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Interim Results Presentation 26 August 2004

Interim Results Presentation 26 August 2004. Brian Wallace Deputy Group Chief Executive and Group Finance Director. Hilton Group plc - Summary of Performance. Half year to 30 June. 2004 £m. 2003 £m. Variance B(W). Hotels 67.1 56.1 19.6% Betting 153.7 101.8 51.0%

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Interim Results Presentation 26 August 2004

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  1. Interim Results Presentation26 August 2004

  2. Brian WallaceDeputy Group Chief Executive and Group Finance Director

  3. Hilton Group plc - Summary of Performance Half year to 30 June 2004 £m 2003 £m Variance B(W) Hotels 67.1 56.1 19.6% Betting 153.7 101.8 51.0% Central costs and income (6.8) (6.6) (3.0)% Operating profit (1) 214.0 151.3 41.4% Interest (24.3) (40.8) 40.4% Profit before tax (1) 189.7 110.5 71.7% Effective tax rate (1) 15.5% 22.0% EBITDA (1) 280.0 220.0 27.3% EPS (1) 10.1p 5.5p 83.6% (1)Before goodwill amortisation and exceptional items

  4. Taxation £m Normal tax charge: Tax charge at 15.5% on profit before tax, exceptional items and goodwill amortisation 29.4 Exceptional tax credit: Tax on exceptional items - Exceptional tax credit (9.0) Total tax charge20.4

  5. Hotels Worldwide RevPAR 2004 vs 2003 Like for Like Hotels, Constant Currencies

  6. Worldwide RevPAR by Ownership Type Like for Like Hotels, Constant Currencies RevPAR growth 2004 vs 2003 - first half Q1 Q2 H1 Q1 Q2 H1 Q1 Q2 H1

  7. Hotels - Cost Management Like for Like, Constant Currencies First Half Total £m Increasing revenue £m Declining revenue £m Revenue movement 101.3 124.8 (23.5) GOP movement (1) 54.8 72.0 (17.2) Incremental conversion 54.1% 57.7% 26.8% Rental & Owners return (36.5) Property taxes / rates (2.3) Insurance (0.9) Other (3.5) Operating profit increase (1) 11.6 (1)Before goodwill amortisation and exceptional items

  8. UK Hotels RevPAR 2004 vs 2003 Like for Like

  9. Europe (Hilton brand) - RevPAR by Country Like for Like, Constant Currencies, First Half Q1 H1 Q1 Q1 Q2 H1 Q2 Q2 H1

  10. Scandic RevPAR 2004 vs 2003 Like for Like Hotels, Constant Currencies, Scandic Acquired RevPAR growth 2004 vs 2003

  11. Scandic Performance 2004 vs 2003 Like for like revenue gainers (a) £m Like for like revenue losers (a) £m Half year to 30 June Other (a) (b) £m 2004 Actual £m 2003 Actual £m Revenue 242.4 11.6 (7.4) 1.1 247.7 (a) GOP 76.0 5.9 (6.3) (0.9) 74.7 (a) Inc. conversion 50.9% 14.9% Costs (69.7) (1.3) 1.7 0.7 (68.6) Profit 3.4 4.6 (4.6) (0.2) 3.2 (a) Disposal of Pandox 2.9 - Exchange translation - (0.3) 6.3 2.9 (a) At constant currencies (b) Includes support office costs not allocated to individual hotels

  12. Worldwide Betting Operating Profit (1) 2004 2003 £m £m Gross Win 2004 2003 £m £m Half year to 30 June UK Retail 338.0 274.6 119.6 83.1 Ireland & Belgium 35.9 33.4 7.0 5.5 Telephone Betting - excluding high rollers 25.9 14.9 11.8 5.0 - high rollers - (1.6) - (1.2) 25.9 13.3 11.8 3.8 eGaming 44.7 30.8 12.1 6.2 Vernons 10.6 10.5 3.2 3.2 Worldwide Betting 455.1 362.6 153.7 101.8 (1)Before goodwill amortisation and exceptional items

  13. UK Retail 2004 £m 2003 £m Variance B(W) Half year to 30 June Gross win 338.0 274.6 23.1% Duty / Gross profits tax (50.2) (40.2) (24.9)% Other costs (168.2) (151.3) (11.2)% Operating profit119.6 83.1 43.9% Staff costs per slip 34.29p 31.72p (8.1)% Stake per slip (1) £8.37 £8.24 1.6% • First half OTC growth of 14% benefited from good results at Ascot, Cheltenham and Euro 2004. • Machines gross win grew 62% to £83.8m with average number of FOBTs at 4,363 (2003: 2,230). (1)Excluding machines

  14. Telephone Betting (excluding high rollers) 2004 £m 2003 £m Variance B(W) Half year to 30 June Gross win 25.9 14.9 73.8% Gross profits tax (3.8) (2.2) (72.7)% Other costs (10.3) (7.7) (33.8)% Operating profit11.8 5.0 136.0% Average stake per call £79.77 £77.75 2.6% Salary cost per call 70.0p 67.2p (4.2)% No. of calls (000’s) 3,334 3,060 9.0% Active customers (000’s) (1) 102.2 91.9 11.2% (1)Active customers are those who placed a bet during the period

  15. eGaming 2004 £m 2003 £m Variance B(W) Half year to 30 June Gross win 44.7 30.8 45.1% Gross profits tax (2.7) (1.5) (80.0)% Other costs (29.9) (23.1) (29.4)% Operating profit12.1 6.2 95.2% Active customers (000’s) (1) Sportsbook 231 151 53.0% Casino 66 36 83.3% Poker 33 14 135.7% On-line registrations (000’s)213 153 39.2% (1)Active customers are those who placed a bet during the period

  16. Hilton Group plc - Cash Flow 2004 £m 2003 £m Half year to 30 June Cash inflow from operating activities 255.6 226.5 Interest, tax and dividends paid (126.6) (155.9) Free cash flow 129.0 70.6 Capital expenditure (88.8) (101.8) Free cash flow after capex 40.2 (31.2) Intangible (betting shop licence) additions (13.6) (2.1) Proceeds from asset sales 12.6 0.8 Acquisitions / disposals 1.3 - Exchange and other movements (1) 81.1 (85.8) Net borrowings movement 121.6 (118.3) Opening net borrowings (1,147.7) (1,164.8) Closing net borrowings (1,026.1) (1,283.1) (1)Includes £74.7m favourable exchange (2003: £88.5m adverse)

  17. Analysis of 2004 Capital Expenditure £m Hotels Acquisition linked development: Sydney (refurb) 18.7 Dusseldorf (refurb) 2.5 21.2 Other 35.7 Total Hotels 56.9 LivingWell 3.6 60.5 Worldwide Betting Development – operating assets 7.8 FOBTs 7.0 Other (including TVs £2.6m, Ireland inc. EPOS £2.4m) 9.8 eGaming / Telephone betting 3.7 28.3 Total Group 88.8

  18. David MichelsGroup Chief Executive

  19. Chart of Past EPS Earnings per Share (p)

  20. Recent Trading - Betting “A good year, so far, with growth in all three areas”

  21. Recent Trading - Hotels • London • Japan • Canada • Germany • Holland • France • UK Provinces • Caribbean • Australia • Belgium • Sweden • Norway • Finland • Middle East • South America • Turkey • Rest of Asia • Egypt

  22. Property £2.3bn of hotel assets

  23. Hilton’s Central London Occupancy (11 hotels) – First 7 months Like for Like Hotels

  24. Hilton and Scandic Brand Websites Reservations Launch of localised websites (excludes Third party Website bookings)

  25. Pipeline Growth • Openings 2004 • Openings 2005 • London Waldorf, UK • Odawara, Japan • Helsinki Kalastajatorppa, Finland • Bali, Indonesia (Conrad) • 7 x Trident by Hilton, India • Mumbai Towers, India • Newcastle Gateshead, UK • Paris Arc de Triomphe, France • Miami, USA (Conrad) • Shenzhen, China • Santo Domingo, Dominican Republic • San Salvador, El Salvador • Kuala Lumpur, Malaysia • Hilton Barbados, Caribbean • Cebu, Philippines • Jeddah Palace, Saudi Arabia • Valencia, Spain • Venice, Italy • Casablanca Airport, Morocco • Phuket, Thailand (Conrad) • Sharm Nabq, Egypt • Hilton Diagonal Mar, Spain • Warsaw, Poland • Dubrovnik, Croatia • Sydney, Australia • Evian, France • Hilton Malabo, Equatorial Guinea • Dublin Airport, Ireland • Tokyo, Japan (Conrad) • Hilton Beirut, Lebanon • Millennium Hilton Bangkok, Thailand • Hilton Seychelles Resort, Seychelles • Denarau, Fiji

  26. Capital Expenditure 2005 £110m - £120m on hotels Less than £100m on betting but will still invest to grow the business

  27. Fixed Odds Betting Terminals (FOBTs) 21% reduction in transactions per terminal since the introduction of the Code of Conduct There is an increase of 7% in the average stake per transaction Net effect is a 16% decline in the average weekly gross win per terminal to June

  28. Over-the-Counter Over-the-counter business up 14%

  29. eGaming

  30. Telephone Betting First half profits more than double

  31. Anthony Harris

  32. Hilton University

  33. Outlook Hotels – “difficult to forecast, but cautiously optimistic” Betting – “continued growth, but at a slower rate than the first half”

  34. Interim Results Presentation26 August 2004

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