Interim Results Presentation 26 August 2004

1
Interim Results Presentation26 August 2004
2
Brian WallaceDeputy Group Chief Executive
and Group Finance Director


3
Hilton Group plc - Summary of Performance
2004 m
2003 m
Variance B(W)
Half year to 30 June
Hotels 67.1 56.1 19.6 Betting 153.7 101.8 51.0 C
entral costs and income (6.8) (6.6) (3.0) Operati
ng profit (1) 214.0 151.3 41.4 Interest (24.3) (4
0.8) 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 charge 20.4
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
Total m
Increasing revenue m
Declining revenue m
First Half
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) Insuran
ce (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
2004 Actual m
Other (a) (b) 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
profit 119.6 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 profit 11.8 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 (000s)
3,334
3,060 9.0 Active customers (000s)
(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 profit 12.1 6.2 95.2
Active customers (000s) (1)
Sportsbook 231 151 53.0 Casino 66 36 83.3
Poker 33 14 135.7 On-line registrations
(000s) 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) Pro
ceeds 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) Clo
sing net borrowings (1,026.1) (1,283.1)
(1) Includes 74.7m favourable exchange (2003
88.5m adverse)
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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
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19
David MichelsGroup Chief Executive


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Chart of Past EPS
Earnings per Share (p)
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Recent Trading - Betting

• A good year, so far, with growth in all three
  areas

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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
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Property

• 2.3bn of hotel assets

24
Hiltons Central London Occupancy (11 hotels)
First 7 months
Like for Like Hotels
25
Hilton and Scandic Brand Websites
Reservations
Launch of localised websites
(excludes Third party Website bookings)
26
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
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Capital Expenditure 2005

• 110m - 120m on hotels
• Less than 100m on betting but will still invest
  to grow the business

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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

29
Over-the-Counter

• Over-the-counter business up 14

30
eGaming
31
Telephone Betting

• First half profits more than double

32
Anthony Harris
33
Hilton University
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Outlook

• Hotels difficult to forecast, but cautiously
  optimistic
• Betting continued growth, but at a slower rate
  than the first half

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Interim Results Presentation26 August 2004
36
Appendices


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Hotels - Analysis by Contract Type
Fixed lease
Contingent lease
Owned
Total
Managed
LivingWell
Franchise
No. of hotels 67 49 154 112 23 n/a 405 No. of
rooms 17,087 10,337 33,614 34,646 6,654 n/a 102,32
6
m
Turnover 273.8 130.4 398.5 478.3 1.4 24.8 1,307.2
Gross operating profit 92.5 47.2 138.8 169.6 1.4
9.0 458.5 Less Rental owners
return (4.5) (32.5) (89.0) (153.8) - (1.9) (281.7)
Depreciation (22.5) (10.8) (14.0) - - (2.1)
(49.4) Other costs / income (21.2) (3.2) (2
1.4) - (0.4) (2.3) (48.5) 2004 Profit 44.3 0.7 14.
4 15.8 1.0 2.7 78.9 2003 Profit 34.9 (0.6) 14.0
12.5 - 3.3 64.1
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Geographical RevPAR by Ownership Type
Like for Like Hotels, Constant Currencies
Owned fixed lease
Contingent lease
Managed
UK 10.6 8.1 14.8 Europe Africa 0.0 6.3 7.1
Middle East Asia Pacific 1.7 27.8 18.2 Am
ericas 6.3 14.9 20.0 Total 4.9 8.3 14.6
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Hotels - Like for Like Profit
2004 m
2003 m
Variance B(W)
Half year to 30 June
Reported profit (1) 67.1 56.1 19.6 Less
LivingWell (2.7) (3.3) 64.4 52.8 22.0 Closed
for refurbishment (0.1) 1.5 Disposals / new
openings (2.3) 1.2 Pandox associate
disposal - (2.9) Foreign exchange 2.2 - Like
for like hotels profit (1) 64.2 52.6 22.1
(1) Before goodwill amortisation and exceptional
items
40
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,
Millenium Copthorne, Thistle, Le Meridien,
Whitbread, Sheraton
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Yield Premium - Hilton vs UK Provincial Mkt
Cumulative Year to Date RevPAR Premium
Market Source PKF Hotel Consultancy
Services Market is 8 competitor chains - Marriott
International, InterContinental, De Vere,
Millenium Copthorne, Thistle, Le Meridien,
Whitbread, Sheraton
42
Scandic Incremental Conversion
Half year to 30 June Incremental GOP conversion
Like for like
Gainers
Losers
GOP Movement m
Revenue Movement m
Revenue Movement m
GOP Movement m
Rate growth at 90 conversion (2.6) (2.4) (2.4) (2
.1) Volume growth at incremental
cost 9.2 6.8 (2.2) (1.6) FB / Other revenue
growth at 50 conversion 5.0 2.5 (2.8) (1.4) Othe
r (inc. payroll inflation) - (1.0) - (1.2) Increm
ental 11.6 5.9 (7.4) (6.3) Conversion 50.9 14.9

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Worldwide Betting - Revenue
2004 m
2003 m
Variance B(W)
Half year to 30 June
UK Retail (1) 4,063.9 2,562.2 58.6 Ireland
Belgium 160.9 147.3 9.2 Telephone
Betting 266.0 240.7 10.5 eGaming 281.9 215.1
31.1 Vernons 15.2 15.0 1.3 Worldwide
Betting 4,787.9 3,180.3 50.5
(1) Includes FOBT turnover, year on year increase
in machines turnover 1,412.1m
44
eGaming Gross Win
2003
2004
45
Breakdown of Lease Commitments
Forecast land and buildings full year lease
commitments for 2004
Total m
Contingent lease m
Minimum guarantee m
Fixed lease m

• Hotels 83.4 73.0 115.3 271.7
• Betting 36.5 - - 36.5
• Property / Centre 6.2 - - 6.2
• Total 126.1 73.0 115.3 314.4
• Also circa 17m other operating lease
  commitments

Forecast contingent commitments are based on 2004
forecast results