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Brian Wallace Group Finance Director and Deputy Chief Executive

Brian Wallace Group Finance Director and Deputy Chief Executive. Hilton Group plc - Summary of Performance. 6 months to 30 June 2002 £m. 6 months to 30 June 2001 (1) £m. Variance B(W). Hotels 97.8 126.3 (22.6)% Worldwide Betting 76.5 62.6 22.2% Disposal businesses - 1.2

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Brian Wallace Group Finance Director and Deputy Chief Executive

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  1. Brian WallaceGroup Finance Directorand Deputy Chief Executive

  2. Hilton Group plc - Summary of Performance 6 months to 30 June 2002£m 6 months to 30 June 2001(1)£m Variance B(W) Hotels 97.8 126.3 (22.6)% Worldwide Betting 76.5 62.6 22.2% Disposal businesses - 1.2 Central costs and income (6.6) (6.2) Operating profit (2) 167.7 183.9 (8.8)% Interest (37.7) (39.6) 4.8% Profit before tax (2) 130.0 144.3 (9.9)% Effective tax rate (2)22.0% 21.1% EBITDA (2)237.7 239.3 (0.7)% (1) Restated for the impact of FRS 19 (2) Before goodwill amortisation and exceptional items

  3. Hotels - Like for Like Profit (1) 2001£m % change 2002 £m Reported profit 97.8 126.3 (22.6)% Scandic profit (16.6) (2.7) Comparable profit 81.2 123.6 (34.3)% Royal Bank of Scotland rent 9.5 6.7 Disposals / new openings (1.0) (2.7) Foreign exchange (0.6) - Like for like profit 89.1 127.6 (30.2)% (1) Before goodwill amortisation and exceptional items

  4. Hotels Worldwide Occupancy,Rate and RevPAR Performance vs 2001 Like for Like Hotels, Constant Currencies Occ % growth Rate growth RevPAR growth 5% 1.1% 0% (5)% (4.3)% (4.3)% (5.6)% (5.5)% (7.5)% (10)% Jan Feb Mar / Apr May June July Including Scandic March / April have been combined to avoid the distortion caused by the timing of Easter

  5. Hotels Worldwide RevPAR by Ownership Type Like for Like, Constant Currencies • First half RevPAR growth 2002 vs 2001 split by owned properties, fixed lease, contingent leaseand management contract • Includes Scandic in2001 although it wasonly consolidated from11th June 2001 First half RevPAR growth 2002 vs 2001 0% (0.8)% (2)% (4)% (6)% (8)% (8.2)% (8.3)% (10)% (10.0)% (12)% Fixed lease Owned Contingent lease Managed

  6. Hotels - Cost Management Like for Like £m Revenue decrease (61.1) GOP decrease (1) (36.3) Incremental conversion 40.6% Rental and owners return 2.6 Rates (2.4) Insurance and other (1.8) Foreign exchange (0.6) (2.2) Operating profitdecrease (1) (38.5) (1) Before exceptional items and goodwill amortisation Excludes Scandic

  7. UK Hotels RevPAR Performance vs 2001 Like for Like Hotels 5% London 5 star London 4 star Provinces Total UK 0% (5)% (10)% (15)% (20)% Jan Feb Mar / Apr May June July March / April have been combined to avoid the distortion caused by the timing of Easter

  8. Hilton vs London Market Cumulative Year to Date RevPAR Premium £90 18% RevPAR (£) Premium Hilton RevPAR 2002 16% The Market RevPAR 2002 £80 14% Hilton RevPAR Premium 2002 12% £70 10% 8% £60 6% £50 4% Jan Feb Mar Apr May June Market Source: PKF Hotel Consultancy Services

  9. France, Germany, BeneluxRevPAR Performance vs 2001 Like for Like, Constant Currencies 0% (5)% (10)% (15)% (20)% (25)% France Germany Benelux (30)% Jan Feb Mar / Apr May June July Including Scandic March / April have been combined to avoid the distortion caused by the timing of Easter

  10. Scandic - Occupancy, Rate and RevPAR Performance vs 2001 Like for Like, Constant Currencies 5% Occ % growth Rate growth RevPAR growth 2.5% 0% (1.9)% (0.7)% (5)% (5.4)% (5.9)% (10)% (10.2)% (15)% Jan Feb Mar / Apr May June July March / April have been combined to avoid the distortion caused by the timing of Easter

  11. Scandic - Financial Update Profit Impact £m • Integration synergies in excess of £10m on an annualised basis Like for like hotels trading (3.9) Openings / closures / major refurbishments (3.5) Integration synergies 5.8

  12. Stakis - Post Acquisition Review • Successful integration • Cost savings exceeded • Transformed UK market position • Returns held back by 11th September and economic slowdown

  13. Worldwide Betting Turnover Operating Profit (1) 2002 £m 2001 £m 2002 £m 2001 £m Retail Betting 1,353.3 933.2 64.1 58.0 Telephone Betting 193.8 125.8 4.7 1.6 eGaming 192.3 62.8 5.1 0.2 Vernons 15.1 15.3 2.6 2.8 Worldwide Betting 1,754.5 1,137.1 76.5 62.6 (1) Before goodwill amortisation and exceptional items

  14. Gross Win by Channel 2002 Gross win - £319.9m 2001 Gross win - £295.5m 5% 5% 4% 8% 87% 91% European Retail Telephone Betting eGaming Gross win is before duty / gross profit tax are deducted NB. European retail includes AWPs net of VAT

  15. UK Retail Betting Year on Year Turnover Growth - Zero Deduction Effect (2001/ 2 vs 2000/1) 80% Trendline (growth due to zero deduction) Actual growth Growth due to zero deduction 60% 40% 20% 0% Oct Nov Dec Jan Feb Mar Apr May June

  16. Telephone Betting 2002 £m 2001 £m • Single account proposition across telephone, online and interactive TV • Voice recognition on trial during World Cup Turnover 193.8 125.8 Gross win 15.0 14.6 Gross win margin 7.7% 11.6% Operating profit 4.7 4.6 Average stake per call (£) 83.26 66.21 No. of calls (000’s) 2,264 1,840 Active customers (000’s) 87.7 80.2

  17. eGaming 2002 £m 2001 £m • eGaming now has over 400,000 registered customers Turnover 192.3 62.8 Gross win (1) 26.8 10.4 Gross profit (2) 24.9 10.2 Gross profit % (2) 12.9% 16.2% Operating profit 5.1 0.2 Active customers (000’s) (3) 179.4 83.3 (1) Gross win is before duty / gross profits tax are deducted (2) Gross profit is after duty / gross profits tax (3) Active customers are those who placed a bet during the period

  18. eGaming - Monthly Turnover £m 45 £41m 40 35 World Cup 30 25 £23m 20 £14m 15 64% 10 £5m 5 Euro 2000 0 June 2000 June 2001 June 2002

  19. eGaming Sportsbook First Half Turnover by Country 2002 2001 • 169% growth in sportsbook turnover year on year 4% 10% 1% 6% 32% 49% 37% 61% UK Far East Europe Other

  20. Hilton Group plc - Cash Flow 2002 £m 2001 £m Opening net borrowings (1,473.9) (1,374.3) Cash inflow from operating activities 211.8 193.9 Interest, tax and dividends paid (132.2) (134.5) Free cash flow 79.6 59.4 Capital expenditure (85.2) (94.6) Free cash flow after capex (5.6) (35.2) Proceeds from asset sales 7.7 363.8 Acquisitions / disposals 3.5 (457.9) 5.6 (129.3) Exchange and other movements (1)(43.6) 6.5 Net borrowings movement(38.0) (122.8) Closing net borrowings (1,511.9) (1,497.1) (1) Includes £48.6m adverse exchange (2001: £3.1m favourable exchange)

  21. Hilton Group plc - Analysis ofCapital Expenditure 2002 £m Hotels Sao Paulo 11.6 Gatwick 9.9 Cologne - Scandic new build & rebrand 6.2 Syndhaven - Scandic rebrand 2.7 Barcelona 2.7 Kalastajatorppa - refurbishment 2.4 Zurich 2.0 Other (all under £2m) 21.9 Total Hotels 59.4 Total LivingWell 5.5 64.9 Worldwide Betting BS 2000 EPOS system 1.6 Numbers terminals 1.1 eGaming / Telephone betting 3.9 Other (including: acquisitions / new licences £1.8m, relocations £2.9m, refurbs / extensions £3.1m) 13.7 20.3 85.2 Total

  22. Treasury • Successful bond issues: - Euro 500 million 6.5% due July 2009 - Sterling 250 million 7.125% due July 2012 • Committed facilities: - £1 billion surplus over gross debt - weighted average term of committed facilities is 4 years • No financial ratio covenants in existing facility agreements • Fixed interest rates on 50% of gross debt for a weighted average term of 3 years • Foreign currency assets hedged by borrowing inforeign currencies

  23. David MichelsGroup Chief Executive

  24. Hilton Group plc

  25. Revenue Per Available Room - Like for Like* First Quarter Second Quarter Six Months to June 2002 2001 Growth 2002 2001 Growth 2002 2001 Growth Hilton branded: London Provinces Total United Kingdom 68.3 48.0 55.6 77.8 49.0 59.7 (12.2)% (2.0)% (6.9)% 74.0 51.5 59.8 85.6 52.9 65.0 (13.6)% (2.6)% (8.0)% 71.2 49.8 57.7 81.7 51.0 62.4 (12.8)% (2.4)% (7.5)% 42.2 43.9 42.4 46.0 28.8 41.3 47.6 44.7 47.2 49.5 32.1 44.8 (11.3)% (1.8)% (10.2)% (7.1)% (10.3)% (7.8)% 55.1 42.7 48.7 51.4 34.0 46.7 58.5 41.3 52.1 53.7 33.4 48.3 (5.8)% 3.5% (6.5)% (4.3)% 1.8% (3.3)% 48.7 43.3 45.6 48.7 31.4 44.0 53.2 43.0 49.7 51.6 32.8 46.5 (8.4)% 0.8% (8.2)% (5.7)% (4.2)% (5.4)% Europe & Africa Middle East &Asia Pacific The Americas Total Hilton Scandic branded Total Hotels *All at constant currencies, including a full 6 months of Scandic in 2001

  26. Capex 1999 £m 2000 £m 2001 £m Forecast 2002 £m Hotels 214 278 144 139 Worldwide betting 30 40 40 53 Major property purchases 84 147 - - Capital expenditure 328 465 184 192 Disposals - hotels (151) (13) (355) * 177 452 (171) Acquisitions (Stakis and Scandic) Cash 461 - 454 Shares 882 - 165 Hotels - Property net book value £2.5bn £2.8bn £2.6bn * Potential sale and leaseback deal

  27. Hilton International - Property Net Book Value movement over 4 years 1999 2000 2001 2002 UK £1.8bn £1.9bn £1.6bn £1.6bn Overseas £0.7bn £0.9bn £1.0bn £1.0bn Total £2.5bn £2.8bn £2.6bn £2.6bn

  28. Scandic

  29. Branding Hilton - 475 hotels in 70 countries (233 HHC) - 40 more on the way - Owned / management contract / leased Scandic (mid-market) - 137 hotels - Target 200 by end 2004 - Management contract / leased / franchised

  30. LivingWell Current Membership UK 123,600 International 16,021 Total 139,621

  31. Half Year Shop Performance - UK and Jersey 1996 1997 1998 1999 2000 2001 2002 Average numberof shops PBIT £m 29.1 37.1 43.3 34.7 36.1 48.3 58.1 PBIT pershop £k 15.9 19.6 23.0 18.2 19.2 25.7 30.8 1,831 1,892 1,892 1,910 1,879 1,883 1,884 N.B. Excludes SIS contribution

  32. UK Shops -Gross Profit (1) Product margins - First Half Average ’97 - ’00 (2) 2002 2001 (2) 2000 (2) Horses 13.5% 14.7% 12.7% 12.9% Greyhounds 17.2% 16.8% 17.2% 15.7% Football (3) 15.5% 23.2% 17.8% 15.9% Sports 14.2% 12.8% 10.7% 10.7% Numbers 24.4% 23.3% 24.3% 26.1% Average 14.9% 15.9% 14.2% 14.0% (1) Gross profit is after duty / gross profits tax (2) Adjusted for gross profits tax (3) Excluding the World Cup the gross profit margin on football for 2002 was 18.4%

  33. Shop Innovation • Further 14 shops recently purchased. 16 more in second half • EPOS drives improved efficiency, the new screen system and Fixed Odds Betting Terminals (FOBT’s) • FOBT’s averaging £3,900 p/w per terminal sincenew bets introduction two months ago • Turnover +50% this year vs last

  34. Budd Review and the Casino Business

  35. Telephone Betting Year on Year Turnover Growth 60% 55% 50% 40% 29% 30% 18% 20% 10% 6% 0% 1999 vs 1998 2000 vs 1999 2001 vs 2000 2002 HY vs 2001 HY

  36. eGaming Gross Win £m 30.0 26.8 25.0 20.0 15.9 15.0 10.4 10.0 5.0 2.8 0.3 0.0 1st half 2000 2nd half 2000 1st half2001 2nd half2001 1st half2002

  37. eGaming Sportsbook Casino Poker (Internet only) Registered players 392,000 65,000 6,400 Active 130,000 28,000 2,500 Currencies 15 15 15 £ stake per bet / play £19.17 £10.26 £35 Languages 11 11 1 (Played since 1 Jan 2002) (Average pot)

  38. Poker - Average Rake Per Week £k 70 61 60 56 48 50 40 29 30 20 10 0 May June July August to date

  39. World Cup 2002 Internet and Interactive TV Betting Total number of bets 1.2 million Turnover £21.6 million Gross win £2.5 million Total number ofnew customer registrations 45,000 % of business non-UK 68%

  40. Upside / Opportunities Hotels Rebound / RevPAR PBIT increase Peer / Yield premium to rise New income stream from midmarket & resorts Betting FOBT income stream Budd Casinos / Slots eGaming to double Turnover increase / more steam Telephone betting / opportunities Strong capex / cost control Capital redeployment EBITDA growth from invested capital

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