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Preliminary Results 24 February 2005

Preliminary Results 24 February 2005. Sir Ian Robinson Chairman. Brian Wallace Deputy Group Chief Executive and Group Finance Director. Hilton Group plc - Summary of Performance. 2004 £m. 2003 £m. Variance B(W). Year to 31 December. Hotels 171.3 146.5 16.9%

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Preliminary Results 24 February 2005

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  1. Preliminary Results24 February 2005

  2. Sir Ian RobinsonChairman

  3. Brian WallaceDeputy Group Chief Executive and Group Finance Director

  4. Hilton Group plc - Summary of Performance 2004 £m 2003 £m Variance B(W) Year to 31 December Hotels 171.3 146.5 16.9% Betting 273.4 214.1 27.7% Central costs and income (14.5) (13.6) Operating profit (1) 430.2 347.0 24.0% Interest (47.1) (74.6) Profit before tax (1) 383.1 272.4 40.6% Effective tax rate (1) 15.5% 22.0% EBITDA (1) 561.9 485.3 15.8% EPS (1) 20.4p 13.4p 52.2% Net Debt 971.9 1,147.7 (1)Before goodwill amortisation and exceptional items

  5. Hotels - Like for Like Profit 2004 £m 2003 £m Variance B(W) Year to 31 December Reported profit (1) 171.3 146.5 16.9% Disposal of Pandox - (5.9) Closed for refurbishment(0.5) 2.5 Disposals / new openings (7.7) (2.4) Middle East litigation costs 2.4 - Foreign exchange3.9 - Like for like profit (1) 169.4 140.7 20.4% (1)Before goodwill amortisation and exceptional items

  6. Hotels Worldwide Revpar 2004 vs 2003 Like for Like Hotels, Constant Currencies

  7. Worldwide Revpar by Ownership Type Like for Like Hotels, Constant Currencies Revpar Growth 2004 vs 2003 - First Half, Second Half, Full Year H1 H2 FY H1 H2 FY H1 H2 FY

  8. Hotels - Cost Management Increasing revenue £m Declining revenue £m Like for Like, Constant Currencies Total £m Full Year Revenue movement 144.8 199.8 (55.0) GOP Movement (1) 73.6 111.0 (37.4) Incremental conversion 50.8% 55.6% 32.0% Rental & Owners return (35.3) Property taxes / rates (3.7) Insurance (2.0) Other (3.9) Operating profit increase (1) 28.7 (1)Before goodwill amortisation and exceptional items

  9. UK Hotels Revpar 2004 vs 2003 Like for Like Hotels

  10. Europe (Hilton Brand) - Revpar by Country Like for Like, Constant Currencies, First Half, Second Half, Full Year H1 H2 FY H1 H2 FY H1 H2 FY

  11. Scandic Revpar 2004 vs 2003 Like for Like Hotels, Constant Currencies, Scandic Acquired

  12. Scandic Performance 2004 vs 2003 (excluding Pandox) Like for like revenue gainers (a) £m Like for like revenue losers (a) £m Other (b) £m 2004 Actual £m 2003 Actual £m Full year Revenue 500.0 23.4 (6.0) (2.3) 515.1 GOP 162.0 13.2 (5.1) 0.5 170.6 Inc. conversion 54.6% 15.0% Costs (148.1) (4.3) 1.9 (2.5) (153.0) Profit (c)13.9 8.9 (3.2) (2.0) 17.6 (a) At constant currencies (b) Includes support office costs not allocated to individual hotels and foreign exchange (c) 2003 excludes £5.9m of Pandox associate profit, the investment was sold in December 2003

  13. Betting and Gaming Operating Profit(1) 2004 2003 £m £m Gross Win 2004 2003 £m £m Year to 31 December UK Retail 652.5 575.1 215.3 173.1 Ireland & Belgium 69.0 67.6 13.2 11.5 Telephone Betting - excluding high rollers 39.8 30.5 13.6 10.6 - high rollers 6.3 (1.6) 4.2 (1.2) 46.1 28.9 17.8 9.4 eGaming 89.3 63.7 21.3 14.2 Vernons 20.2 20.2 5.8 5.9 Betting and Gaming 877.1 755.5 273.4 214.1 (1)Before goodwill amortisation and exceptional items

  14. UK Retail 2004 £m 2003 £m Variance B(W) Year to 31 December Gross win 652.5 575.1 13.5% Duty / Gross profits tax (96.4) (84.4) Other costs (340.8) (317.6) Operating profit215.3 173.1 24.4% Staff costs per slip 36.30p 32.67p (11.1)% Stake per slip(1) £8.47 £8.37 1.2% (1)Excluding machines

  15. Telephone Betting (Excluding High Rollers) 2004 £m 2003 £m Variance B(W) Year to 31 December Gross win 39.8 30.5 30.5% Gross profits tax (5.9) (4.6) Other costs (20.3) (15.3) Operating profit13.6 10.6 28.3% Salary cost per call 69.2p 67.8p (2.1)% No. of calls (000’s) 6,659 5,995 11.1% Active customers (000’s) (1) 125.2 117.0 7.0% (1)Active customers are those who placed a bet during the period

  16. eGaming 2004 £m 2003 £m Variance B(W) Year to 31 December Gross win 89.3 63.7 40.2% Gross profits tax (4.9) (3.2) Other costs (63.1) (46.3) Operating profit21.3 14.2 50.0% Active customers (000’s) (1) Sportsbook 306 206 48.5% Casino 81 80 1.3% Poker 64 25 156.0% Sportsbook registrations (000’s)357 267 33.7% (1)Active customers are those who placed a bet during the period

  17. Hilton Group plc - Cash Flow 2004 £m 2003 £m Year to 31 December Cash inflow from operating activities 546.8 501.9 Interest, tax and dividends paid (243.1) (261.5) Cash flow before capex 303.7 240.4 Capital expenditure (189.6) (189.9) Cash flow after capex 114.1 50.5 Proceeds from asset sales 38.6 20.0 Acquisitions / disposals (1) (6.4) 35.3 146.3 105.8 Exchange and other movements (2) 29.5 (88.7) Net borrowings movement 175.8 17.1 Opening net borrowings (1,147.7) (1,164.8) Closing net borrowings (971.9) (1,147.7) • Includes betting shop acquisitions • Includes £17.8m favourable exchange (2003: £96.0m adverse)

  18. Analysis of 2004 Capital Expenditure £m Hotels Acquisition linked development 39.1 Other 87.9 Total Hotels 127.0 LivingWell 9.0 136.0 Betting and Gaming Development – operating assets 20.4 FOBTs 9.5 Other (including TVs £4.3m, Ireland £2.2m) 17.4 eGaming / Telephone betting 6.3 53.6 Total Group 189.6

  19. Impact of IFRS – Business Performance • UK GAAP Pro forma IFRS (2) • 2004 Profit Before Tax (1) £383m £374m • 2004 EPS (1) 20.4p 20.0p • 2004 Net Assets £2,554m £2,388m • Before goodwill amortisation and exceptional items • This includes the pro forma impact of IAS 32 and 39, which will not be adopted until 1 January 2005 2% 2% 7%

  20. David MichelsGroup Chief Executive

  21. Five Year Record 2000 2002 2003 2004 2001 As at 31 December Dividend 8.50p 8.92p 8.92p 8.92p 9.60p Debt (£m) 1,374.3 1,473.9 1,164.8 1,147.7 971.9 EPS 14.6p 14.3p 13.4p 13.4p 20.4p FTSE Ranking 89th 73rd 68th 59th 60th TSR Growth 9.4% 5.2% (17.1%) 43.2% 31.8%

  22. 2005 – Trading So Far

  23. EPOS

  24. New Shops 44 shops purchased since January 2004 A further 37 agreed in 2005

  25. 270 shops will be relocated, extended or refurbished

  26. 2005 9% increase in number of events 7% increase in trading hours

  27. eGaming

  28. Telephone Betting

  29. Ladbrokes Management Chris Bell Chief Executive Ladbrokes Mike O’Kane Trading Director Ros Barker Human Resources Director Alan Ross Managing Director Ladbrokes Ltd Andy Scott Finance Director John O’Reilly Managing Director eGaming Ltd Steve Roberts Managing Director Vernons Richard Ames Commercial Director Alex Kovach International Business Development Director

  30. Blackpool Casino

  31. Betting Exchanges

  32. Ian Carter

  33. Historical Revpar Chart Rolling 12 months, Like for Like at Constant Currencies £

  34. State of the Nation Scandic Hilton Hilton Espoo, Finland Nagoya, Japan Morumbi, Brazil Scandic Hilton Hilton Otaru, Japan Offenbach, Germany Athens, Greece

  35. Millennium Hilton Hilton Bangkok, Thailand Sydney, Australia Hilton Hilton Barbados Tokyo, Japan Future Openings 2005 • Bari, Italy (Scandic by Hilton) • Shenzhen, China • Qasr al Shaq, Saudi Arabia • Barbados, Caribbean • Santo Domingo, Dominican Republic • Cebu, Philippines • Phuket, Thailand (Conrad) • Barcelona Diagonal Mar, Spain • Dubrovnik, Croatia • Sydney, Australia • Dublin Airport, Ireland • Tokyo, Japan (Conrad) • Millennium Hilton Bangkok, Thailand • Portorosa, Sicily 32 hotels (7,866 rooms) to open in 2006 and beyond

  36. Scandic Franchises Scandic by Hilton Bari, Italy

  37. Conrad Hotels Conrad Conrad Bangkok, Thailand Istanbul, Turkey Conrad Conrad Conrad Waldorf, NY, USA Cairo, Egypt Miami, USA

  38. Hotel Property Planning to raise £300m-£400m

  39. Hilton Taba, Egypt

  40. BDRC Measure UK* Europe* Asia Pacific** Middle East** Rank Rank Rank Rank 1st Prompted Awareness 1st 1st 3rd 2nd 1st 2nd 3rd Unprompted Awareness • Brand Preference • 1st Choice • 1st or 2nd Choice 1st 1st 3rd 1st 1st 1st 2nd 1st 2nd 4th/worse 3rd 2nd Brand Usage 2nd 1st 4th/worse 3rd Brand Loyalty Brand Ranking Index 1st 1st 1st 2nd *BDRC Survey 2003 **BDRC Survey 2004

  41. 2005 Capex 2000 £m 2001 £m 2002 £m 2003 £m 2004 £m Forecast 2005 £m Capex: Hotels 278 144 88 71 97 120 Betting 40 40 41 43 54 70 Major property purchases(1) 147 - 59 76 39 20 Capital expenditure(2) 465 184 188 190 190 210 Disposals - hotels (13) (355) (335) (9) (36) 452 (171) (147) 181 154 • Including acquisition linked development • Excludes potential betting shop acquisitions

  42. Preliminary Results24 February 2005

  43. Appendix

  44. Hotels – Analysis by Contract Type Fixed lease Contingent lease Owned Total Managed Franchise LivingWell No. of hotels 64 49 154 110 26 n/a 403 No. of rooms 16,350 10,337 33,625 34,618 7,706 n/a 102,636 £m Turnover 565.6 276.4 833.8 1,002.7 3.6 50.0 2,732.1 Gross operating profit 197.4 103.0 295.2 370.0 3.6 19.1 988.3 Less: Rental & owners return (9.0) (65.5) (182.4) (332.0) - (4.0) (592.9) Depreciation (45.3) (19.4) (27.6) - - (4.5) (96.8) Other costs / income (43.4) (11.4) (41.6) - (0.9) (4.3) (101.6) 2004 Profit 99.7 6.7 43.6 38.0 2.7 6.3 197.0 2003 Profit 82.6 4.3 34.8 35.8 - 7.4 164.9

  45. Geographical Revpar by Ownership Type Like for Like Hotels, Constant Currencies Owned & fixed lease Contingent lease Managed UK 8.7% 5.9% 10.0% Europe & Africa 1.6% 6.0% 1.9% Middle East & Asia Pacific 9.1% 14.7% 10.6% Americas 10.5% 14.0% 18.2% Total 5.7% 6.9% 8.6%

  46. Yield Premium - Hilton vs London Market Cumulative Year to Date Revpar Premium Market Source: PKF Hotel Consultancy Services Market is 8 competitor chains - Marriott International, InterContinental, De Vere, Millennium & Copthorne, Thistle, Le Meridien, Whitbread, Sheraton

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