Preliminary Results 24 February 2005

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Preliminary Results24 February 2005
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Sir Ian RobinsonChairman
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Brian WallaceDeputy Group Chief Executive and
Group Finance Director
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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
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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 exchange 3.9 - Like for like
profit (1) 169.4 140.7 20.4
(1) Before goodwill amortisation and exceptional
items
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Hotels Worldwide Revpar 2004 vs 2003
Like for Like Hotels, Constant Currencies
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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
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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) Insuran
ce (2.0) Other (3.9) Operating profit increase
(1) 28.7
(1) Before goodwill amortisation and exceptional
items
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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
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Scandic Revpar 2004 vs 2003
Like for Like Hotels, Constant Currencies,
Scandic Acquired
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Scandic Performance 2004 vs 2003 (excluding
Pandox)
Like for like revenue gainers (a) m
Like for like revenue losers (a) m
2004 Actual m
Other (b) 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
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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
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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 profit 215.3 173.1
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
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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 profit 13.6 10.6 28.3 Salary cost
per call 69.2p 67.8p (2.1) No. of calls
(000s) 6,659
5,995 11.1 Active customers (000s)
(1) 125.2 117.0 7.0
(1) Active customers are those who placed a bet
during the period
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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 profit 21.3 14.2 50.0
Active customers (000s) (1)
Sportsbook 306 206 48.5 Casino 81 80
1.3 Poker 64 25 156.0 Sportsbook
registrations (000s) 357 267 33.7
(1) Active customers are those who placed a bet
during the period
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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)

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Analysis of 2004 Capital Expenditure
m
Hotels Acquisition linked development 39.1 Other
87.9 Total Hotels 127.0 LivingWell 9.0 136.0 Bett
ing 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
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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

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David MichelsGroup Chief Executive
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Five Year Record
2003
2002
2000
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
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2005 Trading So Far
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EPOS
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New Shops

• 44 shops purchased since January 2004
• A further 37 agreed in 2005

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• 270 shops will be relocated, extended or
  refurbished

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2005

• 9 increase in number of events
• 7 increase in trading hours

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eGaming
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Telephone Betting
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Ladbrokes Management
Chris Bell Chief Executive Ladbrokes
Mike OKane Trading Director
Ros Barker Human Resources Director
Andy Scott Finance Director
Alan Ross Managing Director Ladbrokes Ltd
John OReilly Managing Director eGaming Ltd
Steve Roberts Managing Director Vernons
Richard Ames Commercial Director
Alex Kovach International Business Development
Director
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Blackpool Casino
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Betting Exchanges
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Ian Carter
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Historical Revpar Chart
Rolling 12 months, Like for Like at Constant
Currencies

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State of the Nation
Scandic
Hilton
Hilton
Espoo, Finland
Nagoya, Japan
Morumbi, Brazil
Scandic
Hilton
Hilton
Athens, Greece
Otaru, Japan
Offenbach, Germany
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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
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Scandic Franchises
Scandic by Hilton
Bari, Italy
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Conrad Hotels
Conrad
Conrad
Bangkok, Thailand
Istanbul, Turkey
Conrad
Conrad
Conrad
Waldorf, NY, USA
Cairo, Egypt
Miami, USA
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Hotel Property

• Planning to raise 300m-400m

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Hilton Taba, Egypt
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BDRC
Measure
Europe
UK
Asia Pacific
Middle East
Rank
Rank
Rank
Rank
1st
Prompted Awareness
1st
1st
3rd
1st
2nd
2nd
3rd
Unprompted Awareness

• Brand Preference
• 1st Choice
• 1st or 2nd Choice

1st
3rd
1st
1st
1st
1st
2nd
1st
4th/worse
2nd
3rd
2nd
Brand Usage
Brand Loyalty
1st
2nd
4th/worse
3rd
Brand Ranking Index
1st
1st
1st
2nd
BDRC Survey 2003
BDRC Survey 2004
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2005 Capex
2000 m
2001 m
2002 m
2003 m
Forecast 2005 m
2004 m
Capex Hotels 278 144 88 71 97 12
0 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

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Preliminary Results24 February 2005
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Appendix
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Hotels Analysis by Contract Type
Fixed lease
Contingent lease
Owned
Total
Managed
LivingWell
Franchise
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 102,63
6
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
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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 Ame
ricas 10.5 14.0 18.2 Total 5.7 6.9 8.6
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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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Yield Premium - Hilton vs UK Provincial 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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Breakdown of Lease Commitments
Total m
Contingent lease m
Minimum guarantee m
Fixed lease m
Forecast land and buildings lease commitments for
2005

• Hotels 79.5 88.2 110.7 278.4
• Betting 38.1 - - 38.1
• Property / Centre 5.5 - - 5.5
• Total 123.1 88.2 110.7 322.0
• Also circa 18m other operating lease
  commitments

Forecast contingent commitments are based on 2005
forecast results
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International Financial Reporting Standards

• Background
• Under EU regulation, Hilton is required to report
  its results for 2005 under IFRS
• Key differences from UK GAAP highlighted at 2003
  Prelims announcement
• Pensions and employee benefits
• Deferred tax
• Goodwill, brands and licences
• Share-based payments
• Derivatives, hedge accounting and convertible
  bond
• 2004 opening balance sheet and 2004 comparative
  information now completed and audited. This
  comparative information may be amended by future
  changes in IFRS and its interpretation
• Hilton has adopted Financial Instruments
  standards (IAS32 IAS 39) from 1 January 2005
• Unaudited pro forma financial information has
  been prepared to illustrate the impact of IAS 32
  IAS 39 on 2004 results

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IFRS Summary

• Key Impacts
• 2004 pro forma EPS reduced by 2
• Potential for increased volatility due to fair
  value of derivatives and pensions
• 2004 Net Assets reduced from 2,554m to 2,388m
  (pro forma)
• Cash flows unaffected
• IFRS Timetable
• Detailed reconciliations from UK GAAP are
  available on website www.hiltongroup.com
• IFRS conference call for interested parties at
  10am (UK time) on
• 3 March 2005
• Interim IFRS financials announced 25 August 2005

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IFRS First Time Adoption Elections

• - no restatement prior to Transition Date (1
  January 2004)
• all actuarial gains and losses recognised in
  equity at Transition Date
• - only awards granted after 7 November 2002 have
  been considered
• - not adopted until 1 January 2005, pro forma
  impact on 2004 disclosed
• - no remeasurement of assets to fair value at
  Transition Date

• Business Combinations
• Employee Benefits
• Share-based payments
• Financial Instruments
• Property, Plant Equipment