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1 2005 Preliminary Results 23 February 2006

0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Page 1: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

1

2005 Preliminary Results23 February 2006

Page 2: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

2

Sir Ian RobinsonChairman

Page 3: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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David MichelsGroup Chief Executive

Page 4: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Brian WallaceDeputy Group Chief Executive

and Finance Director

Page 5: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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(1) Before non-trading items

2005£m

2004£m

VarianceB(W) %

Betting 266.6 272.8 (2.3)

Central costs and income (18.1) (14.1) (28.4)

Operating profit (1) 248.5 258.7 (3.9)

Finance costs (16.9) (34.1) 50.4

Profit before tax (1) 231.6 224.6 3.1

Hotels (1) (2) 187.5 159.0 17.9

Finance costs (5.2) (6.9) 24.6

Profit before tax (1) 182.3 152.1 19.9

413.9 376.7 9.9

Year to 31 December

Continuing Operations

Discontinued Operations

Group profit before tax

Summary of Performance

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Group effective tax rate 15.0% 15.5%

EPS – Continuing Operations (1) 11.9p 11.5p 3.5

EPS – Total Group (1) 22.0p 20.2p 8.9

Net Debt £397.9m £971.9m

(1) Before non-trading items

Summary of Performance2005 2004

VarianceB(W) %

Year to 31 December

Page 7: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Hotels Worldwide Revpar 2005 vs 2004

8.5%

6.2%

3.3%

8.4%

11.8%

4.2%

7.1% 8.0%8.7%

5.8% 6.4%

(2)%

0%

2%

4%

6%

8%

10%

12%

14%

Jan Feb Mar/Apr May June July Aug Sep Oct Nov Dec

Occupancy % pts grow th

Rate grow th

Revpar grow th

March and April results have been combined due to the timing of Easter.

Like for Like Hotels, Constant Currencies

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UK 630.9 81.3 655.1 88.1

Europe & Africa 1,249.3 82.7 1,138.3 58.2

MEAP 726.9 27.0 652.7 18.5

Americas 263.6 24.0 236.0 18.9

LivingWell 52.7 4.2 50.0 6.3

2,932.4 219.2 2,732.1 190.0

Central Costs 1.7 (31.7) 0.4 (31.0)

2,925.1 187.5 2,732.5 159.0

Hotels Summary of Results2005 2004

Revenue£m

Revenue£m

Profit£m

Profit£m

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Cash generated by operations 553.4 549.6Interest, tax and dividends paid (251.7) (243.1)Cash flow before capex 301.7 306.5PPE expenditure – Betting (66.6) (47.3)

PPE expenditure – Hotels (130.3) (127.6)

Intangible additions (1) (45.4) (40.7)

Acquisitions (2) (78.0) -Cash flow after capex (18.6) 90.9Disposals (3) 540.9 40.1Exchange and other movements (4) 51.7 44.8Net borrowings movement 574.0 175.8Opening net borrowings (971.9) (1,147.7)Closing net borrowings (397.9) (971.9)

(1) Includes £38.0m licence additions (2004: £23.2m)(2) Includes 2005 acquisition of Jack Brown for £76.5m(3) Includes £537.5m on hotel disposals in 2005 (2004: £38.0m)(4) Includes £5.8m adverse exchange (2004: £17.8m favourable) and £38.1m inflow from share capital issue (2004: £7.8m)

Hilton Group plc – Cash Flow2005£mYear to 31 December 2004

£m

Page 10: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Cash Return

(1) Based upon current issued share capital. Assuming full conversion of the Group’s convertible bonds and the exercise of all outstanding employee share options, the aggregate amount of the return of value to shareholders will amount to approximately £4,227 million

(2) Comprises proposed final dividend of 6.6 pence and proposed special dividend of 233.4 pence

Hotels disposal proceeds 3,298.4

Cash float adjustment (30.0)

Pension contribution (55.5)

Other costs and income (55.6)

Incremental debt raised 698.4

Cash return to shareholders (1) 3,855.7

Dividend per share (2) £2.40

£m

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Page 12: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Rosemary ThorneFinance Director

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UK Retail 683.6 652.5 207.8 214.7

Ireland & Belgium 71.0 69.0 11.7 13.2

eGaming 123.1 89.3 41.4 21.3

Telephone Betting 21.0 46.1 (0.1) 17.8

Vernons 19.3 20.2 5.8 5.8

Betting and Gaming 918.0 877.1 266.6 272.8

Betting and Gaming

2005£m

2004£m

2005£m

2004£m

Gross Win Operating Profit

Year to 31 December

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UK Retail - Results

OTC gross win 484.5 474.7 2.1

Machines gross win 199.1 177.8 12.0

Total gross win 683.6 652.5 4.8

VAT / Gross profits tax (101.3) (96.4) (5.1)

Staff costs (171.4) (156.3) (9.7)

Property costs (1) (78.2) (68.6) (14.0)

Content costs (2) (53.4) (48.0) (11.3)

Other costs (inc. depn) (3) (71.5) (68.5) (4.4)

Operating profit 207.8 214.7 (3.2)

(1) Rent, rates and utilities (2) Pictures, data, levy, Sky (3) Depreciation = £29.8m (2004: £28.2m)

2005£m

2004£m

Variance% B(W)

Year to 31 December

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UK Retail - KPIs

Like for like total gross win growth 0.4% 12.0%

Like for like OTC gross win growth (2.3)% 4.4%

Like for like machines gross win growth 7.7% 39.3%

OTC margin 16.1% 16.2%

Like for like total costs (1) increase 5.2% 6.1%

Like for like shop staff costs increase 7.3% 15.4%

Stake per slip (2) £8.47 £8.47 -

Average number of FOBTs 6,403 5,146 24.4

Average weekly gross win per FOBT £545 £584 (6.7)

Year to 31 December

(1) Excludes VAT and Gross profits tax (2) Slips exclude machines

2005 2004Variance% B(W)

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eGaming - Gross win

Sportsbook 33.0 26.5 25

Poker 41.4 23.1 79

Casino 39.1 33.6 16

Games 9.6 6.1 57

Gross win 123.1 89.3 38

Year to 31 December 2005£m

2004£m

Variance% B(W)

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eGaming - Results2005£m

2004£m

Variance% B(W)

Gross win 123.1 89.3 38

Gross profits tax (5.8) 4.7 (4.9) 5.5

Levy (1.5) 1.2 (1.6) 1.8

Staff costs (10.2) 8.3 (7.7) 8.6 (32)

Software & geographical partners (1) (26.9) 21.9 (18.0) 20.2 (49)

Marketing (inc. affiliates) (21.1) 17.1 (21.6) 24.2

Banking & chargebacks (5.3) 4.3 (3.0) 3.4 (77)

Other costs (inc. depn) (10.9) 8.9 (11.2) 12.5

Operating profit 41.4 33.6 21.3 23.9 94

Year to 31 December

(1) Payments to third party software and platform providers and geographical partners

%age ofGross win

%age ofGross win

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Telephone Betting - Results

Gross win exc. High Rollers 30.5 39.8 (23.4)

High Rollers’ gross win (9.5) 6.3

Total gross win 21.0 46.1 (54.4)

Gross profits tax (3.1) (6.8)

Levy (2.1) (3.5)

Staff costs (8.1) (8.6) 5.8

Direct operating costs (1) (3.0) (3.0)

Other costs (inc. depn) (4.8) (6.4)

Operating profit (0.1) 17.8

(1) Direct operating costs include telephone, bandwidth and banking costs

2005£m

2004£m

Variance% B(W)

Year to 31 December

Page 19: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Telephone Betting - KPIs

(1) Numbers of calls (excluding customer service calls)

(2) Active customers are those who placed a bet during the period

No. of calls (000’s) (1) 7,290 6,659 9.5

Agent cost per call 63p 69p 8.7

Margin (exc. High Rollers) 7.3% 8.7%

Active customers (000’s) (2) 125.3 125.2 0.1

2005 2004Variance% B(W)

Year to 31 December

Page 20: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Analysis of 2005 Capital ExpenditureCapexUK Development (1) 37.716.2Xtra 4.1 -Ireland 3.25.0Other (including IT £3.1m, 2004: £9.5m FOBTs) 11.124.7Retail 56.145.9eGaming / Telephone betting 4.16.3Total (Operating assets: £54.9m, intangibles: £5.3m) 60.252.2

AcquisitionsJack Brown 80.3 -Other (UK: £43.1m, Ireland: £1.4m) 44.524.7

124.824.7

2005£m

(1) Development = new licences, relocations and refurbishments

2004£m

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Capital Structure£m

Opening adjusted net debt at 1 January 2006 (397.9)

Incremental debt raised for return to shareholders (698.4)

Pro forma adjusted net debt following cash return (1) (2) (1,096.3)

Ongoing target net debt to EBITDA range of 3.5 to 3.75 times

Group Defined Benefit Pension scheme deficit of nil

(1) Estimated net debt immediately following cash return to shareholders and transaction costs(2) Assumes no conversion of convertible bond or outstanding share options

Page 22: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Pro Forma Ladbrokes PLC

Betting & Gaming (2005 Result) 266.6

Proforma Central Costs (1) (15.0)

Operating Profit 251.6

Proforma Finance Costs (2) (57.0)

Profit Before Tax (3) 194.6

Estimated ongoing effective tax rate of 25% - 30%

Estimated dividend cover of 2.0x

£m

(1) 2006 estimate

(2) Based upon estimated net debt of £1.1 billion, GBP LIBOR rates at 51 bps spread, excludes IFRS pension interest. Refinancing the £300m convertible bond with bank debt will increase this charge by approximately £6m

(3) Excludes non-trading items and results of discontinued activities

Year to 31 December

Page 23: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Christopher BellChief Executive Officer

Page 24: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Ro sem ary Th o rn eCF O

Ro s B arke rHR Directo r

Jo h n O'ReillyM D Telep h o n e &

eG am in g

Alan Ro ssM D Eu ro p ean

Retail

M ike O 'Kan eTrad in g D irecto r

Christopher BellCEO

Page 25: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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UK Retail Gross Win Margin %2005 2005 2004 2003 02-04

3 year Av.

Q4 Q3 Q2 Q1

Horses 14.4 14.0 12.2 15.6 13.9 14.2 13.9 14.2

Football 26.4 14.3 28.4 22.7 23.4 18.7 24.1 20.5

OTC 17.5 15.4 14.7 17.4 16.1 16.2 16.4 16.3

Horse overround

per runner 1.50 1.54 1.58 1.57 1.55 1.60 1.72 1.75

%1st/2nd favs 48.8 49.1 48.9 49.3 49.0 50.9 54.0 52.4

% margin lost at Aintree / Epsom Derby

0.6 - - n/a

*all figures exclude Jack Brown

Page 26: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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UK Retail Gross Win Margin %2005 2005 2004 2003 02-04

3 year Av.

Q4 Q3 Q2 Q1

Horses 14.4 14.0 12.2 15.6 13.9 14.2 13.9 14.2

Football 26.4 14.3 28.4 22.7 23.4 18.7 24.1 20.5

OTC 17.5 15.4 14.7 17.4 16.1 16.2 16.4 16.3

Horse overround

per runner 1.50 1.54 1.58 1.57 1.55 1.60 1.72 1.75

%1st/2nd favs 48.8 49.1 48.9 49.3 49.0 50.9 54.0 52.4

% margin lost at Aintree / Epsom Derby

0.6 - - n/a

*all figures exclude Jack Brown

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UK Retail Gross Win Margin %2005 2005 2004 2003 02-04

3 year Av.

Q4 Q3 Q2 Q1

Horses 14.4 14.0 12.2 15.6 13.9 14.2 13.9 14.2

Football 26.4 14.3 28.4 22.7 23.4 18.7 24.1 20.5

OTC 17.5 15.4 14.7 17.4 16.1 16.2 16.4 16.3

Horse overround

per runner 1.50 1.54 1.58 1.57 1.55 1.60 1.72 1.75

%1st/2nd favs 48.8 49.1 48.9 49.3 49.0 50.9 54.0 52.4

% margin lost at Aintree / Epsom Derby

0.6 - - n/a

*all figures exclude Jack Brown

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UK Retail Gross Win Margin %2005 2005 2004 2003 02-04

3 year Av.

Q4 Q3 Q2 Q1

Horses 14.4 14.0 12.2 15.6 13.9 14.2 13.9 14.2

Football 26.4 14.3 28.4 22.7 23.4 18.7 24.1 20.5

OTC 17.5 15.4 14.7 17.4 16.1 16.2 16.4 16.3

Horse overround

per runner 1.50 1.54 1.58 1.57 1.55 1.60 1.72 1.75

%1st/2nd favs 48.8 49.1 48.9 49.3 49.0 50.9 54.0 52.4

% margin lost at Aintree / Epsom Derby

0.6 - - n/a

*all figures exclude Jack Brown

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Page 30: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Shop Development – UK & IrelandNo. Shops ’05 ’06

pipeline

Acquisitions 191 ?

New licences 30 43

Relocations 81 84

Extensions 12 28

Refurbishments 178 55

Total 492 210

Page 31: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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eGamingYear to 31 December 2005 2004 Variance

%B(W)

Average monthly active player days(000’s)

- Sportsbook 471 417 13

- Poker 411 195 111

- Casino 64 56 14

- Games 54 39 38

Average weekly Poker rake £793k £443k 79

Average weekly Casino drop £749k £644k 16

Sportsbook gross win £33.0m £26.5m 25

Gross win conversion 33.6% 23.9%

Page 32: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Page 33: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Taxation and Regulation

FOBTs

– Amusement Machine Licence Duty

– Gaming Machines From Autumn 2007

REMOTE GAMING

– Regulation

– Taxation

£500 Jackpot Machines from Autumn 2007

Page 34: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Outlook

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Our Future• International experience in 200 countries,

18 currencies, 12 languages

• Ladbrokes, the strongest brand

• Management skills and people

• Huge retail footprint 2,583 shops

• Leading edge technology

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Page 37: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Casino Developments• 17 New Casinos – 2005 Act

• Ladbrokes Casino and Sports Bar

• Ladbrokes Palace of Light, Blackpool

Page 38: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Brand Awareness - Sweden

0

10

20

30

40

50

60

70

80

90

100

2001 2002 2003 2004 2005

% BrandAwareness

Page 39: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Page 40: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Our Future• Strong International brand

• Depth and breadth of management

• Clear focused strategy

• Expansion

• Cash generative

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2005 Preliminary Results23 February 2006

Page 42: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Appendix

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Taxation

Normal tax charge:

Tax charge at 15% on Group profit before tax

and non-trading items 62.1

Allocated :

Continuing Operations 40.9

Discontinued Operations 21.2

Non-trading tax charge:

Tax charge on non-trading items : 0.9

Total tax charge 63.0

£m

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Hotels - Like for Like Profit

Reported profit (1) 187.5 171.3 9.5%

IFRS adjustment to 2004 numbers - (12.3)

Revised profit 187.5 159.0 17.9%

Non comparable entities at constant currencies (9.6) (10.0)

St Lucia Termination payment (2.3) -

Foreign exchange (0.9) -

Like for like profit (1) 174.7 149.0 17.3%

(1) Before goodwill amortisation and exceptional items

2005£m

2004£m

VarianceB(W) %

Year to 31 December

Page 45: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Hotels - Cost Management

(1) Before non-trading items

Total Hilton

£m

Hotels Increasing

revenue£m

Hotels Declining revenue

£m

Revenue increase / (decrease) 155.3 189.9 (33.9) (0.7)

GOP increase / (decrease)(1) 83.3 109.9 (23.0) (3.6)

Incremental conversion 53.6% 57.9% 32.2%

Rental & Owners return (49.1)

Property taxes / rates (4.7)

Other (3.8)

Operating profit increase (1) 25.7

LivingWell

& Subs£m

Like for Like Hotels, Constant Currencies

Year to 31 December

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Europe (Hilton brand) - Revpar By Country

£30

£35

£40

£45

£50

£55

£60

£65

£70

Germany France Benelux

Rev

par

2004 2004 20042005 2005 2005

+1.2%

+9.2%

+6.4%

Like for Like Hotels, Constant Currencies

Page 47: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Scandic Revpar 2005 vs 2004

13.5%

8.5%7.3%

12.2%

7.4%8.0%8.7%

6.1%

8.3%

2.1%

9.7%

(2)%

0%

2%

4%

6%

8%

10%

12%

14%

Jan Feb Mar/Apr May June July Aug Sep Oct Nov Dec

Occupancy % pts growthRate growthRevpar growth

March and April results have been combined due to the timing of Easter.

Like for Like Hotels, Constant Currencies, Scandic Acquired

Revpar growth 2005 vs 2004

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Worldwide Revpar by Ownership Type

£30

£35

£40

£45

£50

£55

Owned & Fixed lease Contingent lease Management contract

Rev

par

+4.4%

+8.4%

+8.1%

2004 2004 20042005 20052005

Like for Like Hotels, Constant Currencies

Revpar growth 2005 vs 2004

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49

£50

£55

£60

£65

£70

£75

£80

£85

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Rev

par

0%

2%

4%

6%

8%

10%

12%

Rev

par

Pre

miu

m

Hilton Revpar Premium 2005 Hilton Revpar 2005 Market Revpar 2005

Yield Premium - Hilton vs London Market

Market Source: PKF Hotel Consultancy ServicesMarket is 8 competitor chains - Marriott International, InterContinental, De Vere, Millennium & Copthorne, Thistle, Le Meridien, Whitbread, Sheraton

Cumulative Year to Date Revpar Premium

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Market Source: PKF Hotel Consultancy ServicesMarket is 8 competitor chains - Marriott International, InterContinental, De Vere, Millennium & Copthorne, Thistle, Le Meridien, Whitbread, Sheraton

Cumulative Year to Date Revpar Premium

£30

£35

£40

£45

£50

£55

£60

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Rev

par

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Rev

par

Pre

miu

m

Hilton RevPAR Premium 2005 Hilton RevPAR 2005 Market RevPAR 2005

Yield Premium - Hilton vs UK Provincial Market

Page 51: 0 2005 Preliminary Results 23 February 2006. 1 Sir Ian Robinson Chairman

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Revenue 541.8 277.4 912.9 1,133.1 5.5 52.7 2,923.4

Gross operating profit 171.1 104.1 317.2 429.8 5.5 18.2 1,045.9

Less: Rental/owners return (8.9) (65.9) (197.6) (382.6) - (4.3) (659.3) Depreciation (39.6) (19.7) (28.4) - - (5.0) (92.7) Other costs/income (25.2) (5.9) (37.4) - (1.5) (4.7) (74.7)

2005 Profit 97.4 12.6 53.8 47.2 4.0 4.2 219.2

2004 Profit 99.7 6.6 36.5 38.0 2.7 6.3 190.0

Hotels - Analysis by Contract Type

TotalManaged LivingWell

No. of hotels 41 39 154 127 29 n/a 390

No. of rooms 13,475 8,919 33,538 37,052 8,807 n/a 101,791

OwnedFixed Lease

Contingent Lease

£m

FranchiseYear to 31 December

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Geographical Revpar by Ownership TypeLike for Like Hotels, Constant Currencies

Owned & Fixed Lease

Contingent Lease Managed

UK 1.4% 1.5% 0.6%

Europe & Africa 7.3% 10.5% 4.6%

Middle East & Asia Pacific 0.0% 7.1% 9.2%

Americas 2.3% 18.4% 18.2%

Total 4.4% 8.4% 8.1%

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Appendix

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54

UK Retail - Shop Numbers

1,929

2,134

14147

23

(6)

1,500

1,750

2,000

2,250

01-Jan-05 Jack Brown Otheracquisitions

Newlicences

Closures /disposals

31-Dec-05

Plus:

• 73 relocations

• 172 refurbs

• 11 extensions

Num

ber

of

shop

s

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Ireland & Belgium2005£m

2004£m

Variance% B(W)

Gross win 71.0 69.0 2.9

Betting tax (17.2) (17.4)

Other costs (42.1) (38.4) (9.6)

Operating profit 11.7 13.2 (11.4)

Shop numbers - Ireland 148 138 7.2

Shop numbers - Belgium 301 310 (2.9)

Year to 31 December

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Vernons

Gross win 19.3 20.2 (4.5)

Gross profits tax (2.8) (3.0)

Other costs (10.7) (11.4) 6.1

Operating profit 5.8 5.8 -

Customer recruitment (000’s):

New customers 71 72 (1.4)

Reactivated customers 68 83 (18.1)

2005£m

2004£m

Variance% B(W)Year to 31 December

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eGaming - KPIs

2005 2004Variance% B(W)

Year to 31 December

(1) Total successful registrations

Total registrations (000’s) (1) 479 375 28

Average monthly active player days (000’s)

Sportsbook 471 417 13

Casino 64 56 14

Poker 411 195 111

Games 54 39 38

Customer acquisition costs (2) £32.10 £44.25 27

(2) Marketing costs less CRM costs divided by total successful registrations

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eGaming - KPIs

Sportsbook stake per bet £17.01 £14.44 18

Sportsbook margin 6.8% 8.3%

Average weekly Poker rake £793k £443k 79

Average weekly Casino drop £749k £644k 16

Average weekly Games drop £185k £118k 57

2005 2004Variance% B(W)

Year to 31 December