreased by 2.0%. RevPAR in Continental Europe fell 5.6% with falling rates at the Paris hotels. Regional UK RevPAR grew slightly by 0.2%. Hotel revenues in Rest of Europe were flat year on year helped by increased management revenues from the Middle East, which offset lower contributions from Paris.

US

* % points

· US RevPAR for the first six months increased by 7.7%, compared to the same period last year. This included the positive impact on RevPAR of the Novotel New York Times Square which was acquired in June 2014, the closure of Millennium Hotel St Louis in January 2014 and the full period contribution from Millennium Hotel Minneapolis which was closed for refurbishment from January to April in 2013. Excluding these three hotels, RevPAR grew 1.9%.

· New York RevPAR increased by 2.9%. Excluding the Novotel New York Times Square, RevPAR increased 1.6% with RevPAR gains at Millenium Hilton and One UN New York.

· RevPAR increased at 9 of the Group's 15 hotels in Regional US, with the refurbished Millennium Hotel Minneapolis showing the largest gains, compared to 2013. Higher average room rates were the main driver. Excluding the impact of Millennium Hotel Minneapolis and the Millennium Hotel St Louis, RevPAR increased 1.1%.

AUSTRALASIA

* % points

· RevPAR increased by 9.3% in the first six months of 2014, with 12 of the 13 hotels showing RevPAR gains. Increased overseas visitor numbers are driving up both rate and occupancy in most locations.

· Total hotel revenue has fallen due to the cessation during the first quarter of 2014 of business interruption insurance receipts relating to the three Christchurch hotels that had been damaged in the 2011 earthquake. Excluding this factor, hotel revenues increased by 5.1%, compared to the first half of 2013.

· As announced on 10 July 2014, Millennium & Copthorne Hotels New Zealand Limited ("MCK") entered into a conditional agreement with Te Maori Lodges Limited, a subsidiary of the Maori Trustee, for the acquisition of the 30% interest in Quantum Limited ("Quantum") which MCK does not already own. Quantum is the principal operating subsidiary of MCK and owns and leases seven of the Group's hotels in the region. The agreed price for the acquisition of the shares is NZ$14.25m (£7.3m). Completion of the purchase is subject to approval by the Overseas Investment Office.

Condensed consolidated income statement

for the half year ended 30 June 2014

The financial results above derive from continuing activities.

¹ The Group adopted IFRS 10 with effect from 1 January 2014 and comparatives have been restated.

Condensed consolidated statement of comprehensive income

for the half year ended 30 June 2014

¹ The Group adopted IFRS 10 with effect from 1 January 2014 and comparatives have been restated.

Condensed consolidated statement of financial position

as at 30 June 2014

¹ The Group adopted IFRS 10 with effect from 1 January 2014 and comparatives have been restated.

Condensed consolidated statement of cash flows

for the half year ended 30 June 2014

¹ The Group adopted IFRS 10 with effect from 1 January 2014 and comparatives have been restated.

Condensed consolidated statement of changes in equity

for the half year ended 30 June 2014

Notes to the condensed consolidated financial statements

1. General information

Basis of preparation

The consolidated financial statements in this interim management report for Millennium & Copthorne Hotels plc ("the Company") as at and for the half year ended 30 June 2014 comprise the Company and its subsidiaries (together referred to as "the Group") and the Group's interests in joint ventures and associates.

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2013.

The comparative figures for the financial year ended 31 December 2013 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor draw 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.

These interim financial statements were authorised for issue by the Company's Board of Directors on 30 July 2014.

Use of judgements and estimates

The financial statements were prepared on a going concern basis supported by the Directors' assessment of the Group's current and forecast financial position, and forecast for the foreseeable future; and are presented in the Company's functional currency of sterling, rounded to the nearest hundred thousands.

In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2013.

Significant accounting policies

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2013. The following changes in accounting policies are also expected to be reflected in the Group's consolidated financial statements as at and for the year ending 31 December 2014.

The Group adopted IFRS 10 Consolidated Financial Statements with effect from 1 January 2014. This resulted in the Group consolidating CDL Hospitality Trusts ("CDLHT") which was previously treated as an associate undertaking and not consolidated. The comparatives for 2013 have been restated accordingly.

Notes to the condensed consolidated financial statements

1. General information (continued)

The following tables summarise the material impacts resulting from the adoption of IFRS 10 on the Group's financial position, income statement and cash flows.

Condensed consolidated statement of financial position

Condensed consolidated income statement

Condensed consolidated statement of cash flows

Notes to the condensed consolidated financial statements

1. General information (continued)

Condensed consolidated statement of financial position

Condensed consolidated income statement

Notes to the condensed consolidated financial statements

2. Foreign currency translation

The Company publishes its Group financial statements in sterling. However, the majority of the Company's subsidiaries, joint ventures and associates report their revenue, costs, assets and liabilities in currencies other than sterling. The Company translates the revenue, costs, assets and liabilities of those subsidiaries, joint ventures and associates into sterling, and this translation of other currencies into sterling could materially affect the amount of these items in the Group's financial statements, even if their values have not changed in their original currencies. The following table sets out the sterling exchange rates of the other principal currencies of the Group.

3. Operating segment information

Disclosure of segmental information is principally presented in respect of the Group's geographical segments.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items principally comprise: interest-bearing loans, borrowings, cash and cash equivalents, net finance expense, taxation balances and corporate expenses.

Geographical segments

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

· New York

· Regional US

· London

· Rest of Europe (including the Middle East)

· Singapore

· Rest of Asia

· Australasia

The segments reported reflect the operating segment information included in the internal reports that the Chief Operating Decision Maker ("CODM"), which is the Board, regularly reviews.

The reportable segments are aligned with the structure of the Group's internal organisation which is based according to geographical region. Discrete financial information is reported to and is reviewed by the CODM on a geographical basis. Operating segments have Chief Operating Officers ("COOs") or equivalent who are directly accountable for the functioning of their segments and who maintain regular contact with the Chief Executive Officer and Chairman of the CODM to discuss the operational and financial performance. The CODM makes decisions about allocation of resources to the regions managed by the COOs.

Notes to the condensed consolidated financial statements

3. Operating segment information (continued)