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Brian Wallace Group Finance Director

Brian Wallace Group Finance Director. Hilton Group plc - Summary of Performance. Year to 31st December 2000 £m. Proforma year to 31st December 1999* £m. Hilton International Betting & Gaming Central costs and income Operating profit Goodwill amortisation Interest

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Brian Wallace Group Finance Director

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  1. Brian WallaceGroup Finance Director

  2. Hilton Group plc - Summary of Performance Year to 31st December 2000 £m Proforma year to 31st December 1999* £m Hilton International Betting & Gaming Central costs and income Operating profit Goodwill amortisation Interest Profit before tax Tax Profit after tax 268.0 114.9 (11.6) 371.3 (36.9) (94.6) 239.8 (57.2) 182.6 242.5 139.2 (21.4) 360.3 (28.1) (76.8) 255.4 (64.1) 191.3 EBITDA before exceptional items 478.4 456.8 Profit before tax, goodwill,FRS15 & exceptional items 301.2 305.0 * 1999 results have been adjusted to show the effect of FRS15 depreciation as if it had been charged in 1999.

  3. Hilton Group plc - Exceptional Items P&L effect Net asset effect £m £m Profit on sale of UK Casinos Loss on termination of Egyptian Casinos Loss on sale of non-European betting and gaming businesses Impairment of Belgium fixed assets 6.9 (10.4) (14.3) (25.6) (43.4) 52.7 (10.4) (14.3) (25.6) 2.4

  4. Adjusted operating profit: 1st Half 107.6 98.7 9.0% Adjusted operating profit: 2nd Half 151.1 129.4 16.8% Hilton International - Underlying Performance Year to 31st December 2000 £m Proforma year to 31st December 1999 £m %Increase Operating profit as reported 268.0 242.5 10.5% Net effect of property changes (9.3) (24.3) Inclusion of overheads treated centrally in 1999 - (10.0) Effect of treating Stakis as acquired on 1 January 1999 - 19.9 Adjusted operating profit: Full Year 258.7 228.1 13.4%

  5. Hilton International 2000 1999 Proforma Turnover Profit Turnover Profit * Revpar £m £m £m £m Growth UK 606.4 156.3 516.2 148.8 10.5% Europe 553.7 68.3 485.8 48.3 11.4% Middle Eastand Africa 216.6 14.3 192.8 14.0 2.2% Asia / Australasia 518.6 13.6 485.9 11.6 5.9% Americas 247.3 25.4 193.7 34.1 6.3% LivingWell 40.9 4.5 27.4 2.9 - 2,183.5 282.4 1,901.8 259.7 7.9% Central & non-operating Items (14.4) (17.2) 268.0 242.5 10.5% * At constant currencies and including full 12 months of Stakis results.

  6. Market Hilton Hilton UK Revpar vs The London Market 2000 Revpar growth 25% 20% 15% 10% 5% 0% -5% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: AA & PKF

  7. Market Hilton Hilton UK Revpar vs The Provincial Market 2000 Revpar growth 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: AA, PKF & TRI

  8. 1st Half£m 2nd Half£m 9.4 5.5 (5.2) 29.8 18.2 11.6 Hilton UK Year on Year Movement Year on Year Increase Comparable sales Comparable gross profit Comparable PBIT

  9. 45.0 25.0 40.0 35.0 20.0 30.0 15.0 25.0 20.0 10.0 15.0 10.0 5.0 5.0 0.0 0.0 Top Ten UK and International Hotel Growths Top 10 UK Hotels Top 10 International Hotels % Growth % Growth 22.8% 39.3% 35.1% 11.2% 17.7% 8.0% 11.9% 3.0% Revpar Gwth PBIT Gwth Revpar Gwth PBIT Gwth First Half Second Half

  10. 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% Comparable Like for Like Gross Operating Profit by Area 47.8 47.0 46.9 46.3 39.2 37.9 37.5 34.5 33.5 32.1 31.0 30.3 UK Americas ContinentalEurope Total Asia/ Australasia Middle East & Africa 2000 1999

  11. Betting & Gaming Profit Comparison Telephone Betting / eGaming Retail Betting Vernons Casinos Americas Total £m £m £m £m £m £m 1999 reported profit High roller activity Sale of Golden Gate Fields Stakis Q1 2000 reported profit Movement 6.1 6.1 5.6 (0.5) 12.5 2.6 15.1 14.1 (1.0) 10.4 (2.9) 7.5 8.5 1.0 91.0 91.0 94.6 3.6 19.2 (12.2) 7.0 (7.9) (14.9) 139.2 (12.2) (2.9) 2.6 126.7 114.9 (11.8)

  12. UK Retail Betting - Comparative Analysis Variance£m 2000£m 1999£m Turnover 1,642.9 1,667.2 (24.3) Gross profit (including AWP’s) 310.5 300.1 10.4 Gross profit % - including AWP’s 18.9% 18.0% 0.9% - excluding AWP’s 17.3% 16.4% 0.9% Operating costs (226.1) (215.8) (10.3) Operating profit 84.4 84.3 0.1

  13. Gross Betting Margin Before Costs (%) 2000 Full Year First Half Second Half 2000 1999 Horses 15.2 16.1 15.6 15.1 Greyhounds 20.5 19.2 19.8 19.3 Numbers 29.0 29.4 29.2 28.5 Other Sports 12.6 10.2 11.3 11.6 Football 21.3 24.8 23.0 18.1 Total 16.9 17.6 17.3 16.4

  14. Analysis of Telephone Betting/eGaming profit Variance£m 2000£m 1999£m UK - Telephone Betting 2.1 3.3 (1.2) - eGaming (8.0) - (8.0) International - Elite Telebetting 1.2 4.9 (3.7) - Other Telebetting (1.9) (1.2) (0.7) - High Roller activity 0.7 12.2 (11.5) - Internet Betting (2.0) - (2.0) (7.9) 19.2 (27.1)

  15. Telebetting Analysis UK Telebetting Gibraltar Call Centre Gibraltar Elite Total 2000 £m 1999 £m 2000 £m 1999 £m 2000 £m 1999 £m 2000 £m 1999 £m Turnover Gross profit Costs Net profit 95.2 8.6 (6.5) 2.1  129.8 9.9 (6.6) 3.3  75.0  4.3  (6.2)  (1.9)   4.1 0.4 (1.6) (1.2)  72.6  2.8  (1.6)  1.2   85.4  5.9  (1.0)  4.9   242.8  15.7  (14.3)  1.4   219.3  16.2  (9.2)  7.0  Note: Excludes high roller activity in Gibraltar

  16. Telebetting Analysis UK Telebetting Gibraltar Call Centre Gibraltar Elite Total 2000 £m 1999 £m 2000 £m 1999 £m 2000 £m 1999 £m 2000 £m 1999 £m Turnover Gross profit Costs Net profit No. of calls Cost per call 95.2 8.6 (6.5) 2.1 2.5m £2.60  129.8 9.9 (6.6) 3.3 2.6m £2.50  75.0  4.3  (6.2)  (1.9)  1.2m  £5.10   4.1 0.4 (1.6) (1.2) 39k £41.00  72.6  2.8  (1.6)  1.2  67k  £23.90  85.4  5.9  (1.0)  4.9  60k  £16.80  242.8  15.7  (14.3)  1.4  3.8m  £3.80   219.3  16.2  (9.2)  7.0  2.7m  £3.40  Note: Excludes high roller activity in Gibraltar

  17. Telebetting Analysis UK Telebetting Gibraltar Call Centre Gibraltar Elite Total 2000 £m 1999 £m 2000 £m 1999 £m 2000 £m 1999 £m 2000 £m 1999 £m Turnover Gross profit Costs Net profit No. of calls Cost per call Full yeargross profit % Half year gross profit % 95.2 8.6 (6.5) 2.1 2.5m £2.60 9.0% 7.9%  129.8 9.9 (6.6) 3.3 2.6m £2.50 7.6% 6.9%  75.0  4.3  (6.2)  (1.9)  1.2m  £5.10  5.7% 3.4%  4.1 0.4 (1.6) (1.2) 39k £41.00 9.8% -  72.6  2.8  (1.6)  1.2  67k  £23.90 3.9% 3.6%  85.4  5.9  (1.0)  4.9  60k  £16.80 6.9% 6.8%  242.8  15.7  (14.3)  1.4  3.8m  £3.80  6.5% 5.4%  219.3  16.2  (9.2)  7.0  2.7m  £3.40  7.4% 6.9% Note: Excludes high roller activity in Gibraltar

  18. Cumulative Internet Registrations 120,000 100,000 80,000 60,000 40,000 20,000 0 Feb Mar April May June July Aug Sept Oct Nov Dec Jan

  19. Sportsbook Margin Progression 20% 15% 10% 5% 0% -5% July Aug Sept Oct Nov Dec Jan

  20. Group Cash Flow 2000 £m 1999 £m Inflow from operating activities 462.0 363.2 Interest paid (103.9) (60.2) Tax paid (48.9) (58.5) Dividends paid (123.5) (177.0) Free cash flow 185.7 67.5 Capital expenditure (476.9) (358.6) Proceeds from asset sales 22.0 244.5 Acquisitions, disposals 244.4 (366.7) (24.8) (413.3) Exchange & other movements (12.7) 26.0 Opening net debt (1,336.8) (949.5) Closing net debt (1,374.3) (1,336.8)

  21. Analysis of Capital Expenditure Hilton £m £m   Acquisitions Sydney 70.8 Caledonian 45.8 Dusseldorf 30.0 146.6 Other Capital United Kingdom 147.3 Overseas99.8LivingWell 30.8 277.9 Betting & GamingRefurbishment/relocation 19.5 BS2000 EPOS system 8.5 Other 24.4 52.4 476.9

  22. David MichelsGroup Chief Executive

  23. Hilton International Worldwide revpar increase 1999 vs 2000 7.9% (constant currencies and comparable Stakis) UK revpar increase 10.5% Like for like UK: 1st half 2nd half GOP conversion 46.5% 49.0% PBIT (7.0%) 14.3% 2000 1999 2000 1999 £m £m £m £m 68.6 73.8 92.7 81.1

  24. Objectives As at Interim Results 2000 • More falls to the bottom line • These businesses are as customer friendly as we can make them • That our physical hotel estate lives up to Hilton’s perceived reputation • That our eGaming investment is sensibly directed • That we expand the group • To improve the long term return on capital of the group as a whole

  25. Openings and Pipeline Hotels No. of rooms Openings 2000 12 3,713 Medina, Malta, Caledonian, Buenos Aires, Algiers, Budapest WestEnd, Dalian, Dubai Jumeirah, Hua Hin, Mauritius, Seremban, Tobago Pipeline 41 11,237Opening 2001 20 5,162 Incl:Copenhagen, Sofia, Rhodes, Melbourne Airport, Dubai, Jeddah, Trafalgar Square, Paddington, Auckland, Moscow, Bangalore, Amman Opening 2002/2003 21 6,075 Incl: Dubrovnik, Philippines, Beirut, Xiamen, Sao Paulo, Lagos, Kuala Lumpur, Tahiti, Inchon

  26. 68% 12% 20% Customer Satisfaction 1999 2000 71% 9% 20% Independent research carried out for Hilton International, based on a sample of over 8,100 respondents Completely or Very Satisfied Fairly Satisfied Dissatisfied

  27. Hilton International Capital Expenditure Maintenance/mandatory 48.6 43.0Profit generating 205.4 132.2 254.0 175.2 New builds/development 23.9 67.3Acquisitions 146.6 7.2 Total 424.5 249.7 20002001 Actual Forecast£m £m

  28. Amsterdam Hilton Refurbishment Total cost £16.5m substantially completed Q2 1999 CapitalExpenditure £m IRRForecast Amsterdam - major refurbishment 16.5 49.0% Metropole - extension 90.9 22.3% Munich Park - major refurbishment 39.9 15.0% Caribe - purchase & refurbishment 85.4 12.9% Major Projects Amsterdam Hilton - Profit History 4 3 2 1 0 1997 1998 1999 2000 Note: 2000 numbers are on a Pre FRS 15 basis

  29. Hilton Alliance Hilton HHonorsTotal members 10.5m 7.7mActive members 5.3m 2.8m Hilton Reservations WorldwideTotal worldwide 9.2m 7.8mhilton.com worldwide 376k 149kHRW Hilton International 1.6m 1.2m Conrad Joint VentureFamily of brands - Hilton Garden Inn, Doubletree, Embassy, Hampton, Homewood, Red Lion 20001999

  30. LivingWell Current Total Membership 125,000UK 112,500International 12,500 UK Development 2000/2001Clubs opened in UK in 2000 Clubs to Open in UK in 2001 HotelPremier Nottingham Peterborough (open) Caledonian Burton on Trent (open) InvernessPremier BarnsleySutton Coldfield York Carlisle Ashford

  31. LivingWell International Development 2000 / 2001 Health Club • Malta (open) • Melbourne Airport • Mersin • Adana • Dresden • Berlin • Mainz Premier Health Club • North Sydney (open) • Castlehill, Sydney (open) • Brisbane (open) • Carindale, Brisbane • Sydney Hilton • Bucharest • Prague • Dresden • Bangkok • Colombo • Adelaide

  32. £300 million to be sold in UK whilst retaining flag Hilton International Property UK - £1.9 billion Overseas - £0.9 billion

  33. Sale of Businesses UK Ladbroke Casinos - non coreSold for £236.7 million vs 2000 PBIT £14.9 million Overseas Gaming - non coreSold - Fort Erie; Argentina; Peru; San Pablo Card Club;Pennsylvania(conditional contract);Colorado(auction process at advanced stage) To be sold - 2 Cairo casinos

  34. UK Betting Industry & Environment • Government review of a new betting tax regime • Gambling Review Body to submit report to Home Office during summer • Horserace levy agreed for 2001/02. Home Office consulting on a replacement scheme • SIS in discussions with the Racecourse Association (RCA) over renewal of betting shop picture rights

  35. eGaming Performance • EBITDA break even achieved • Further investment planned • By end 2001 sustainable break even will be achieved • Move into profit during 2002 Sportsbook registrations 105,000 Casino players 6,000 Average cost customer recruitment 2000 £42.00 2001 £29.00

  36. eGaming Platforms Platform Media Timing Internet Bet.co.uk Launched February 2000 Ladbrokes.co.uk Launched February 2000 Ladbrokes.com Launched February 2000 Ladbrokescasino.com Launched November 2000 Vernons.co.uk Launched February 2001 Mobile WAP Launched August 2000 GPRS Summer 2001 UMTS 2003 Digital TV Cable } Telewest Launched February 2000 } CWC Launched March 2000 } Ntl Launch April/May 2001 Satellite } Open In Discussion } Sky (WAPTV) Awaiting platform rates Terrestrial } On Digital Launched

  37. eGaming Partnerships Partner Activity Teamtalk Exclusive sportsbook and casino link South ChinaMorning Post Sportsbook and casino link Soccernet World’s largest soccer site – exclusive sportsbook link Cricinfo World’s largest single sports site Sportsbook and casino link Autosport.com Europe’s second biggest motor racing site Sportsbook link Totalsports.asia.com Dedicated sales team in KL generating affiliate deals for Ladbrokes sportsbook and casino in Far East Playboy Provide sportsbook. One of the top ten most searched words on the worldwide web

  38. eGaming Future Developments Activity Planned 2001 • Flash casino games March • Cantonese Casino April • Ntl interactive TV service April • Playboy sportsbook April • Progressive casino games (blackjack/roulette/slots) May • High roller casino September • Numbers games July • Sportsbook – next generation July • Poker Million web site September • Video streamed casino December

  39. eGaming - Digital TV 2000 2004 (F’cast) Homes Connected Satellite Sky/Open 4.7m 7.2m Cable Ntl 0.5m 2.8m Telewest 0.3m 1.5m Terrestrial On-Digital 1.0m 3.3m 6.5m14.8m NB:* 1 million digital terrestrial homes via OnDigital but only circa 50,000 currently subscribe to OnNet boxes which enable Web access (i.e. delivers a return path)

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