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Interim Results Presentation 26 August 2004. Brian Wallace Deputy Group Chief Executive and Group Finance Director.

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Presentation on theme: "Interim Results Presentation 26 August 2004. Brian Wallace Deputy Group Chief Executive and Group Finance Director."— Presentation transcript:

1 Interim Results Presentation 26 August 2004

2 Brian Wallace Deputy Group Chief Executive and Group Finance Director

3 2 Hilton Group plc - Summary of Performance (1) Before goodwill amortisation and exceptional items 2004 £m 2003 £m Variance B(W) Hotels % Betting % Central costs and income(6.8)(6.6)(3.0)% Operating profit (1) % Interest(24.3)(40.8)40.4% Profit before tax (1) % Effective tax rate (1) 15.5%22.0% EBITDA (1) % EPS (1) 10.1p5.5p83.6% Half year to 30 June

4 3 Taxation Normal tax charge: Tax charge at 15.5% on profit before tax, exceptional items and goodwill amortisation29.4 Exceptional tax credit: Tax on exceptional items- Exceptional tax credit(9.0) Total tax charge20.4 £m

5 4 Hotels Worldwide RevPAR 2004 vs 2003 Like for Like Hotels, Constant Currencies

6 5 Worldwide RevPAR by Ownership Type Like for Like Hotels, Constant Currencies RevPAR growth 2004 vs first half Q1Q2H1Q1Q2H1Q1Q2H1

7 6 Hotels - Cost Management (1) Before goodwill amortisation and exceptional items Total £m Increasing revenue £m Declining revenue £m First Half Revenue movement (23.5) GOP movement (1) (17.2) I ncremental conversion54.1%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 Like for Like, Constant Currencies

8 7 UK Hotels RevPAR 2004 vs 2003 Like for Like

9 8 Europe (Hilton brand) - RevPAR by Country Like for Like, Constant Currencies, First Half Q1Q2H1 Q1 Q2 H1 Q1 Q2H1

10 9 Scandic RevPAR 2004 vs 2003 Like for Like Hotels, Constant Currencies, Scandic Acquired RevPAR growth 2004 vs 2003

11 10 Scandic Performance 2004 vs 2003 (a) At constant currencies (b) Includes support office costs not allocated to individual hotels 2004 Actual £m Other (a) (b) £m Revenue (7.4) (a) GOP (6.3)(0.9)74.7 (a) Inc. conversion50.9%14.9% Costs(69.7)(1.3)1.70.7(68.6) Profit (4.6)(0.2)3.2 (a) Disposal of Pandox 2.9- Exchange translation-(0.3) Like for like revenue gainers (a) £m 2003 Actual £m Like for like revenue losers (a) £m Half year to 30 June

12 11 Worldwide Betting UK Retail Ireland & Belgium Telephone Betting - excluding high rollers high rollers-(1.6)-(1.2) eGaming Vernons Worldwide Betting Gross Win £m (1) Before goodwill amortisation and exceptional items Operating Profit (1) £m Half year to 30 June

13 12 UK Retail (1) Excluding machines 2004 £m 2003 £m Variance B(W) Gross win % Duty / Gross profits tax(50.2)(40.2)(24.9)% Other costs(168.2)(151.3)(11.2)% Operating profit % Staff costs per slip34.29p31.72p(8.1)% Stake per slip (1) £8.37£ % First half OTC growth of 14% benefited from good results at Ascot, Cheltenham and Euro Machines gross win grew 62% to £83.8m with average number of FOBTs at 4,363 (2003: 2,230). Half year to 30 June

14 13 Telephone Betting (excluding high rollers) (1) Active customers are those who placed a bet during the period 2004 £m 2003 £m Variance B(W) Gross win % Gross profits tax(3.8)(2.2)(72.7)% Other costs(10.3)(7.7)(33.8)% Operating profit % Average stake per call£79.77£ % Salary cost per call70.0p67.2p(4.2)% No. of calls (000’s) 3,334 3,0609.0% Active customers (000’s) (1) % Half year to 30 June

15 14 Active customers (000’s) (1) Sportsbook % Casino % Poker % On-line registrations (000’s) % eGaming 2004 £m 2003 £m Variance B(W) Gross win % Gross profits tax(2.7)(1.5)(80.0)% Other costs(29.9)(23.1)(29.4)% Operating profit % (1) Active customers are those who placed a bet during the period Half year to 30 June

16 15 Hilton Group plc - Cash Flow 2004 £m 2003 £m Cash inflow from operating activities Interest, tax and dividends paid(126.6)(155.9) Free cash flow Capital expenditure(88.8)(101.8) Free cash flow after capex40.2(31.2) Intangible (betting shop licence) additions(13.6)(2.1) Proceeds from asset sales Acquisitions / disposals1.3- Exchange and other movements (1) 81.1(85.8) Net borrowings movement121.6(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) Half year to 30 June

17 16 Analysis of 2004 Capital Expenditure £m Hotels Acquisition linked development: Sydney (refurb)18.7 Dusseldorf (refurb) Other35.7 Total Hotels56.9 LivingWell Worldwide Betting Development – operating assets7.8 FOBTs7.0 Other (including TVs £2.6m, Ireland inc. EPOS £2.4m)9.8 eGaming / Telephone betting Total Group88.8

18

19 David Michels Group Chief Executive

20 19 Chart of Past EPS Earnings per Share (p)

21 20 Recent Trading - Betting “A good year, so far, with growth in all three areas”

22 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

23 22 Property £2.3bn of hotel assets

24 23 Hilton’s Central London Occupancy (11 hotels) – First 7 months Like for Like Hotels

25 24 Hilton and Scandic Brand Websites (excludes Third party Website bookings) Reservations Launch of localised websites

26 25 Pipeline Growth Openings 2004 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 Openings 2005 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

27 26 Capital Expenditure 2005 £110m - £120m on hotels Less than £100m on betting but will still invest to grow the business

28 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

29 28 Over-the-Counter Over-the-counter business up 14%

30 29 eGaming

31 30 Telephone Betting First half profits more than double

32 31 Anthony Harris

33 32 Hilton University

34 33 Outlook Hotels – “difficult to forecast, but cautiously optimistic” Betting – “continued growth, but at a slower rate than the first half”

35 Interim Results Presentation 26 August 2004

36 Appendices

37 36 Turnover ,307.2 Gross operating profit 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)(21.4)-(0.4)(2.3)(48.5) 2004 Profit Profit34.9(0.6) Hotels - Analysis by Contract Type Total ManagedLivingWell No. of hotels n/a405 No. of rooms17,08710,33733,61434,6466,654n/a102,326 Owned Fixed lease Contingent lease £m Franchise

38 37 Geographical RevPAR by Ownership Type Like for Like Hotels, Constant Currencies Owned & fixed lease Contingent leaseManaged UK10.6%8.1%14.8% Europe & Africa0.0%6.3%7.1% Middle East & Asia Pacific1.7%27.8%18.2% Americas6.3%14.9%20.0% Total4.9%8.3%14.6%

39 38 Hotels - Like for Like Profit (1) Before goodwill amortisation and exceptional items 2004 £m 2003 £m Variance B(W) Reported profit (1) % Less: LivingWell(2.7)(3.3) % Closed for refurbishment(0.1)1.5 Disposals / new openings(2.3)1.2 Pandox associate disposal-(2.9) Foreign exchange2.2- Like for like hotels profit (1) % Half year to 30 June

40 39 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

41 40 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 41 Scandic Incremental Conversion GOP Movement £m Rate growth at 90% conversion (2.6)(2.4)(2.4)(2.1) Volume growth at incremental cost (2.2)(1.6) F&B / Other revenue growth at 50% conversion (2.8)(1.4) Other (inc. payroll inflation) -(1.0)-(1.2) Incremental (7.4)(6.3) Conversion 50.9%14.9% Revenue Movement £m Half year to 30 June Incremental GOP conversion Like for like Revenue Movement £m GOP Movement £m GainersLosers

43 42 Worldwide Betting - Revenue (1) Includes FOBT turnover, year on year increase in machines turnover £1,412.1m 2004 £m 2003 £m Variance B(W) Half year to 30 June UK Retail (1) 4,063.92, % Ireland & Belgium % Telephone Betting % eGaming % Vernons % Worldwide Betting4,787.93, %

44 43 eGaming Gross Win

45 44 Breakdown of Lease Commitments Fixed lease £m Minimum guarantee £m Total £m Hotels Betting Property / Centre Total Also circa £17m other operating lease commitments Forecast land and buildings full year lease commitments for 2004 Contingent lease £m Forecast contingent commitments are based on 2004 forecast results


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