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SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 20-F


|           |  |                                                                                                       
|---------- |  | ------------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                       
|o          |  | REGISTRATION STATEMENT PURSUANT TO
    SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
    ACT OF 1934
|          
|or        
|          
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934              
|           |  | For the fiscal year ended December 31, 2004                                                           
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934          

Commission file number: 1-10409


InterContinental Hotels Group PLC


(Exact name of registrant as specified in its charter)


England and Wales


(Jurisdiction of incorporation or organization)


67 Alma Road,


Windsor, Berkshire SL4 3HD


(Address of principal executive offices)




|                                  |  |                                          
|--------------------------------- |  | -----------------------------------------
|Title of each class               |  | Name of each exchange on which registered
|                                  |  |                                          
|American Depositary Shares        |  | New York Stock Exchange                  
|Ordinary Shares of 112 pence each |  | New York Stock Exchange*                 






|  |                                                                                                                                                                             
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Not for trading, but only in connection with the registration of
    American Depositary Shares, pursuant to the requirements of the
    Securities and Exchange Commission.

Securities registered or to be registered pursuant to
Section 12(g) of the Act:


None


Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act:


None


Indicate the number of outstanding shares of each of the
issuers classes of capital or common stock as of the close
of the period covered by the annual report:


Ordinary Shares of 112 pence
each                              622,068,047


þ o




o þ










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##### Table of Contents



TABLE OF CONTENTS







|                                                         |  |                                                             |   |      |    | 
|-------------------------------------------------------- |  | ----------------------------------------------------------- | - | ---- | -- | 
|                                                         |  |                                                             |   | Page |   
|                                                         |  |                                                             |   |      |   
|Introduction                                             |  |                                                             | 4 |     
|Cautionary Note Regarding Forward-Looking
    Statements |  |                                                             | 5 |     
|                                                        
|PART I                                                  
|Item 1.                                                  |  | Identity of Directors, Senior Management
    and Advisors   |   |      | 7  | 
|Item 2.                                                  |  | Offer Statistics and Expected Timetable                     |   |      | 7  | 
|Item 3.                                                  |  | Key Information                                             |   |      | 7  | 
|                                                         |  | Selected Consolidated Financial
    Information             |   |      | 7  | 
|                                                         |  | Risk Factors                                                |   |      | 13 | 
|Item 4.                                                  |  | Information on the Company                                  |   |      | 17 | 
|                                                         |  | Summary                                                     |   |      | 17 | 
|                                                         |  | Segmental Information                                       |   |      | 19 | 
|                                                         |  | Hotels                                                      |   |      | 23 | 
|                                                         |  | Soft Drinks                                                 |   |      | 39 | 
|                                                         |  | Trademarks                                                  |   |      | 41 | 
|                                                         |  | Organizational Structure                                    |   |      | 41 | 
|                                                         |  | Property, Plants and Equipment                              |   |      | 42 | 
|                                                         |  | Environment                                                 |   |      | 42 | 
|Item 5.                                                  |  | Operating and Financial Review and
    Prospects            |   |      | 43 | 
|                                                         |  | Introduction                                                |   |      | 43 | 
|                                                         |  | Critical Accounting Policies Under UK GAAP
    and US GAAP  |   |      | 44 | 
|                                                         |  | Operating Results                                           |   |      | 46 | 
|                                                         |  | Liquidity and Capital Resources                             |   |      | 59 | 
|                                                         |  | International Financial Reporting
    Information           |   |      | 61 | 
|Item 6.                                                  |  | Directors, Senior Management and
    Employees              |   |      | 70 | 
|                                                         |  | Directors and Senior Management                             |   |      | 70 | 
|                                                         |  | Compensation                                                |   |      | 72 | 
|                                                         |  | Board Practices                                             |   |      | 74 | 
|                                                         |  | Employees                                                   |   |      | 76 | 
|                                                         |  | Share Ownership                                             |   |      | 77 | 
|Item 7.                                                  |  | Major Shareholders and Related Party
    Transactions       |   |      | 78 | 
|                                                         |  | Major Shareholders                                          |   |      | 78 | 
|                                                         |  | Related Party Transactions                                  |   |      | 78 | 
|Item 8.                                                  |  | Financial Information                                       |   |      | 80 | 
|                                                         |  | Consolidated Statements and Other Financial
    Information |   |      | 80 | 
|                                                         |  | Significant Changes                                         |   |      | 80 | 
|Item 9.                                                  |  | The Offer and Listing                                       |   |      | 80 | 
|                                                         |  | Plan of Distribution                                        |   |      | 81 | 
|                                                         |  | Selling Shareholders                                        |   |      | 81 | 
|                                                         |  | Dilution                                                    |   |      | 81 | 
|                                                         |  | Expenses of the Issue                                       |   |      | 81 | 

2



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|                  |  |                                                                                  |  |      |    | 
|----------------- |  | -------------------------------------------------------------------------------- |  | ---- | -- | 
|                  |  |                                                                                  |  | Page |   
|                  |  |                                                                                  |  |      |   
|Item 10.          |  | Additional Information                                                           |  |      | 82 | 
|                  |  | Memorandum and Articles of Association                                           |  |      | 82 | 
|                  |  | Material Contracts                                                               |  |      | 84 | 
|                  |  | Exchange Controls                                                                |  |      | 87 | 
|                  |  | Taxation                                                                         |  |      | 87 | 
|                  |  | Documents on Display                                                             |  |      | 90 | 
|Item 11.          |  | Quantitative and Qualitative Disclosures
    About Market Risk                   |  |      | 90 | 
|Item 12.          |  | Description of Securities Other Than Equity
    Securities                       |  |      | 93 | 
|                 
|PART II          
|Item 13.          |  | Defaults, Dividend Arrearages and
    Delinquencies                              |  |      | 93 | 
|Item 14.          |  | Material Modifications to the Rights of
    Security Holders and Use of Proceeds |  |      | 93 | 
|Item 15.          |  | Controls and Procedures                                                          |  |      | 93 | 
|Item 16.          |  | [Reserved]                                                                       |  |      | 93 | 
|Item 16A.         |  | Audit Committee Financial Expert                                                 |  |      | 93 | 
|Item 16B.         |  | Code of Ethics                                                                   |  |      | 93 | 
|Item 16C.         |  | Principal Accountant Fees and Services                                           |  |      | 94 | 
|Item 16D.         |  | Exemptions from the Listing Standards for
    Audit Committees                   |  |      | 94 | 
|Item 16E.         |  | Purchases of Equity Securities by the
    Issuer and Affiliated Purchasers       |  |      | 95 | 
|                 
|PART III         
|Item 17.          |  | Financial Statements                                                             |  |      | 95 | 
|Item 18.          |  | Financial Statements                                                             |  |      | 96 | 
|Item 19.          |  | Exhibits                                                                         |  |      | 96 | 
|Exhibit 4(a)(ii) 
|Exhibit 4(b)(i)  
|Exhibit 4(b)(ii) 
|Exhibit 4(b)(iii)
|Exhibit 4(b)(iv) 
|Exhibit 4(b)(v)  
|Exhibit 4(c)(v)  
|Exhibit 8        
|Exhibit 12.1     
|Exhibit 12.2     
|Exhibit 13.1     



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INTRODUCTION






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | board refers to the board of directors of
    InterContinental Hotels Group PLC or, where appropriate, the
    board of Six Continents PLC;                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Britvic refers to Britannia Soft Drinks Limited;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Company refers to InterContinental Hotels Group PLC
    or Six Continents PLC or their respective board of directors as
    the context requires;                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Group refers to InterContinental Hotels Group PLC
    and its subsidiaries or Six Continents PLC and its subsidiaries
    as the context requires;                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Hotels or IHG Hotels refers to the
    hotels business of Six Continents or InterContinental Hotels
    Group PLC as the context requires;                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | IHG refers to InterContinental Hotels Group PLC or,
    where appropriate, its board of directors;                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | MAB or Mitchells and Butlers refers to
    Mitchells & Butlers plc;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | ordinary share or share refers to the
    ordinary shares of 28 pence each of Six Continents PLC or
    the ordinary shares of £1 and after December 10, 2004,
    112 pence each of InterContinental Hotels Group PLC;                                                                                                                                                                                                                                                                                                                                        
|
| |  | Separation transaction or Separation
    refers to the transaction that separated Six Continents
    PLCs hotels and soft drinks businesses from its retail
    business, completed on April 15, 2003. The Separation
    resulted in two separately listed holding companies:
    (i) Mitchells & Butlers plc, which is the holding
    company of the retail business and Standard Commercial Property
    Developments Limited; and (ii) InterContinental Hotels
    Group PLC, which is the holding company for the hotels and soft
    drinks businesses;
|
| |  | Six Continents refers to Six Continents PLC;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Soft Drinks and Britvic business refer
    to the soft drinks business of InterContinental Hotels Group
    PLC, which the Company has through its controlling interest in
    Britvic; and                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | VAT refers to UK value added tax levied by HM
    Customs & Excise on certain goods and services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                








4



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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS




5



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6



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PART I







|        |                                                          
|------- | ---------------------------------------------------------
|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
    ADVISORS








|        |                                        
|------- | ---------------------------------------
|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE








|        |                
|------- | ---------------
|ITEM 3. | KEY INFORMATION




SELECTED CONSOLIDATED FINANCIAL INFORMATION


Summary




7



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| |                                          
| | -----------------------------------------
| | Consolidated Profit and Loss Account Data

|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |       |   |  |       |       |   |  |       |       |  
|---------------------------------------------------------- | ----------------------- | ----------------------------------------------- | ----- | ------------ | ------------ |  | --------- | ------------ | - | --------- | ------------ | --- | - | ------------- | ----- | ----- | ------- |  | ----- | ------- | - |  | ------- | ----- | - |  | ----- | ----- | - |  | ----- | ----- | -
|                                                           |                         |                                                 |       | Three months |              |  | 12 months |              |   | 15 months |              |     |  
|                                                           |                         | Year ended                                      |       |              | ended        |  |           | ended        |   |           | ended        |     |   | Year ended    |      
|                                                           |                         | December 31,                                    |       |              | December 31, |  |           | December 31, |   |           | December 31, |     |   | September 30, |      
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |      
|                                                           |                         | 2004(1)(2)                                      |       |              | 2004(1)      |  |           | 2002         |   |           | 2003         |     |   | 2003(1)       |       |       | 2002(1) |  |       | 2001(1) |   |  | 2000(1) |      
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|                                                           |                         | $                                               |       |              | £            |  |           | £            |   |           | £            |     |   | £             |       |       | £       |  |       | £       |   |  | £       |      
|                                                           |                         | (in millions, except per share and ADS amounts) |      
|Amounts in accordance with UK GAAP                         |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |       |   |  |       |       |   |  |       |      
|Turnover:                                                  |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |       |   |  |       |       |   |  |       |      
|                                                           | Continuing operations   |                                                 |       | 4,011        |              |  |           | 2,204        |   |           |              | 529 |   |               |       | 2,161 |         |  |       | 2,690   |   |  |         | 2,134 |   |  |       | 2,473 |   |  |       | 2,092 |  
|                                                           | Discontinued operations |                                                 |       |             |              |  |           |             |   |           |              | 342 |   |               |       | 451   |         |  |       | 793     |   |  |         | 1,481 |   |  |       | 1,560 |   |  |       | 3,066 |  
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|                                                           |                         |                                                 | 4,011 |              |              |  | 2,204     |              |   |           | 871          |     |   |               | 2,612 |       |         |  | 3,483 |         |   |  | 3,615   |       |   |  | 4,033 |       |   |  | 5,158 |      
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|Total operating profit before operating exceptional items: |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |       |   |  |       |       |   |  |       |      
|                                                           | Continuing operations   |                                                 |       | 603          |              |  |           | 331          |   |           |              | 60  |   |               |       | 286   |         |  |       | 346     |   |  |         | 329   |   |  |       | 486   |   |  |       | 428   |  
|                                                           | Discontinued operations |                                                 |       |             |              |  |           |             |   |           |              | 52  |   |               |       | 85    |         |  |       | 137     |   |  |         | 289   |   |  |       | 306   |   |  |       | 477   |  
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|                                                           |                         |                                                 | 603   |              |              |  | 331       |              |   |           | 112          |     |   |               | 371   |       |         |  | 483   |         |   |  | 618     |       |   |  | 792   |       |   |  | 905   |      
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|Operating exceptional items:                               |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |       |   |  |       |       |   |  |       |      
|                                                           | Continuing operations   |                                                 |       | (35          | )            |  |           | (19          | ) |           |              |    |   |               |       | (51   | )       |  |       | (51     | ) |  |         | (77   | ) |  |       | (43   | ) |  |       |      |  
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|                                                           |                         |                                                 | (35   | )            |              |  | (19       | )            |   |           |             |     |   |               | (51   | )     |         |  | (51   | )       |   |  | (77     | )     |   |  | (43   | )     |   |  |      |      
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|Total operating profit:                                    |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |       |   |  |       |       |   |  |       |      
|                                                           | Continuing operations   |                                                 |       | 568          |              |  |           | 312          |   |           |              | 60  |   |               |       | 235   |         |  |       | 295     |   |  |         | 252   |   |  |       | 443   |   |  |       | 428   |  
|                                                           | Discontinued operations |                                                 |       |             |              |  |           |             |   |           |              | 52  |   |               |       | 85    |         |  |       | 137     |   |  |         | 289   |   |  |       | 306   |   |  |       | 477   |  
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|                                                           |                         |                                                 | 568   |              |              |  | 312       |              |   |           | 112          |     |   |               | 320   |       |         |  | 432   |         |   |  | 541     |       |   |  | 749   |       |   |  | 905   |      
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|Non-operating exceptional items:                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |       |   |  |       |       |   |  |       |      
|                                                           | Continuing operations   |                                                 |       | (126         | )            |  |           | (69          | ) |           |              | (3  | ) |               |       | (167  | )       |  |       | (170    | ) |  |         | (2    | ) |  |       | (2    | ) |  |       | 2     |  
|                                                           | Discontinued operations |                                                 |       |             |              |  |           |             |   |           |              |    |   |               |       | (43   | )       |  |       | (43     | ) |  |         | 55    |   |  |       | 2     |   |  |       | 1,294 |  
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|                                                           |                         |                                                 | (126  | )            |              |  | (69       | )            |   |           | (3           | )   |   |               | (210  | )     |         |  | (213  | )       |   |  | 53      |       |   |  |      |       |   |  | 1,296 |      
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|Profit on ordinary activities before interest              |                         |                                                 | 442   |              |              |  | 243       |              |   |           | 109          |     |   |               | 110   |       |         |  | 219   |         |   |  | 594     |       |   |  | 749   |       |   |  | 2,201 |      
|Interest receivable                                        |                         |                                                 | 128   |              |              |  | 70        |              |   |           | 27           |     |   |               | 77    |       |         |  | 104   |         |   |  | 116     |       |   |  | 165   |       |   |  | 57    |      
|Interest payable and similar charges                       |                         |                                                 | (157  | )            |              |  | (86       | )            |   |           | (39          | )   |   |               | (112  | )     |         |  | (151  | )       |   |  | (176    | )     |   |  | (224  | )     |   |  | (209  | )    
|Premium on early settlement of debt                        |                         |                                                 | (31   | )            |              |  | (17       | )            |   |           |             |     |   |               | (136  | )     |         |  | (136  | )       |   |  |        |       |   |  |      |       |   |  |      |      
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|Profit before taxation                                     |                         |                                                 | 382   |              |              |  | 210       |              |   |           | 97           |     |   |               | (61   | )     |         |  | 36    |         |   |  | 534     |       |   |  | 690   |       |   |  | 2,049 |      
|Taxation                                                   |                         |                                                 | 213   |              |              |  | 117       |              |   |           | (29          | )   |   |               | 46    |       |         |  | 17    |         |   |  | (52     | )     |   |  | (223  | )     |   |  | (342  | )    
|Minority equity interests                                  |                         |                                                 | (51   | )            |              |  | (28       | )            |   |           | (4           | )   |   |               | (30   | )     |         |  | (34   | )       |   |  | (25     | )     |   |  | (24   | )     |   |  | (16   | )    
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|Earnings                                                   |                         |                                                 | 544   |              |              |  | 299       |              |   |           | 64           |     |   |               | (45   | )     |         |  | 19    |         |   |  | 457     |       |   |  | 443   |       |   |  | 1,691 |      
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|Per ordinary share:                                        |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |       |   |  |       |       |   |  |       |      
|                                                           | Basic                   |                                                 |       | 76.6         | p            |  |           | 42.1         | p |           |              | 8.7 | p |               |       | (6.1  | )p      |  |       | 2.6     | p |  |         | 62.5  | p |  |       | 60.6  | p |  |       | 228.5 | p
|                                                           | Diluted                 |                                                 |       | 75.7         | p            |  |           | 41.6         | p |           |              | 8.7 | p |               |       | (6.1  | )p      |  |       | 2.6     | p |  |         | 62.3  | p |  |       | 60.2  | p |  |       | 227.0 | p
|                                                           | Adjusted(3)             |                                                 |       | 59.2         | p            |  |           | 32.5         | p |           |              | 9.1 | p |               |       | 30.0  | p       |  |       | 39.1    | p |  |         | 49.5  | p |  |       | 66.6  | p |  |       | 68.8  | p
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      
|                                                           | Dividends               |                                                 |       | 157.1        | p            |  |           | 86.3         | p |           |              |    |   |               |       | 21.2  | p       |  |       | 21.2    | p |  |         | 41.7  | p |  |       | 40.5  | p |  |       | 39.3  | p
|                                                           |                         |                                                 |       |              |              |  |           |              |   |           |              |     |   |               |       |       |         |  |       |         |   |  |         |      

Footnotes on page 10.


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|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |      |     |  |      |      |     |  |       |       |       | 
|-------------------------------------------------------------------------------------------- | ----------------------------- | ----------------------------------------------- | ---- | ------------ | ------------ |  | --------- | ------------ | -- | --------- | ------------ | ---- | -- | ------------- | --- | ---- | ------- |  | ----- | ------- | -- |  | ------- | ---- | --- |  | ---- | ---- | --- |  | ----- | ----- | ----- | 
|                                                                                             |                               |                                                 |      | Three months |              |  | 12 months |              |    | 15 months |              |      |   
|                                                                                             |                               | Year ended                                      |      |              | ended        |  |           | ended        |    |           | ended        |      |    | Year ended    |    
|                                                                                             |                               | December 31,                                    |      |              | December 31, |  |           | December 31, |    |           | December 31, |      |    | September 30, |    
|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |    
|                                                                                             |                               | 2004(1)(2)(4)                                   |      |              | 2004(1)(4)   |  |           | 2002(4)      |    |           | 2003(4)      |      |    | 2003(1)(4)    |     |      | 2002(1) |  |       | 2001(1) |    |  | 2000(1) |     
|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |     
|                                                                                             |                               | $                                               |      |              | £            |  |           | £            |    |           | £            |      |    | £             |     |      | £       |  |       | £       |    |  | £       |     
|                                                                                             |                               | (in millions, except per share and ADS amounts) |     
|Amounts in accordance with US GAAP                                                           |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |      |     |  |      |      |     |  |       |      
|Income/(loss) before cumulative effect on prior years of change
    in accounting principle: |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |      |     |  |      |      |     |  |       |      
|                                                                                             | Continuing operations         |                                                 |      | 580          |              |  |           | 318          |    |           |              | 29   |    |               |     | (5   | )       |  |       | 24      |    |  |         | 163  |     |  |      | 185  |     |  |       | 135   |      
|                                                                                             | Discontinued operations:      |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |      |     |  |      |      |     |  |       |       |      
|                                                                                             |                               | Income from discontinued operations             |      |              | 2            |  |           |              | 1  |           |              |      | 31 |               |     |      | 34      |  |       |         | 65 |  |         |      | 165 |  |      |      | 466 |  |       |       | 462   | 
|                                                                                             |                               | Surplus on disposal                             |      |              | 38           |  |           |              | 21 |           |              |      |   |               |     |      |        |  |       |         |   |  |         |      | 171 |  |      |      | 25  |  |       |       | 1,242 | 
|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |     
|                                                                                             | Total discontinued operations |                                                 |      | 40           |              |  |           | 22           |    |           |              | 31   |    |               |     | 34   |         |  |       | 65      |    |  |         | 336  |     |  |      | 491  |     |  |       | 1,704 |      
|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |     
|Cumulative effect on prior years of adoption of FAS 142                                      |                               |                                                 |     |              |              |  |          |              |    |           | (712         | )    |    |               |    |      |         |  | (712  | )       |    |  |        |      |     |  |     |      |     |  |      |      
|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |     
|                                                                                             | Net income/(loss)             |                                                 |      | 620          |              |  |           | 340          |    |           |              | (652 | )  |               |     | 29   |         |  |       | (623    | )  |  |         | 499  |     |  |      | 676  |     |  |       | 1,839 |      
|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |     
|Per ordinary share and American Depositary Share(5)                                          |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |      |     |  |      |      |     |  |       |      
|Basic                                                                                        |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |      |     |  |      |      |     |  |       |      
|Income/(loss) before cumulative effect on prior years of change
    in accounting principle: |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |      |     |  |      |      |     |  |       |      
|                                                                                             | Continuing operations         |                                                 |      | 81.8         | ¢            |  |           | 44.8         | p  |           |              | 4.0  | p  |               |     | (0.6 | )p      |  |       | 3.3     | p  |  |         | 22.3 | p   |  |      | 25.3 | p   |  |       | 18.2  | p    
|                                                                                             | Discontinued operations       |                                                 |      | 5.6          | ¢            |  |           | 3.1          | p  |           |              | 4.2  | p  |               |     | 4.6  | p       |  |       | 8.9     | p  |  |         | 46.0 | p   |  |      | 67.1 | p   |  |       | 230.3 | p    
|Cumulative effect on prior years of adoption of FAS 142                                      |                               |                                                 |     |              |              |  |          |              |    |           | (97.1        | )p   |    |               |    |      |         |  | (97.1 | )p      |    |  |        |      |     |  |      |      |     |  |       |      
|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |     
|Net income/(loss)                                                                            |                               |                                                 | 87.4 | ¢            |              |  | 47.9      | p            |    |           | (88.9        | )p   |    |               | 4.0 | p    |         |  | (84.9 | )p      |    |  | 68.3    | p    |     |  | 92.4 | p    |     |  | 248.5 | p    
|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |     
|Diluted                                                                                      |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |      |     |  |      |      |     |  |       |      
|Income/(loss) before cumulative effect on prior years of change
    in accounting principle: |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |      |     |  |      |      |     |  |       |      
|                                                                                             | Continuing operations         |                                                 |      | 77.8         | ¢            |  |           | 42.6         | p  |           |              | 4.0  | p  |               |     | (0.6 | )p      |  |       | 3.3     | p  |  |         | 22.2 | p   |  |      | 25.2 | p   |  |       | 18.1  | p    
|                                                                                             | Discontinued operations       |                                                 |      | 5.5          | ¢            |  |           | 3.1          | p  |           |              | 4.2  | p  |               |     | 4.6  | p       |  |       | 8.9     | p  |  |         | 45.8 | p   |  |      | 66.7 | p   |  |       | 228.8 | p    
|Cumulative effect on prior years of adoption of FAS 142                                      |                               |                                                 |     |              |              |  |          |              |    |           | (97.1        | )p   |    |               |    |      |         |  | (97.1 | )p      |    |  |        |      |     |  |     |      |     |  |      |      
|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |     
|Net income/(loss)                                                                            |                               |                                                 | 83.3 | ¢            |              |  | 45.7      | p            |    |           | (88.9        | )p   |    |               | 4.0 | p    |         |  | (84.9 | )p      |    |  | 68.0    | p    |     |  | 91.9 | p    |     |  | 246.9 | p    
|                                                                                             |                               |                                                 |      |              |              |  |           |              |    |           |              |      |    |               |     |      |         |  |       |         |    |  |         |     

Footnotes on page 10.


9



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##### Table of Contents





| |                                
| | -------------------------------
| | Consolidated Balance Sheet Data

|                                   |  |               |        |  |               |  |       |      |  |  |       |  |  |      |        |  |      |  |        |  |  |  |        | 
|---------------------------------- |  | ------------- | ------ |  | ------------- |  | ----- | ---- |  |  | ----- |  |  | ---- | ------ |  | ---- |  | ------ |  |  |  | ------ | 
|                                   |  | December 31,  |        |  | September 30, | 
|                                   |  |               |        |  |               | 
|                                   |  | 2004(2)       |        |  | 2004          |  |       | 2003 |  |  | 2002  |  |  | 2001 |        |  | 2000 | 
|                                   |  |               |        |  |               |  |       |      |  |  |       |  |  |      |        |  |      | 
|                                   |  | $             |        |  | £             |  |       | £    |  |  | £     |  |  | £    |        |  | £    | 
|                                   |  | (in millions) |       
|Amounts in accordance with UK GAAP |  |               |        |  |               |  |       |      |  |  |       |  |  |      |        |  |      |  |        | 
|Intangible assets                  |  |               | 274    |  |               |  | 142   |      |  |  | 158   |  |  |      | 173    |  |      |  | 174    |  |  |  | 189    | 
|Tangible assets                    |  |               | 7,288  |  |               |  | 3,776 |      |  |  | 3,951 |  |  |      | 7,641  |  |      |  | 7,558  |  |  |  | 6,683  | 
|Investments                        |  |               | 191    |  |               |  | 99    |      |  |  | 172   |  |  |      | 218    |  |      |  | 234    |  |  |  | 217    | 
|Current assets                     |  |               | 1,461  |  |               |  | 757   |      |  |  | 999   |  |  |      | 1,022  |  |      |  | 1,107  |  |  |  | 1,684  | 
|Total assets                       |  |               | 9,214  |  |               |  | 4,774 |      |  |  | 5,280 |  |  |      | 9,054  |  |      |  | 9,073  |  |  |  | 8,773  | 
|                                   |  |               |        |  |               |  |       |      |  |  |       |  |  |      |        |  |      | 
|Current liabilities(6)             |  |               | 1,955  |  |               |  | 1,013 |      |  |  | 1,085 |  |  |      | 2,273  |  |      |  | 2,009  |  |  |  | 1,604  | 
|Long-term debt(6)                  |  |               | 2,231  |  |               |  | 1,156 |      |  |  | 988   |  |  |      | 631    |  |      |  | 1,019  |  |  |  | 1,213  | 
|Share capital                      |  |               | 1,345  |  |               |  | 697   |      |  |  | 739   |  |  |      | 734    |  |      |  | 734    |  |  |  | 745    | 
|Shareholders funds                |  |               | 3,816  |  |               |  | 1,977 |      |  |  | 2,554 |  |  |      | 5,335  |  |      |  | 5,153  |  |  |  | 5,099  | 
|                                   |  |               |        |  |               |  |       |      |  |  |       |  |  |      |        |  |      | 
|Amounts in accordance with US GAAP |  |               |        |  |               |  |       |      |  |  |       |  |  |      |        |  |      |  |        |  |  |  |        | 
|Intangible assets                  |  |               | 2,644  |  |               |  | 1,370 |      |  |  | 1,587 |  |  |      | 2,702  |  |      |  | 2,902  |  |  |  | 2,960  | 
|Tangible assets                    |  |               | 6,666  |  |               |  | 3,454 |      |  |  | 3,916 |  |  |      | 6,552  |  |      |  | 6,343  |  |  |  | 5,130  | 
|Investments                        |  |               | 197    |  |               |  | 102   |      |  |  | 174   |  |  |      | 189    |  |      |  | 205    |  |  |  | 254    | 
|Current assets                     |  |               | 2,017  |  |               |  | 1,045 |      |  |  | 978   |  |  |      | 983    |  |      |  | 1,209  |  |  |  | 1,796  | 
|Total assets                       |  |               | 11,524 |  |               |  | 5,971 |      |  |  | 6,655 |  |  |      | 10,426 |  |      |  | 10,659 |  |  |  | 10,140 | 
|                                   |  |               |        |  |               |  |       |      |  |  |       |  |  |      |        |  |      | 
|Current liabilities(6)             |  |               | 3,926  |  |               |  | 2,034 |      |  |  | 1,496 |  |  |      | 2,109  |  |      |  | 2,033  |  |  |  | 1,461  | 
|Long-term debt(6)                  |  |               | 100    |  |               |  | 52    |      |  |  | 523   |  |  |      | 622    |  |      |  | 779    |  |  |  | 1,152  | 
|Share capital                      |  |               | 1,345  |  |               |  | 697   |      |  |  | 739   |  |  |      | 243    |  |      |  | 242    |  |  |  | 246    | 
|Shareholders equity               |  |               | 5,398  |  |               |  | 2,797 |      |  |  | 3,380 |  |  |      | 6,221  |  |      |  | 6,381  |  |  |  | 6,147  | 
|                                   |  |               |        |  |               |  |       |      |  |  |       |  |  |      |        |  |      | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The results for 2002, 2001 and 2000 include 52 weeks
    (Hotels 12 months). Fiscal 2003 reflects 15 months
    trading for Hotels, Soft Drinks 64 weeks ended
    December 20, 2003 and Mitchells and Butlers plc which
    reflects 28 weeks ended April 12, 2003. For the year
    2004, Hotels include 12 months and Soft drinks
    53 weeks ended December 25, 2004.                                                                                       
|   
|(2) | US dollar amounts have been translated at the Noon Buying
    Rate on December 31, 2004 of £1.00 = $1.93
    solely for convenience.                                                                                                                                                                                                                                                                                                                             
|   
|(3) | Adjusted earnings per share are disclosed in order to show
    performance undistorted by exceptional items.                                                                                                                                                                                                                                                                                                                                                     
|   
|(4) | Subsequent to the publication of the Groups UK Annual
    Report and Financial Statements, the net income in accordance
    with US GAAP for the year ended December 31, 2004,
    reported therein, was determined to be understated in that
    document by £8 million. Also, the split of net income
    between continuing operations and discontinued operations as
    reported therein, has been revised. There was no impact on the
    UK GAAP results.
|   
|(5) | Each American Depositary Share represents one ordinary share.                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(6) | Long-term debt under UK GAAP includes amounts supported by
    long-term credit facilities, which are classified as current
    liabilities under US GAAP.                                                                                                                                                                                                                                                                                                       

Dividends




10



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Ordinary dividend


|                               |  |                          |       |  |           |  |       |       |  |  |         |  |  |       |       |  |       |  |       |     |  |  |       | 
|------------------------------ |  | ------------------------ | ----- |  | --------- |  | ----- | ----- |  |  | ------- |  |  | ----- | ----- |  | ----- |  | ----- | --- |  |  | ----- | 
|                               |  | Pence per ordinary share |       |  | $ per ADS | 
|                               |  |                          |       |  |           | 
|                               |  | Interim                  |       |  | Final     |  |       | Total |  |  | Interim |  |  | Final |       |  | Total | 
|                               |  |                          |       |  |           |  |       |       |  |  |         |  |  |       |       |  |       | 
|Year ended September 30        |  |                          |       |  |           |  |       |       |  |  |         |  |  |       |       |  |       |  |       |     |  |  |       | 
|2000(1)                        |  |                          | 11.92 |  |           |  | 27.37 |       |  |  | 39.29   |  |  |       | 0.178 |  |       |  | 0.402 |     |  |  | 0.580 | 
|2001(1)                        |  |                          | 12.27 |  |           |  | 28.20 |       |  |  | 40.47   |  |  |       | 0.177 |  |       |  | 0.406 |     |  |  | 0.583 | 
|2002(1)                        |  |                          | 12.58 |  |           |  | 29.14 |       |  |  | 41.72   |  |  |       | 0.205 |  |       |  | 0.474 |     |  |  | 0.679 | 
|Period ended December 31, 2003 |  |                          |       |  |           |  |       |       |  |  |         |  |  |       |       |  |       |  |       |     |  |  |       | 
|Six Continents(1)              |  |                          | 7.65  |  |           |  |      |       |  |  | 7.65    |  |  |       | 0.119 |  |       |  |      |     |  |  | 0.119 | 
|IHG                            |  |                          | 4.05  |  |           |  | 9.45  |       |  |  | 13.50   |  |  |       | 0.068 |  |       |  | 0.174 |     |  |  | 0.242 | 
|Year ended December 31, 2004   |  |                          |       |  |           |  |       |       |  |  |         |  |  |       |       |  |       |  |       |     |  |  |       | 
|IHG                            |  |                          | 4.30  |  |           |  | 10.00 |       |  |  | 14.30   |  |  |       | 0.077 |  |       |  | 0.191 | (2) |  |  | 0.268 | 






|    |                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------
|(1) | Restated to reflect an equivalent number of shares in
    InterContinental Hotels Group PLC.               
|   
|(2) | The 2004 final dividend has been translated at the Noon Buying
    Rate on April 25, 2005 of £1.00 = $1.91.

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Special Dividend


|              |  |                |       |  |           |  |      | 
|------------- |  | -------------- | ----- |  | --------- |  | ---- | 
|              |  | Pence per      |       |  |          
|              |  | ordinary share |       |  | $ per ADS | 
|              |  |                |       |  |           | 
|December 2004 |  |                | 72.00 |  |           |  | 1.39 | 





| |               
| | --------------
| | Exchange Rates



|                                    |  |               |      |  |               |  |      | 
|----------------------------------- |  | ------------- | ---- |  | ------------- |  | ---- | 
|                                    |  | Months       |      |  | Months       | 
|                                    |  | highest       |      |  | lowest        | 
|Month                               |  | exchange rate |      |  | exchange rate | 
|                                    |  |               |      |  |               | 
|October 2004                        |  |               | 1.84 |  |               |  | 1.78 | 
|November 2004                       |  |               | 1.91 |  |               |  | 1.83 | 
|December 2004                       |  |               | 1.95 |  |               |  | 1.91 | 
|January 2005                        |  |               | 1.91 |  |               |  | 1.86 | 
|February 2005                       |  |               | 1.93 |  |               |  | 1.86 | 
|March 2005                          |  |               | 1.93 |  |               |  | 1.87 | 
|April 2005 (through April 25, 2005) |  |               | 1.92 |  |               |  | 1.87 | 

|                         |  |        |      |  |         |  |      |      |  |  |      |  |  |  |      | 
|------------------------ |  | ------ | ---- |  | ------- |  | ---- | ---- |  |  | ---- |  |  |  | ---- | 
|                         |  | Period |      |  | Average |  |      |      |  | 
|                         |  | end    |      |  | rate(1) |  |      | High |  |  | Low  | 
|                         |  |        |      |  |         |  |      |      |  |  |      | 
|Year ended September 30  |  |        |      |  |         |  |      |      |  |  |      |  |  |  |      | 
|2000                     |  |        | 1.48 |  |         |  | 1.55 |      |  |  | 1.68 |  |  |  | 1.40 | 
|2001                     |  |        | 1.47 |  |         |  | 1.44 |      |  |  | 1.50 |  |  |  | 1.37 | 
|2002                     |  |        | 1.56 |  |         |  | 1.48 |      |  |  | 1.58 |  |  |  | 1.41 | 
|Period ended December 31 |  |        |      |  |         |  |      |      |  |  |      |  |  |  |      | 
|2003                     |  |        | 1.78 |  |         |  | 1.63 |      |  |  | 1.78 |  |  |  | 1.54 | 
|Year ended December 31   |  |        |      |  |         |  |      |      |  |  |      |  |  |  |      | 
|2004                     |  |        | 1.93 |  |         |  | 1.84 |      |  |  | 1.95 |  |  |  | 1.75 | 






|    |                                                                                              
|--- | ---------------------------------------------------------------------------------------------
|(1) | The average of the Noon Buying Rate on the last day of each full
    month during the period.



12



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##### Table of Contents






RISK FACTORS






General Risks




| |                                                                             
| | ----------------------------------------------------------------------------
| | The Group is exposed to the risks of political and
    economic developments







| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Group is reliant on the reputation of its brands, the
    steps it takes to define and enforce brand standards and the
    protection of its intellectual property rights











| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | The Group is dependent upon recruiting and retaining key
    personnel and developing their skills



13



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##### Table of Contents







| |                                                                                
| | -------------------------------------------------------------------------------
| | The Group is exposed to certain risks in relation to
    technology and systems













| |                                                            
| | -----------------------------------------------------------
| | The Group may face difficulties insuring its
    businesses





| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | The Group is exposed to funding risks in relation to the
    defined benefits under its pension plans







14



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##### Table of Contents





Risks relating to the Hotels business




| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | The Hotels business is exposed to the risks of the hotel
    industry supply and demand cycle





| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | The Hotels business is exposed to a variety of risks
    related to identifying, securing and retaining management and
    franchise agreements





| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | The Hotels business is exposed to the risk of events that
    adversely impact domestic or international travel







| |                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Hotels business is reliant upon its proprietary
    reservation system and is exposed to the risk of failures in the
    system and increased competition in reservation
    infrastructure





15



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##### Table of Contents







| |                                                                                    
| | -----------------------------------------------------------------------------------
| | The Hotels business may experience a lack of selected
    acquisition opportunities





| |                                                                        
| | -----------------------------------------------------------------------
| | The Hotels business may be unable to make disposals of
    hotel assets





| |                                                             
| | ------------------------------------------------------------
| | The Hotels business is exposed to the risk of
    litigation





Risks relating to the Britvic business




| |                                                                                       
| | --------------------------------------------------------------------------------------
| | The Britvic business is exposed to risks related to
    possible product contamination





| |                                                           
| | ----------------------------------------------------------
| | The Britvic business is reliant upon certain
    suppliers





| |                                                               
| | --------------------------------------------------------------
| | The Britvic business is exposed to significant
    competition





16



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##### Table of Contents





| |                                                                          
| | -------------------------------------------------------------------------
| | Adverse weather conditions could reduce demand for
    Britvics products








|        |                           
|------- | --------------------------
|ITEM 4. | INFORMATION ON THE COMPANY




SUMMARY


Group Overview
























| |                                      
| | -------------------------------------
| | Group History and Recent Developments







| |                              
| | -----------------------------
| | Acquisitions and Dispositions





17



---



##### Table of Contents













| |                
| | ---------------
| | Return of Funds









18



---



##### Table of Contents







| |       
| | ------
| | Hotels





| |            
| | -----------
| | Soft Drinks






SEGMENTAL INFORMATION


Geographic
Segmentation




|                                                |  |              |       |              |              |             |           |              |  |           |              |  |  |               |       |  |  |  |       | 
|----------------------------------------------- |  | ------------ | ----- | ------------ | ------------ | ----------- | --------- | ------------ |  | --------- | ------------ |  |  | ------------- | ----- |  |  |  | ----- | 
|                                                |  |              |       | Three months |              |             | 12 months |              |  | 15 months |              |  | 
|                                                |  | Year ended   |       |              | ended        |             |           | ended        |  |           | ended        |  |  | Year ended    |      
|                                                |  | December 31, |       |              | December 31, |             |           | December 31, |  |           | December 31, |  |  | September 30, |      
|                                                |  | 2004         |       |              | 2002         |             |           | 2003         |  |           | 2003         |  |  | 2002          |      
|                                                |  |              |       |              |              |             |           |              |  |           |              |  |  |               |      
|                                                |  |              |       |              |              | (£ million) |           |              |  |           |             
|Turnover(1)(3)                                  |  |              |       |              |              |             |           |              |  |           |              |  |  |               |       |  |  |  |       | 
|United Kingdom                                  |  |              | 1,126 |              |              |             | 598       |              |  |           | 1,533        |  |  |               | 2,131 |  |  |  | 2,491 | 
|Rest of Europe, the Middle East and Africa      |  |              | 419   |              |              |             | 95        |              |  |           | 411          |  |  |               | 506   |  |  |  | 411   | 
|United States                                   |  |              | 423   |              |              |             | 117       |              |  |           | 454          |  |  |               | 571   |  |  |  | 476   | 
|Rest of Americas                                |  |              | 102   |              |              |             | 27        |              |  |           | 100          |  |  |               | 127   |  |  |  | 108   | 
|Asia Pacific                                    |  |              | 134   |              |              |             | 34        |              |  |           | 114          |  |  |               | 148   |  |  |  | 129   | 
|                                                |  |              |       |              |              |             |           |              |  |           |              |  |  |               |      
|Total                                           |  |              | 2,204 |              |              |             | 871       |              |  |           | 2,612        |  |  |               | 3,483 |  |  |  | 3,615 | 
|                                                |  |              |       |              |              |             |           |              |  |           |              |  |  |               |      
|Operating profit before exceptional items(1)(2) |  |              |       |              |              |             |           |              |  |           |              |  |  |               |       |  |  |  |       | 
|United Kingdom                                  |  |              | 118   |              |              |             | 70        |              |  |           | 197          |  |  |               | 267   |  |  |  | 397   | 
|Rest of Europe, the Middle East and Africa      |  |              | 57    |              |              |             | 8         |              |  |           | 30           |  |  |               | 38    |  |  |  | 60    | 
|United States                                   |  |              | 105   |              |              |             | 17        |              |  |           | 107          |  |  |               | 124   |  |  |  | 114   | 
|Rest of Americas                                |  |              | 30    |              |              |             | 7         |              |  |           | 26           |  |  |               | 33    |  |  |  | 26    | 
|Asia Pacific                                    |  |              | 21    |              |              |             | 10        |              |  |           | 11           |  |  |               | 21    |  |  |  | 21    | 
|                                                |  |              |       |              |              |             |           |              |  |           |              |  |  |               |      
|Total                                           |  |              | 331   |              |              |             | 112       |              |  |           | 371          |  |  |               | 483   |  |  |  | 618   | 
|                                                |  |              |       |              |              |             |           |              |  |           |              |  |  |               |      

Footnotes on page 20.


19



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|                                           |  |              |       |              |              |  |           |              |  |           |              |  |      |               |       |  |  |  |       | 
|------------------------------------------ |  | ------------ | ----- | ------------ | ------------ |  | --------- | ------------ |  | --------- | ------------ |  | ---- | ------------- | ----- |  |  |  | ----- | 
|                                           |  |              |       | Three months |              |  | 12 months |              |  | 15 months |              |  | Year |              
|                                           |  | Year ended   |       |              | ended        |  |           | ended        |  |           | ended        |  |      | ended         |      
|                                           |  | December 31, |       |              | December 31, |  |           | December 31, |  |           | December 31, |  |      | September 30, |      
|                                           |  | 2004         |       |              | 2002         |  |           | 2003         |  |           | 2003         |  |      | 2002          |      
|                                           |  |              |       |              |              |  |           |              |  |           |              |  |      |               |      
|                                           |  | %            |      
|Turnover                                   |  |              |       |              |              |  |           |              |  |           |              |  |      |               |       |  |  |  |       | 
|United Kingdom                             |  |              | 51.1  |              |              |  | 68.7      |              |  |           | 58.7         |  |      |               | 61.2  |  |  |  | 68.9  | 
|Rest of Europe, the Middle East and Africa |  |              | 19.0  |              |              |  | 10.9      |              |  |           | 15.7         |  |      |               | 14.6  |  |  |  | 11.4  | 
|United States                              |  |              | 19.2  |              |              |  | 13.4      |              |  |           | 17.4         |  |      |               | 16.4  |  |  |  | 13.2  | 
|Rest of Americas                           |  |              | 4.6   |              |              |  | 3.1       |              |  |           | 3.8          |  |      |               | 3.6   |  |  |  | 3.0   | 
|Asia Pacific                               |  |              | 6.1   |              |              |  | 3.9       |              |  |           | 4.4          |  |      |               | 4.2   |  |  |  | 3.5   | 
|                                           |  |              |       |              |              |  |           |              |  |           |              |  |      |               |      
|Total                                      |  |              | 100.0 |              |              |  | 100.0     |              |  |           | 100.0        |  |      |               | 100.0 |  |  |  | 100.0 | 
|                                           |  |              |       |              |              |  |           |              |  |           |              |  |      |               |      
|Operating profit before exceptional items  |  |              |       |              |              |  |           |              |  |           |              |  |      |               |       |  |  |  |       | 
|United Kingdom                             |  |              | 35.7  |              |              |  | 62.5      |              |  |           | 53.1         |  |      |               | 55.3  |  |  |  | 64.2  | 
|Rest of Europe, the Middle East and Africa |  |              | 17.2  |              |              |  | 7.1       |              |  |           | 8.1          |  |      |               | 7.9   |  |  |  | 9.7   | 
|United States                              |  |              | 31.7  |              |              |  | 15.2      |              |  |           | 28.8         |  |      |               | 25.7  |  |  |  | 18.5  | 
|Rest of Americas                           |  |              | 9.1   |              |              |  | 6.3       |              |  |           | 7.0          |  |      |               | 6.8   |  |  |  | 4.2   | 
|Asia Pacific                               |  |              | 6.3   |              |              |  | 8.9       |              |  |           | 3.0          |  |      |               | 4.3   |  |  |  | 3.4   | 
|                                           |  |              |       |              |              |  |           |              |  |           |              |  |      |               |      
|Total                                      |  |              | 100.0 |              |              |  | 100.0     |              |  |           | 100.0        |  |      |               | 100.0 |  |  |  | 100.0 | 
|                                           |  |              |       |              |              |  |           |              |  |           |              |  |      |               |      






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The results of overseas operations have been translated into
    sterling at weighted average rates of exchange for the period.
    In the case of the US dollar, the translation rates are
    2004: £1 = $1.82; (2003: £1 =
    $1.62 and 2002: £1 = $1.48).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | Operating profit before exceptional items does not include
    operating and non-operating exceptional items for all periods
    presented. Operating exceptional items (charge unless otherwise
    noted) by region are United Kingdom
    (2004: £10 million; 2003: 15 months
    £17 million, 12 months £17 million,
    three months £nil million;
    2002: £24 million), Rest of Europe, the Middle
    East and Africa (2004: £11 million;
    2003 15 months £24 million, 12 months
    £24 million, three months £nil million;
    2002: £nil million), the United States
    (2004: credit of £6 million;
    2003 15 months £9 million, 12 months
    £9 million, three months £nil million;
    2002: £39 million) and Asia Pacific
    (2004: £4 million; 2003: 15 months
    £1 million, 12 months £1 million,
    three months £nil million;
    2002: £14 million).
|   
|(3) | Amounts are reported by origin. See Note 2 of Notes to the
    Financial Statements for details by destination, for which the
    amounts are not significantly different.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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| |                      
| | ---------------------
| | Activity Segmentation



|                                                |  |              |       |              |              |  |           |              |  |           |              |   |  |               |       |   |  |  |       |  
|----------------------------------------------- |  | ------------ | ----- | ------------ | ------------ |  | --------- | ------------ |  | --------- | ------------ | - |  | ------------- | ----- | - |  |  | ----- | -
|                                                |  |              |       | Three months |              |  | 12 months |              |  | 15 months |              |   | 
|                                                |  | Year ended   |       |              | ended        |  |           | ended        |  |           | ended        |   |  | Year ended    |      
|                                                |  | December 31, |       |              | December 31, |  |           | December 31, |  |           | December 31, |   |  | September 30, |      
|                                                |  | 2004         |       |              | 2002         |  |           | 2003         |  |           | 2003         |   |  | 2002          |      
|                                                |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|                                                |  | (£ million)  |      
|Turnover(1)                                     |  |              |       |              |              |  |           |              |  |           |              |   |  |               |       |   |  |  |       |  
|Americas                                        |  |              | 495   |              |              |  | 136       |              |  |           | 525          |   |  |               | 661   |   |  |  | 570   |  
|EMEA                                            |  |              | 829   |              |              |  | 203       |              |  |           | 807          |   |  |               | 1,010 |   |  |  | 794   |  
|Asia Pacific                                    |  |              | 134   |              |              |  | 34        |              |  |           | 114          |   |  |               | 148   |   |  |  | 128   |  
|Central(3)                                      |  |              | 40    |              |              |  | 10        |              |  |           | 41           |   |  |               | 51    |   |  |  | 40    |  
|                                                |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Hotels                                          |  |              | 1,498 |              |              |  | 383       |              |  |           | 1,487        |   |  |               | 1,870 |   |  |  | 1,532 |  
|Soft Drinks                                     |  |              | 706   |              |              |  | 146       |              |  |           | 674          |   |  |               | 820   |   |  |  | 602   |  
|                                                |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Continuing operations                           |  |              | 2,204 |              |              |  | 529       |              |  |           | 2,161        |   |  |               | 2,690 |   |  |  | 2,134 |  
|Discontinued operations                         |  |              |      |              |              |  | 342       |              |  |           | 451          |   |  |               | 793   |   |  |  | 1,481 |  
|                                                |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Total                                           |  |              | 2,204 |              |              |  | 871       |              |  |           | 2,612        |   |  |               | 3,483 |   |  |  | 3,615 |  
|                                                |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Operating profit before exceptional items(1)(2) |  |              |       |              |              |  |           |              |  |           |              |   |  |               |       |   |  |  |       |  
|Americas                                        |  |              | 163   |              |              |  | 34        |              |  |           | 161          |   |  |               | 195   |   |  |  | 173   |  
|EMEA                                            |  |              | 119   |              |              |  | 22        |              |  |           | 92           |   |  |               | 114   |   |  |  | 125   |  
|Asia Pacific                                    |  |              | 21    |              |              |  | 10        |              |  |           | 12           |   |  |               | 22    |   |  |  | 23    |  
|Central (3)                                     |  |              | (52   | )            |              |  | (18       | )            |  |           | (62          | ) |  |               | (80   | ) |  |  | (55   | )
|                                                |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Hotels                                          |  |              | 251   |              |              |  | 48        |              |  |           | 203          |   |  |               | 251   |   |  |  | 266   |  
|Soft Drinks                                     |  |              | 80    |              |              |  | 12        |              |  |           | 83           |   |  |               | 95    |   |  |  | 63    |  
|                                                |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Continuing operations                           |  |              | 331   |              |              |  | 60        |              |  |           | 286          |   |  |               | 346   |   |  |  | 329   |  
|Discontinued operations                         |  |              |      |              |              |  | 52        |              |  |           | 85           |   |  |               | 137   |   |  |  | 289   |  
|                                                |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Total                                           |  |              | 331   |              |              |  | 112       |              |  |           | 371          |   |  |               | 483   |   |  |  | 618   |  
|                                                |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      

Footnotes on page 22.


21



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##### Table of Contents



|                                          |  |              |       |              |              |  |           |              |  |           |              |   |  |               |       |   |  |  |       |  
|----------------------------------------- |  | ------------ | ----- | ------------ | ------------ |  | --------- | ------------ |  | --------- | ------------ | - |  | ------------- | ----- | - |  |  | ----- | -
|                                          |  |              |       | Three months |              |  | 12 months |              |  | 15 months |              |   | 
|                                          |  | Year ended   |       |              | ended        |  |           | ended        |  |           | ended        |   |  | Year ended    |      
|                                          |  | December 31, |       |              | December 31, |  |           | December 31, |  |           | December 31, |   |  | September 30, |      
|                                          |  | 2004         |       |              | 2002         |  |           | 2003         |  |           | 2003         |   |  | 2002          |      
|                                          |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|                                          |  | (%)          |      
|Turnover                                  |  |              |       |              |              |  |           |              |  |           |              |   |  |               |       |   |  |  |       |  
|Americas                                  |  |              | 22.5  |              |              |  | 25.7      |              |  |           | 24.3         |   |  |               | 24.6  |   |  |  | 26.7  |  
|EMEA                                      |  |              | 37.6  |              |              |  | 38.4      |              |  |           | 37.3         |   |  |               | 37.5  |   |  |  | 37.2  |  
|Asia Pacific                              |  |              | 6.1   |              |              |  | 6.4       |              |  |           | 5.3          |   |  |               | 5.5   |   |  |  | 6.0   |  
|Central (3)                               |  |              | 1.8   |              |              |  | 1.9       |              |  |           | 1.9          |   |  |               | 1.9   |   |  |  | 1.9   |  
|                                          |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Hotels                                    |  |              | 68.0  |              |              |  | 72.4      |              |  |           | 68.8         |   |  |               | 69.5  |   |  |  | 71.8  |  
|Soft Drinks                               |  |              | 32.0  |              |              |  | 27.6      |              |  |           | 31.2         |   |  |               | 30.5  |   |  |  | 28.2  |  
|                                          |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Continuing operations                     |  |              | 100.0 |              |              |  | 100.0     |              |  |           | 100.0        |   |  |               | 100.0 |   |  |  | 100.0 |  
|                                          |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Operating profit before exceptional items |  |              |       |              |              |  |           |              |  |           |              |   |  |               |       |   |  |  |       |  
|Hotels                                    |  |              |       |              |              |  |           |              |  |           |              |   |  |               |       |   |  |  |       |  
|Americas                                  |  |              | 49.2  |              |              |  | 56.6      |              |  |           | 56.3         |   |  |               | 56.3  |   |  |  | 52.6  |  
|EMEA                                      |  |              | 36.0  |              |              |  | 36.7      |              |  |           | 32.2         |   |  |               | 32.9  |   |  |  | 38.0  |  
|Asia Pacific                              |  |              | 6.3   |              |              |  | 16.7      |              |  |           | 4.2          |   |  |               | 6.4   |   |  |  | 7.0   |  
|Central (3)                               |  |              | (15.7 | )            |              |  | (30.0     | )            |  |           | (21.7        | ) |  |               | (23.1 | ) |  |  | (16.7 | )
|                                          |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Hotels                                    |  |              | 75.8  |              |              |  | 80.0      |              |  |           | 71.0         |   |  |               | 72.5  |   |  |  | 80.9  |  
|Soft Drinks                               |  |              | 24.2  |              |              |  | 20.0      |              |  |           | 29.0         |   |  |               | 27.5  |   |  |  | 19.1  |  
|                                          |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      
|Continuing operations                     |  |              | 100.0 |              |              |  | 100.0     |              |  |           | 100.0        |   |  |               | 100.0 |   |  |  | 100.0 |  
|                                          |  |              |       |              |              |  |           |              |  |           |              |   |  |               |      






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The results of overseas operations have been translated into
    sterling at weighted average rates of exchange for the period.
    In the case of the US dollar, the translation rates are
    2004: £1 = $1.82; (2003: £1 =
    $1.62 and 2002: £1 = $1.48).                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(2) | Operating profit before exceptional items does not include
    operating and non-operating exceptional items for all periods
    presented. Operating exceptional items by business segment are
    the Americas (2004: £14 million;
    2003: 15 months £9 million, 12 months
    £9 million, three months £nil million;
    2002: £39 million), EMEA
    (2004: £19 million; 2003: 15 months
    £41 million, 12 months £41 million,
    three months £nil million;
    2002: £24 million), and Asia Pacific
    (2004: £4 million; 2003: 15 months
    £1 million, 12 months £1 million,
    three months £nil million;
    2002: £14 million).
|   
|(3) | Central relates to global functions. Turnover relates to Holidex
    fee income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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##### Table of Contents






HOTELS




| |         
| | --------
| | Overview



Strategy






| |   |                                                                                                
| | - | -----------------------------------------------------------------------------------------------
| |  | to strengthen the core business through focus on brand
    differentiation and system delivery;
|
| |  | to grow the managed and franchised fee income business in key
    markets;                     
|
| |  | to develop the organisation and its people;                                                    
|
| |  | to continue the asset disposal program; and                                                    
|
| |  | to return funds to shareholders.                                                               

23



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##### Table of Contents



Segmental Results




|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |       |     |     |   |       |     |     |  
|----------------------------------------------------------- | ------------ | ------------------ | ----- | ------------ | ------------ | - | --------- | ------------ | --- | --------- | ------------ | --- | --- | ------------- | ----- | --- | --- | - | ----- | --- | --- | -
|                                                            |              |                    |       | Three months |              |   | 12 months |              |     | 15 months |              |     |    
|                                                            |              | Year ended         |       |              | ended        |   |           | ended        |     |           | ended        |     |     | Year ended    |      
|                                                            |              | December 31,       |       |              | December 31, |   |           | December 31, |     |           | December 31, |     |     | September 30, |      
|                                                            |              | 2004               |       |              | 2002         |   |           | 2003         |     |           | 2003         |     |     | 2002          |      
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      
|                                                            |              | (£ million)        |      
|Turnover by activity(1)(2)                                  |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |       |     |     |   |       |    
|                                                            | Americas     |                    |       |              |              |   |           |              |     |           |              |     |     |               |       |     |     |   |       |     |    
|                                                            |              | Owned and leased   |       |              | 269          |   |           |              | 80  |           |              |     | 296 |               |       |     | 376 |   |       |     | 314 |  
|                                                            |              | Managed            |       |              | 30           |   |           |              | 8   |           |              |     | 28  |               |       |     | 36  |   |       |     | 38  |  
|                                                            |              | Franchised         |       |              | 196          |   |           |              | 48  |           |              |     | 201 |               |       |     | 249 |   |       |     | 218 |  
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      
|                                                            |              |                    | 495   |              |              |   | 136       |              |     |           | 525          |     |     |               | 661   |     |     |   | 570   |    
|                                                            | EMEA         |                    |       |              |              |   |           |              |     |           |              |     |     |               |       |     |     |   |       |     |    
|                                                            |              | Owned and leased   |       |              | 759          |   |           |              | 187 |           |              |     | 746 |               |       |     | 933 |   |       |     | 736 |  
|                                                            |              | Managed            |       |              | 43           |   |           |              | 10  |           |              |     | 38  |               |       |     | 48  |   |       |     | 36  |  
|                                                            |              | Franchised         |       |              | 27           |   |           |              | 6   |           |              |     | 23  |               |       |     | 29  |   |       |     | 22  |  
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      
|                                                            |              |                    | 829   |              |              |   | 203       |              |     |           | 807          |     |     |               | 1,010 |     |     |   | 794   |    
|                                                            | Asia         |                    |       |              |              |   |           |              |     |           |              |     |     |               |       |     |     |   |       |     |    
|                                                            |              | Owned and leased   |       |              | 110          |   |           |              | 28  |           |              |     | 95  |               |       |     | 123 |   |       |     | 103 |  
|                                                            |              | Managed            |       |              | 21           |   |           |              | 5   |           |              |     | 15  |               |       |     | 20  |   |       |     | 20  |  
|                                                            |              | Franchised         |       |              | 3            |   |           |              | 1   |           |              |     | 4   |               |       |     | 5   |   |       |     | 5   |  
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      
|                                                            |              |                    | 134   |              |              |   | 34        |              |     |           | 114          |     |     |               | 148   |     |     |   | 128   |    
|                                                            | Central(4)   |                    |       | 40           |              |   |           | 10           |     |           |              | 41  |     |               |       | 51  |     |   |       | 40  |    
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      
|Total                                                       |              |                    | 1,498 |              |              |   | 383       |              |     |           | 1,487        |     |     |               | 1,870 |     |     |   | 1,532 |    
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      
|Operating profit before exceptional items by activity(1)(3) |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |       |     |     |   |       |    
|                                                            | Americas     |                    |       |              |              |   |           |              |     |           |              |     |     |               |       |     |     |   |       |     |    
|                                                            |              | Owned and leased   |       |              | 22           |   |           |              | 3   |           |              |     | 20  |               |       |     | 23  |   |       |     | 24  |  
|                                                            |              | Managed            |       |              | 6            |   |           |              | 1   |           |              |     | 4   |               |       |     | 5   |   |       |     | 10  |  
|                                                            |              | Franchised         |       |              | 167          |   |           |              | 41  |           |              |     | 172 |               |       |     | 213 |   |       |     | 177 |  
|                                                            |              | Regional overheads |       |              | (32          | ) |           |              | (11 | )         |              |     | (35 | )             |       |     | (46 | ) |       |     | (38 | )
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      
|                                                            |              |                    | 163   |              |              |   | 34        |              |     |           | 161          |     |     |               | 195   |     |     |   | 173   |    
|                                                            | EMEA         |                    |       |              |              |   |           |              |     |           |              |     |     |               |       |     |     |   |       |     |    
|                                                            |              | Owned and leased   |       |              | 97           |   |           |              | 20  |           |              |     | 77  |               |       |     | 97  |   |       |     | 124 |  
|                                                            |              | Managed            |       |              | 24           |   |           |              | 5   |           |              |     | 19  |               |       |     | 24  |   |       |     | 20  |  
|                                                            |              | Franchised         |       |              | 21           |   |           |              | 5   |           |              |     | 18  |               |       |     | 23  |   |       |     | 11  |  
|                                                            |              | Regional overheads |       |              | (23          | ) |           |              | (8  | )         |              |     | (22 | )             |       |     | (30 | ) |       |     | (30 | )
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      
|                                                            |              |                    | 119   |              |              |   | 22        |              |     |           | 92           |     |     |               | 114   |     |     |   | 125   |    
|                                                            | Asia Pacific |                    |       |              |              |   |           |              |     |           |              |     |     |               |       |     |     |   |       |     |    
|                                                            |              | Owned and leased   |       |              | 16           |   |           |              | 7   |           |              |     | 11  |               |       |     | 18  |   |       |     | 15  |  
|                                                            |              | Managed            |       |              | 14           |   |           |              | 6   |           |              |     | 8   |               |       |     | 14  |   |       |     | 14  |  
|                                                            |              | Franchised         |       |              | 2            |   |           |              |    |           |              |     | 4   |               |       |     | 4   |   |       |     | 5   |  
|                                                            |              | Regional overheads |       |              | (11          | ) |           |              | (3  | )         |              |     | (11 | )             |       |     | (14 | ) |       |     | (11 | )
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      
|                                                            |              |                    | 21    |              |              |   | 10        |              |     |           | 12           |     |     |               | 22    |     |     |   | 23    |    
|                                                            | Central(4)   |                    |       | (52          | )            |   |           | (18          | )   |           |              | (62 | )   |               |       | (80 | )   |   |       | (55 | )  
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      
|Total                                                       |              |                    | 251   |              |              |   | 48        |              |     |           | 203          |     |     |               | 251   |     |     |   | 266   |    
|                                                            |              |                    |       |              |              |   |           |              |     |           |              |     |     |               |      




Footnotes on page 25.


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|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |       |  
|----------------------------------------- | ------------ | ------------------ | ----- | ------------ | ------------ | - | --------- | ------------ | ----- | --------- | ------------ | ----- | ----- | ------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | -
|                                          |              |                    |       | Three months |              |   | 12 months |              |       | 15 months |              |       |      
|                                          |              | Year ended         |       |              | ended        |   |           | ended        |       |           | ended        |       |       | Year ended    |      
|                                          |              | December 31,       |       |              | December 31, |   |           | December 31, |       |           | December 31, |       |       | September 30, |      
|                                          |              | 2004               |       |              | 2002         |   |           | 2003         |       |           | 2003         |       |       | 2002          |      
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              | (%)                |      
|Turnover                                  |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |      
|                                          | Americas     |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 18.0         |   |           |              | 20.9  |           |              |       | 19.9  |               |       |       | 20.1  |   |       |       | 20.5  |  
|                                          |              | Managed            |       |              | 2.0          |   |           |              | 2.1   |           |              |       | 1.9   |               |       |       | 1.9   |   |       |       | 2.5   |  
|                                          |              | Franchised         |       |              | 13.1         |   |           |              | 12.5  |           |              |       | 13.5  |               |       |       | 13.3  |   |       |       | 14.2  |  
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 33.1  |              |              |   | 35.5      |              |       |           | 35.3         |       |       |               | 35.3  |       |       |   | 37.2  |      
|                                          | EMEA         |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 50.7         |   |           |              | 48.8  |           |              |       | 50.1  |               |       |       | 49.8  |   |       |       | 48.2  |  
|                                          |              | Managed            |       |              | 2.9          |   |           |              | 2.6   |           |              |       | 2.6   |               |       |       | 2.6   |   |       |       | 2.3   |  
|                                          |              | Franchised         |       |              | 1.8          |   |           |              | 1.6   |           |              |       | 1.5   |               |       |       | 1.6   |   |       |       | 1.4   |  
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 55.4  |              |              |   | 53.0      |              |       |           | 54.2         |       |       |               | 54.0  |       |       |   | 51.9  |      
|                                          | Asia Pacific |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 7.3          |   |           |              | 7.3   |           |              |       | 6.4   |               |       |       | 6.6   |   |       |       | 6.7   |  
|                                          |              | Managed            |       |              | 1.4          |   |           |              | 1.3   |           |              |       | 1.0   |               |       |       | 1.1   |   |       |       | 1.3   |  
|                                          |              | Franchised         |       |              | 0.2          |   |           |              | 0.3   |           |              |       | 0.3   |               |       |       | 0.3   |   |       |       | 0.3   |  
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 8.9   |              |              |   | 8.9       |              |       |           | 7.7          |       |       |               | 8.0   |       |       |   | 8.3   |      
|                                          | Central (4)  |                    |       | 2.6          |              |   |           | 2.6          |       |           |              | 2.8   |       |               |       | 2.7   |       |   |       | 2.6   |      
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|Total                                     |              |                    | 100.0 |              |              |   | 100.0     |              |       |           | 100.0        |       |       |               | 100.0 |       |       |   | 100.0 |      
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|Operating profit before exceptional items |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |      
|                                          | Americas     |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 8.8          |   |           |              | 6.3   |           |              |       | 9.9   |               |       |       | 9.2   |   |       |       | 9.0   |  
|                                          |              | Managed            |       |              | 2.4          |   |           |              | 2.1   |           |              |       | 2.0   |               |       |       | 2.0   |   |       |       | 3.8   |  
|                                          |              | Franchised         |       |              | 66.5         |   |           |              | 85.4  |           |              |       | 84.5  |               |       |       | 84.8  |   |       |       | 66.6  |  
|                                          |              | Regional overheads |       |              | (12.7        | ) |           |              | (22.9 | )         |              |       | (17.2 | )             |       |       | (18.3 | ) |       |       | (14.3 | )
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 65.0  |              |              |   | 70.9      |              |       |           | 79.2         |       |       |               | 77.7  |       |       |   | 65.1  |      
|                                          | EMEA         |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 38.6         |   |           |              | 41.7  |           |              |       | 37.9  |               |       |       | 38.6  |   |       |       | 46.6  |  
|                                          |              | Managed            |       |              | 9.6          |   |           |              | 10.4  |           |              |       | 9.4   |               |       |       | 9.6   |   |       |       | 7.5   |  
|                                          |              | Franchised         |       |              | 8.4          |   |           |              | 10.4  |           |              |       | 8.9   |               |       |       | 9.2   |   |       |       | 4.1   |  
|                                          |              | Regional overheads |       |              | (9.2         | ) |           |              | (16.7 | )         |              |       | (10.8 | )             |       |       | (12.0 | ) |       |       | (11.3 | )
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 47.4  |              |              |   | 45.8      |              |       |           | 45.4         |       |       |               | 45.4  |       |       |   | 46.9  |      
|                                          | Asia Pacific |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 6.4          |   |           |              | 14.6  |           |              |       | 5.4   |               |       |       | 7.2   |   |       |       | 5.6   |  
|                                          |              | Managed            |       |              | 5.6          |   |           |              | 12.5  |           |              |       | 3.9   |               |       |       | 5.6   |   |       |       | 5.3   |  
|                                          |              | Franchised         |       |              | 0.8          |   |           |              |      |           |              |       | 2.0   |               |       |       | 1.6   |   |       |       | 1.9   |  
|                                          |              | Regional overheads |       |              | (4.4         | ) |           |              | (6.3  | )         |              |       | (5.4  | )             |       |       | (5.6  | ) |       |       | (4.1  | )
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 8.4   |              |              |   | 20.8      |              |       |           | 5.9          |       |       |               | 8.8   |       |       |   | 8.7   |      
|                                          | Central (4)  |                    |       | (20.8        | )            |   |           | (37.5        | )     |           |              | (30.5 | )     |               |       | (31.9 | )     |   |       | (20.7 | )    
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|Total                                     |              |                    | 100.0 |              |              |   | 100.0     |              |       |           | 100.0        |       |       |               | 100.0 |       |       |   | 100.0 |      
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      






|    |                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The results of overseas operations have been translated into
    sterling at weighted average rates of exchange for the period.
    In the case of the US dollar, the translation rates are 2004:
    £1 = $1.82; (2003: £1 = $1.62 and 2002:
    £1 = $1.48).
|   
|(2) | Amounts are reported by origin.                                                                                                                                                                                                                               
|   
|(3) | Operating profit before exceptional items excludes
    profits/(losses) on sale of fixed assets and operations and
    other exceptional items.                                                                                                               
|   
|(4) | Central relates to global functions. Turnover relates to Holidex
    fee income.                                                                                                                                                                              

25



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##### Table of Contents





|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |       |      |       |   |       |     |       |  
|-------------------------------------------- | ------------ | ------------------ | ----- | ------------ | ------------ | - | --------- | ------------ | --- | --------- | ------------ | ---- | ----- | ------------- | ----- | ---- | ----- | - | ----- | --- | ----- | -
|                                             |              |                    |       | Three months |              |   | 12 months |              |     | 15 months |              |      |      
|                                             |              | Year ended         |       |              | ended        |   |           | ended        |     |           | ended        |      |       | Year ended    |      
|                                             |              | December 31,       |       |              | December 31, |   |           | December 31, |     |           | December 31, |      |       | September 30, |      
|                                             |              | 2004               |       |              | 2002         |   |           | 2003         |     |           | 2003         |      |       | 2002          |      
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      
|                                             |              | ($ million)        |      
|Turnover(1)                                  |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |       |      |       |   |       |    
|                                             | Americas     |                    |       |              |              |   |           |              |     |           |              |      |       |               |       |      |       |   |       |     |      
|                                             |              | Owned and leased   |       |              | 490          |   |           |              | 127 |           |              |      | 481   |               |       |      | 608   |   |       |     | 463   |  
|                                             |              | Managed            |       |              | 55           |   |           |              | 12  |           |              |      | 46    |               |       |      | 58    |   |       |     | 57    |  
|                                             |              | Franchised         |       |              | 357          |   |           |              | 75  |           |              |      | 327   |               |       |      | 402   |   |       |     | 322   |  
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      
|                                             |              |                    | 902   |              |              |   | 214       |              |     |           | 854          |      |       |               | 1,068 |      |       |   | 842   |    
|                                             | EMEA         |                    |       |              |              |   |           |              |     |           |              |      |       |               |       |      |       |   |       |     |      
|                                             |              | Owned and leased   |       |              | 1,383        |   |           |              | 290 |           |              |      | 1,213 |               |       |      | 1,503 |   |       |     | 1,088 |  
|                                             |              | Managed            |       |              | 78           |   |           |              | 15  |           |              |      | 62    |               |       |      | 77    |   |       |     | 53    |  
|                                             |              | Franchised         |       |              | 50           |   |           |              | 9   |           |              |      | 37    |               |       |      | 46    |   |       |     | 36    |  
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      
|                                             |              |                    | 1,511 |              |              |   | 314       |              |     |           | 1,312        |      |       |               | 1,626 |      |       |   | 1,177 |    
|                                             | Asia Pacific |                    |       |              |              |   |           |              |     |           |              |      |       |               |       |      |       |   |       |     |      
|                                             |              | Owned and leased   |       |              | 201          |   |           |              | 44  |           |              |      | 154   |               |       |      | 198   |   |       |     | 152   |  
|                                             |              | Managed            |       |              | 38           |   |           |              | 8   |           |              |      | 26    |               |       |      | 34    |   |       |     | 29    |  
|                                             |              | Franchised         |       |              | 5            |   |           |              | 2   |           |              |      | 5     |               |       |      | 7     |   |       |     | 5     |  
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      
|                                             |              |                    | 244   |              |              |   | 54        |              |     |           | 185          |      |       |               | 239   |      |       |   | 186   |    
|                                             | Central(3)   |                    |       | 74           |              |   |           | 16           |     |           |              | 66   |       |               |       | 82   |       |   |       | 57  |      
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      
|Total                                        |              |                    | 2,731 |              |              |   | 598       |              |     |           | 2,417        |      |       |               | 3,015 |      |       |   | 2,262 |    
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      
|Operating profit before exceptional items(2) |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |       |      |       |   |       |    
|                                             | Americas     |                    |       |              |              |   |           |              |     |           |              |      |       |               |       |      |       |   |       |     |      
|                                             |              | Owned and leased   |       |              | 39           |   |           |              | 6   |           |              |      | 32    |               |       |      | 38    |   |       |     | 36    |  
|                                             |              | Managed            |       |              | 12           |   |           |              | 2   |           |              |      | 7     |               |       |      | 9     |   |       |     | 15    |  
|                                             |              | Franchised         |       |              | 304          |   |           |              | 63  |           |              |      | 279   |               |       |      | 342   |   |       |     | 262   |  
|                                             |              | Regional overheads |       |              | (59          | ) |           |              | (18 | )         |              |      | (56   | )             |       |      | (74   | ) |       |     | (56   | )
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      
|                                             |              |                    | 296   |              |              |   | 53        |              |     |           | 262          |      |       |               | 315   |      |       |   | 257   |    
|                                             | EMEA         |                    |       |              |              |   |           |              |     |           |              |      |       |               |       |      |       |   |       |     |      
|                                             |              | Owned and leased   |       |              | 177          |   |           |              | 31  |           |              |      | 125   |               |       |      | 156   |   |       |     | 184   |  
|                                             |              | Managed            |       |              | 43           |   |           |              | 8   |           |              |      | 31    |               |       |      | 39    |   |       |     | 29    |  
|                                             |              | Franchised         |       |              | 38           |   |           |              | 7   |           |              |      | 29    |               |       |      | 36    |   |       |     | 17    |  
|                                             |              | Regional overheads |       |              | (42          | ) |           |              | (12 | )         |              |      | (36   | )             |       |      | (48   | ) |       |     | (43   | )
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      
|                                             |              |                    | 216   |              |              |   | 34        |              |     |           | 149          |      |       |               | 183   |      |       |   | 187   |    
|                                             | Asia Pacific |                    |       |              |              |   |           |              |     |           |              |      |       |               |       |      |       |   |       |     |      
|                                             |              | Owned and leased   |       |              | 31           |   |           |              | 9   |           |              |      | 18    |               |       |      | 27    |   |       |     | 24    |  
|                                             |              | Managed            |       |              | 25           |   |           |              | 10  |           |              |      | 15    |               |       |      | 25    |   |       |     | 19    |  
|                                             |              | Franchised         |       |              | 3            |   |           |              | 1   |           |              |      | 4     |               |       |      | 5     |   |       |     | 5     |  
|                                             |              | Regional overheads |       |              | (20          | ) |           |              | (4  | )         |              |      | (18   | )             |       |      | (22   | ) |       |     | (16   | )
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      
|                                             |              |                    | 39    |              |              |   | 16        |              |     |           | 19           |      |       |               | 35    |      |       |   | 32    |    
|                                             | Central(3)   |                    |       | (93          | )            |   |           | (28          | )   |           |              | (100 | )     |               |       | (128 | )     |   |       | (82 | )    
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      
|Total                                        |              |                    | 458   |              |              |   | 75        |              |     |           | 330          |      |       |               | 405   |      |       |   | 394   |    
|                                             |              |                    |       |              |              |   |           |              |     |           |              |      |       |               |      




Footnotes on page 27.


26



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##### Table of Contents



|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |       |  
|----------------------------------------- | ------------ | ------------------ | ----- | ------------ | ------------ | - | --------- | ------------ | ----- | --------- | ------------ | ----- | ----- | ------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | -
|                                          |              |                    |       | Three months |              |   | 12 months |              |       | 15 months |              |       |      
|                                          |              | Year ended         |       |              | ended        |   |           | ended        |       |           | ended        |       |       | Year ended    |      
|                                          |              | December 31,       |       |              | December 31, |   |           | December 31, |       |           | December 31, |       |       | September 30, |      
|                                          |              | 2004               |       |              | 2002         |   |           | 2003         |       |           | 2003         |       |       | 2002          |      
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              | (%)                |      
|Turnover                                  |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |      
|                                          | Americas     |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 17.9         |   |           |              | 21.2  |           |              |       | 19.9  |               |       |       | 20.2  |   |       |       | 20.5  |  
|                                          |              | Managed            |       |              | 2.0          |   |           |              | 2.0   |           |              |       | 1.9   |               |       |       | 1.9   |   |       |       | 2.5   |  
|                                          |              | Franchised         |       |              | 13.1         |   |           |              | 12.5  |           |              |       | 13.5  |               |       |       | 13.3  |   |       |       | 14.2  |  
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 33.0  |              |              |   | 35.7      |              |       |           | 35.3         |       |       |               | 35.4  |       |       |   | 37.2  |      
|                                          | EMEA         |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 50.6         |   |           |              | 48.6  |           |              |       | 50.2  |               |       |       | 49.9  |   |       |       | 48.1  |  
|                                          |              | Managed            |       |              | 2.9          |   |           |              | 2.5   |           |              |       | 2.6   |               |       |       | 2.6   |   |       |       | 2.3   |  
|                                          |              | Franchised         |       |              | 1.8          |   |           |              | 1.5   |           |              |       | 1.5   |               |       |       | 1.5   |   |       |       | 1.6   |  
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 55.3  |              |              |   | 52.6      |              |       |           | 54.3         |       |       |               | 54.0  |       |       |   | 52.0  |      
|                                          | Asia Pacific |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 7.4          |   |           |              | 7.4   |           |              |       | 6.4   |               |       |       | 6.6   |   |       |       | 6.7   |  
|                                          |              | Managed            |       |              | 1.4          |   |           |              | 1.3   |           |              |       | 1.1   |               |       |       | 1.1   |   |       |       | 1.3   |  
|                                          |              | Franchised         |       |              | 0.2          |   |           |              | 0.3   |           |              |       | 0.2   |               |       |       | 0.2   |   |       |       | 0.2   |  
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 9.0   |              |              |   | 9.0       |              |       |           | 7.7          |       |       |               | 7.9   |       |       |   | 8.2   |      
|                                          | Central (3)  |                    |       | 2.7          |              |   |           | 2.7          |       |           |              | 2.7   |       |               |       | 2.7   |       |   |       | 2.6   |      
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|Total                                     |              |                    | 100.0 |              |              |   | 100.0     |              |       |           | 100.0        |       |       |               | 100.0 |       |       |   | 100.0 |      
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|Operating profit before exceptional items |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |      
|                                          | Americas     |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 8.5          |   |           |              | 8.0   |           |              |       | 9.7   |               |       |       | 9.4   |   |       |       | 9.1   |  
|                                          |              | Managed            |       |              | 2.6          |   |           |              | 2.7   |           |              |       | 2.1   |               |       |       | 2.2   |   |       |       | 3.8   |  
|                                          |              | Franchised         |       |              | 66.4         |   |           |              | 84.0  |           |              |       | 84.5  |               |       |       | 84.4  |   |       |       | 66.5  |  
|                                          |              | Regional overheads |       |              | (12.9        | ) |           |              | (24.0 | )         |              |       | (17.0 | )             |       |       | (18.3 | ) |       |       | (14.2 | )
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 64.6  |              |              |   | 70.7      |              |       |           | 79.3         |       |       |               | 77.7  |       |       |   | 65.2  |      
|                                          | EMEA         |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 38.6         |   |           |              | 41.3  |           |              |       | 37.9  |               |       |       | 38.5  |   |       |       | 46.7  |  
|                                          |              | Managed            |       |              | 9.4          |   |           |              | 10.7  |           |              |       | 9.4   |               |       |       | 9.6   |   |       |       | 7.4   |  
|                                          |              | Franchised         |       |              | 8.3          |   |           |              | 9.3   |           |              |       | 8.8   |               |       |       | 8.9   |   |       |       | 4.3   |  
|                                          |              | Regional overheads |       |              | (9.2         | ) |           |              | (16.0 | )         |              |       | (10.9 | )             |       |       | (11.9 | ) |       |       | (10.9 | )
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 47.1  |              |              |   | 45.3      |              |       |           | 45.2         |       |       |               | 45.1  |       |       |   | 47.5  |      
|                                          | Asia         |                    |       |              |              |   |           |              |       |           |              |       |       |               |       |       |       |   |       |       |      
|                                          |              | Owned and leased   |       |              | 6.7          |   |           |              | 12.0  |           |              |       | 5.5   |               |       |       | 6.7   |   |       |       | 6.1   |  
|                                          |              | Managed            |       |              | 5.5          |   |           |              | 13.3  |           |              |       | 4.6   |               |       |       | 6.2   |   |       |       | 4.8   |  
|                                          |              | Franchised         |       |              | 0.7          |   |           |              | 1.3   |           |              |       | 1.2   |               |       |       | 1.2   |   |       |       | 1.3   |  
|                                          |              | Regional overheads |       |              | (4.4         | ) |           |              | (5.3  | )         |              |       | (5.5  | )             |       |       | (5.4  | ) |       |       | (4.1  | )
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|                                          |              |                    | 8.5   |              |              |   | 21.3      |              |       |           | 5.8          |       |       |               | 8.7   |       |       |   | 8.1   |      
|                                          | Central (3)  |                    |       | (20.2        | )            |   |           | (37.3        | )     |           |              | (30.3 | )     |               |       | (31.5 | )     |   |       | (20.8 | )    
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      
|Total                                     |              |                    | 100.0 |              |              |   | 100.0     |              |       |           | 100.0        |       |       |               | 100.0 |       |       |   | 100.0 |      
|                                          |              |                    |       |              |              |   |           |              |       |           |              |       |       |               |      






|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts are reported by origin.                                                                                                                 
|   
|(2) | Operating profit before exceptional items excludes profits/
    (losses) on sale of fixed assets and operations and other
    exceptional items.
|   
|(3) | Central relates to global functions. Turnover relates to Holidex
    fee income.                                                                

27



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Operations




| |                            
| | ---------------------------
| | Ownership/ Management Model



franchised


managed


owned and leased






|     |  |                 |     |                     |          |            |        |            |  |  |        |  |  |        |         |  |        |  |       |        |  |  |         |  |  |  |       |  |  |  |         | 
|---- |  | --------------- | --- | ------------------- | -------- | ---------- | ------ | ---------- |  |  | ------ |  |  | ------ | ------- |  | ------ |  | ----- | ------ |  |  | ------- |  |  |  | ----- |  |  |  | ------- | 
|     |  |                 |     |                     |          | Management |        |            |  |  |        |  |  |        |        
|     |  |                 |     | contracts and joint |          |            |        |            | 
|     |  | Owned or leased |     |                     | ventures |            |        | Franchised |  |  | Total  | 
|     |  |                 |     |                     |          |            |        |            |  |  |        | 
|     |  | No. of          |     |                     | No. of   |            |        | No. of     |  |  | No. of |  |  | No. of |         |  | No. of |  |       | No. of |  |  | No. of  | 
|     |  | hotels          |     |                     | rooms    |            |        | hotels     |  |  | rooms  |  |  | hotels |         |  | rooms  |  |       | hotels |  |  | rooms   | 
|     |  |                 |     |                     |          |            |        |            |  |  |        |  |  |        |         |  |        |  |       |        |  |  |         | 
|2004 |  |                 | 166 |                     |          |            | 38,420 |            |  |  | 403    |  |  |        | 98,953  |  |        |  | 2,971 |        |  |  | 396,829 |  |  |  | 3,540 |  |  |  | 534,202 | 
|2003 |  |                 | 171 |                     |          |            | 39,459 |            |  |  | 423    |  |  |        | 103,440 |  |        |  | 2,926 |        |  |  | 393,419 |  |  |  | 3,520 |  |  |  | 536,318 | 
|2002 |  |                 | 190 |                     |          |            | 42,642 |            |  |  | 314    |  |  |        | 86,761  |  |        |  | 2,821 |        |  |  | 386,122 |  |  |  | 3,325 |  |  |  | 515,525 | 



28



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| |              
| | -------------
| | Global System



Priority Club Rewards:


Central Reservation System Technology:


Reservation Call Centers:


Internet:






| |                    
| | -------------------
| | Sales and Marketing







| |   |                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | adding further locations and improving guest satisfaction for
    its brands;                                                                                                                  
|
| |  | continuing the focus on enrolments in Priority Club Rewards and
    increasing share of the total hotel spend to establish Priority
    Club Rewards as the number one program in the industry;
|
| |  | making the direct channels the best available; and                                                                                                                                             
|
| |  | improving pricing structure.                                                                                                                                                                   

29



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##### Table of Contents





| |              
| | -------------
| | Global Brands



| |                
| | ---------------
| | Brands Overview



|                  |  |                   |         |  |        |  |       | 
|----------------- |  | ----------------- | ------- |  | ------ |  | ----- | 
|                  |  | December 31, 2004 |        
|                  |  |                   |        
|Brands            |  | Room numbers      |         |  | Hotels | 
|                  |  |                   |         |  |        | 
|InterContinental  |  |                   | 44,516  |  |        |  | 132   | 
|Crowne Plaza      |  |                   | 61,627  |  |        |  | 215   | 
|Holiday Inn       |  |                   | 278,787 |  |        |  | 1,484 | 
|Express           |  |                   | 126,035 |  |        |  | 1,512 | 
|Staybridge Suites |  |                   | 9,189   |  |        |  | 79    | 
|Candlewood Suites |  |                   | 12,407  |  |        |  | 109   | 
|Other(1)          |  |                   | 1,641   |  |        |  | 9     | 
|                  |  |                   |         |  |        | 
|Total             |  |                   | 534,202 |  |        |  | 3,540 | 
|                  |  |                   |         |  |        | 






|    |                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------
|(1) | Other comprises one Hotel Indigo, seven other branded hotels
    under management and one under franchise.



| |                 
| | ----------------
| | InterContinental

|                       |  |          |        |  |          |  |        |       |  |  |        |  |  |              |        |  |  |  |        | 
|---------------------- |  | -------- | ------ |  | -------- |  | ------ | ----- |  |  | ------ |  |  | ------------ | ------ |  |  |  | ------ | 
|                       |  | Americas |        |  | Americas |  |        | EMEA  |  |  | EMEA   |  |  |             
|                       |  | total    |        |  | O & L    |  |        | total |  |  | O & L  |  |  | Asia Pacific |       
|                       |  |          |        |  |          |  |        |       |  |  |        |  |  |              |       
|Average room rate $(1) |  |          | 129.83 |  |          |  | 168.66 |       |  |  | 154.12 |  |  |              | 211.21 |  |  |  | 137.63 | 
|Room numbers(2)        |  |          | 15,088 |  |          |  | 4,489  |       |  |  | 20,292 |  |  |              | 4,483  |  |  |  | 9,136  | 






|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2004; quoted at constant
    US$ exchange rate. Owned and leased average room rate is for
    comparable hotels.
|   
|(2) | As at December 31, 2004.                                                                                                                        









| |             
| | ------------
| | Crowne Plaza

|                       |  |          |        |  |          |  |        |       |  |  |        |  |  |              |        |  |  |  |        | 
|---------------------- |  | -------- | ------ |  | -------- |  | ------ | ----- |  |  | ------ |  |  | ------------ | ------ |  |  |  | ------ | 
|                       |  | Americas |        |  | Americas |  |        | EMEA  |  |  | EMEA   |  |  |             
|                       |  | total    |        |  | O & L    |  |        | total |  |  | O & L  |  |  | Asia Pacific |       
|                       |  |          |        |  |          |  |        |       |  |  |        |  |  |              |       
|Average room rate $(1) |  |          | 96.24  |  |          |  | 107.73 |       |  |  | 118.48 |  |  |              | 122.29 |  |  |  | 81.07  | 
|Room numbers(2)        |  |          | 33,645 |  |          |  | 2,284  |       |  |  | 15,747 |  |  |              | 3,879  |  |  |  | 12,235 | 

30



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|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2004; quoted at constant
    US$ exchange rate. Owned and leased average room rate is for
    comparable hotels.
|   
|(2) | As at December 31, 2004.                                                                                                                        









| |            
| | -----------
| | Holiday Inn

|                       |  |          |         |  |          |  |       |       |  |  |        |  |  |              |        |  |  |  |        | 
|---------------------- |  | -------- | ------- |  | -------- |  | ----- | ----- |  |  | ------ |  |  | ------------ | ------ |  |  |  | ------ | 
|                       |  | Americas |         |  | Americas |  |       | EMEA  |  |  | EMEA   |  |  |             
|                       |  | total    |         |  | O&L      |  |       | total |  |  | O&L    |  |  | Asia Pacific |       
|                       |  |          |         |  |          |  |       |       |  |  |        |  |  |              |       
|Average room rate $(1) |  |          | 79.85   |  |          |  | 78.56 |       |  |  | 95.49  |  |  |              | 111.89 |  |  |  | 63.22  | 
|Room numbers(2)        |  |          | 205,500 |  |          |  | 2,577 |       |  |  | 53,568 |  |  |              | 15,735 |  |  |  | 19,719 | 






|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2004; quoted at constant
    US$ exchange rate. Owned and leased average room rate is for
    comparable hotels.
|   
|(2) | As at December 31, 2004.                                                                                                                        









| |        
| | -------
| | Express

|                       |  |          |         |  |       |  |        |      |  |  |              |  |  |  |       | 
|---------------------- |  | -------- | ------- |  | ----- |  | ------ | ---- |  |  | ------------ |  |  |  | ----- | 
|                       |  | Americas |         |  | EMEA  |  |        | EMEA |  |  |             
|                       |  | total    |         |  | total |  |        | O&L  |  |  | Asia Pacific | 
|                       |  |          |         |  |       |  |        |      |  |  |              | 
|Average room rate $(1) |  |          | 75.53   |  |       |  | 89.83  |      |  |  | 75.15        |  |  |  | 61.72 | 
|Room numbers(2)        |  |          | 109,882 |  |       |  | 15,921 |      |  |  | 1,473        |  |  |  | 232   | 






|    |                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2004; quoted at constant
    US$ conversion rate. Owned and leased average room rate is for
    comparable hotels.
|   
|(2) | As at December 31, 2004.                                                                                                                          



31



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##### Table of Contents











| |                  
| | -----------------
| | Staybridge Suites

|                       |  |          |       | 
|---------------------- |  | -------- | ----- | 
|                       |  | Americas |      
|                       |  | total    |      
|                       |  |          |      
|Average room rate $(1) |  |          | 87.20 | 
|Room numbers(2)        |  |          | 9,189 | 






|    |                                                                                
|--- | -------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2004; quoted at constant
    US$ exchange rate.
|   
|(2) | As at December 31, 2004.                                                       









| |                  
| | -----------------
| | Candlewood Suites

|                       |  |       |        | 
|---------------------- |  | ----- | ------ | 
|                       |  | Total |       
|                       |  |       |       
|Average room rate $(1) |  |       | 58.06  | 
|Room numbers(2)        |  |       | 12,407 | 






|    |                                                                                
|--- | -------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2004; quoted at constant
    US$ exchange rate.
|   
|(2) | As at December 31, 2004.                                                       





| |             
| | ------------
| | Hotel Indigo



32



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##### Table of Contents





| |                      
| | ---------------------
| | Geographical Analysis





|                                                                                    |  |              |    |  |      |  |    |              |  |  |   | 
|----------------------------------------------------------------------------------- |  | ------------ | -- |  | ---- |  | -- | ------------ |  |  | - | 
|                                                                                    |  | Americas     |    |  | EMEA |  |    | Asia Pacific | 
|                                                                                    |  |              |    |  |      |  |    |              | 
|                                                                                    |  | (% of Total) |   
|Room numbers(1)                                                                     |  |              | 72 |  |      |  | 20 |              |  |  | 8 | 
|Hotel level operating profit (before central overheads and
    exceptional items(2) |  |              | 54 |  |      |  | 39 |              |  |  | 7 | 






|    |                                      
|--- | -------------------------------------
|(1) | As at December 31, 2004.             
|   
|(2) | For the year ended December 31, 2004.



|                 |                  |                 |    |                    |          |            |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |         | 
|---------------- | ---------------- | --------------- | -- | ------------------ | -------- | ---------- | ----- | ---------- |  |  | ----- | -- |  | ------ | ------ | ------ | ----- |  | ----- | ------ |  |  | ------- | ------- |  |  | ----- | ----- |  |  | ------- | ------- | 
|                 |                  |                 |    |                    |          | Management |       |            |  |  |       |    |  |        |       
|                 |                  |                 |    | contract and joint |          |            |       |            | 
|                 |                  | Owned or leased |    |                    | ventures |            |       | Franchised |  |  | Total |   
|                 |                  |                 |    |                    |          |            |       |            |  |  |       |   
|                 |                  | Hotels          |    |                    | Rooms    |            |       | Hotels     |  |  | Rooms |    |  | Hotels |        |        | Rooms |  |       | Hotels |  |  | Rooms   |        
|                 |                  |                 |    |                    |          |            |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|United States    |                  |                 |    |                    |          |            |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                 | InterContinental |                 |    | 7                  |          |            |       | 3,523      |  |  |       | 5  |  |        |        | 1,819  |       |  |       | 1      |  |  |         | 150     |  |  |       | 13    |  |  |         | 5,492   | 
|                 | Crowne Plaza     |                 |    | 5                  |          |            |       | 1,991      |  |  |       | 16 |  |        |        | 5,942  |       |  |       | 73     |  |  |         | 20,643  |  |  |       | 94    |  |  |         | 28,576  | 
|                 | Holiday Inn      |                 |    | 6                  |          |            |       | 1,453      |  |  |       | 50 |  |        |        | 15,446 |       |  |       | 882    |  |  |         | 165,860 |  |  |       | 938   |  |  |         | 182,759 | 
|                 | Express          |                 |    |                   |          |            |       |           |  |  |       | 2  |  |        |        | 362    |       |  |       | 1,296  |  |  |         | 103,029 |  |  |       | 1,298 |  |  |         | 103,391 | 
|                 | Staybridge       |                 |    | 3                  |          |            |       | 372        |  |  |       | 35 |  |        |        | 4,227  |       |  |       | 39     |  |  |         | 4,255   |  |  |       | 77    |  |  |         | 8,854   | 
|                 | Candlewood       |                 |    |                   |          |            |       |           |  |  |       | 76 |  |        |        | 9,189  |       |  |       | 33     |  |  |         | 3,218   |  |  |       | 109   |  |  |         | 12,407  | 
|                 | Other            |                 |    |                   |          |            |       |           |  |  |       | 4  |  |        |        | 616    |       |  |       |       |  |  |         |        |  |  |       | 4     |  |  |         | 616     | 
|                 |                  |                 |    |                    |          |            |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total            |                  |                 | 21 |                    |          |            | 7,339 |            |  |  | 188   |    |  |        | 37,601 |        |       |  | 2,324 |        |  |  | 297,155 |         |  |  | 2,533 |       |  |  | 342,095 |        
|                 |                  |                 |    |                    |          |            |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Rest of Americas |                  |                 |    |                    |          |            |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                 | InterContinental |                 |    | 3                  |          |            |       | 966        |  |  |       | 11 |  |        |        | 3,556  |       |  |       | 17     |  |  |         | 5,074   |  |  |       | 31    |  |  |         | 9,596   | 
|                 | Crowne Plaza     |                 |    | 1                  |          |            |       | 293        |  |  |       | 2  |  |        |        | 357    |       |  |       | 19     |  |  |         | 4,419   |  |  |       | 22    |  |  |         | 5,069   | 
|                 | Holiday Inn      |                 |    | 2                  |          |            |       | 1,124      |  |  |       | 3  |  |        |        | 1,599  |       |  |       | 131    |  |  |         | 20,018  |  |  |       | 136   |  |  |         | 22,741  | 
|                 | Express          |                 |    |                   |          |            |       |           |  |  |       |   |  |        |        |       |       |  |       | 59     |  |  |         | 6,491   |  |  |       | 59    |  |  |         | 6,491   | 
|                 | Staybridge       |                 |    | 1                  |          |            |       | 120        |  |  |       | 1  |  |        |        | 215    |       |  |       |       |  |  |         |        |  |  |       | 2     |  |  |         | 335     | 
|                 | Candlewood       |                 |    |                   |          |            |       |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                 | Other            |                 |    |                   |          |            |       |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                 |                  |                 |    |                    |          |            |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total            |                  |                 | 7  |                    |          |            | 2,503 |            |  |  | 17    |    |  |        | 5,727  |        |       |  | 226   |        |  |  | 36,002  |         |  |  | 250   |       |  |  | 44,232  |        
|                 |                  |                 |    |                    |          |            |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        

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|                           |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |         | 
|-------------------------- | ---------------- | --------------- | -- | ------------------ | -------- | ---------- | ------ | ---------- |  |  | ----- | -- |  | ------ | ------ | ------ | ----- |  | ----- | ------ |  |  | ------- | ------- |  |  | ----- | ----- |  |  | ------- | ------- | 
|                           |                  |                 |    |                    |          | Management |        |            |  |  |       |    |  |        |       
|                           |                  |                 |    | contract and joint |          |            |        |            | 
|                           |                  | Owned or leased |    |                    | ventures |            |        | Franchised |  |  | Total |   
|                           |                  |                 |    |                    |          |            |        |            |  |  |       |   
|                           |                  | Hotels          |    |                    | Rooms    |            |        | Hotels     |  |  | Rooms |    |  | Hotels |        |        | Rooms |  |       | Hotels |  |  | Rooms   |        
|                           |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total Americas             |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                           | InterContinental |                 |    | 10                 |          |            |        | 4,489      |  |  |       | 16 |  |        |        | 5,375  |       |  |       | 18     |  |  |         | 5,224   |  |  |       | 44    |  |  |         | 15,088  | 
|                           | Crowne Plaza     |                 |    | 6                  |          |            |        | 2,284      |  |  |       | 18 |  |        |        | 6,299  |       |  |       | 92     |  |  |         | 25,062  |  |  |       | 116   |  |  |         | 33,645  | 
|                           | Holiday Inn      |                 |    | 8                  |          |            |        | 2,577      |  |  |       | 53 |  |        |        | 17,045 |       |  |       | 1,013  |  |  |         | 185,878 |  |  |       | 1,074 |  |  |         | 205,500 | 
|                           | Express          |                 |    |                   |          |            |        |           |  |  |       | 2  |  |        |        | 362    |       |  |       | 1,355  |  |  |         | 109,520 |  |  |       | 1,357 |  |  |         | 109,882 | 
|                           | Staybridge       |                 |    | 4                  |          |            |        | 492        |  |  |       | 36 |  |        |        | 4,442  |       |  |       | 39     |  |  |         | 4,255   |  |  |       | 79    |  |  |         | 9,189   | 
|                           | Candlewood       |                 |    |                   |          |            |        |           |  |  |       | 76 |  |        |        | 9,189  |       |  |       | 33     |  |  |         | 3,218   |  |  |       | 109   |  |  |         | 12,407  | 
|                           | Other            |                 |    |                   |          |            |        |           |  |  |       | 4  |  |        |        | 616    |       |  |       |       |  |  |         |        |  |  |       | 4     |  |  |         | 616     | 
|                           |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total                      |                  |                 | 28 |                    |          |            | 9,842  |            |  |  | 205   |    |  |        | 43,328 |        |       |  | 2,550 |        |  |  | 333,157 |         |  |  | 2,783 |       |  |  | 386,327 |        
|                           |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|United Kingdom             |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                           | InterContinental |                 |    | 2                  |          |            |        | 646        |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       | 2     |  |  |         | 646     | 
|                           | Crowne Plaza     |                 |    | 5                  |          |            |        | 1,413      |  |  |       | 2  |  |        |        | 399    |       |  |       | 4      |  |  |         | 879     |  |  |       | 11    |  |  |         | 2,691   | 
|                           | Holiday Inn      |                 |    | 72                 |          |            |        | 12,109     |  |  |       | 3  |  |        |        | 431    |       |  |       | 22     |  |  |         | 2,881   |  |  |       | 97    |  |  |         | 15,421  | 
|                           | Express          |                 |    | 1                  |          |            |        | 120        |  |  |       |   |  |        |        |       |       |  |       | 98     |  |  |         | 9,987   |  |  |       | 99    |  |  |         | 10,107  | 
|                           | Staybridge       |                 |    |                   |          |            |        |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                           | Candlewood       |                 |    |                   |          |            |        |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                           | Other            |                 |    |                   |          |            |        |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                           |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total                      |                  |                 | 80 |                    |          |            | 14,288 |            |  |  | 5     |    |  |        | 830    |        |       |  | 124   |        |  |  | 13,747  |         |  |  | 209   |       |  |  | 28,865  |        
|                           |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Europe                     |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                           | InterContinental |                 |    | 10                 |          |            |        | 3,837      |  |  |       | 13 |  |        |        | 4,488  |       |  |       | 7      |  |  |         | 2,149   |  |  |       | 30    |  |  |         | 10,474  | 
|                           | Crowne Plaza     |                 |    | 10                 |          |            |        | 2,466      |  |  |       | 6  |  |        |        | 1,665  |       |  |       | 21     |  |  |         | 4,669   |  |  |       | 37    |  |  |         | 8,800   | 
|                           | Holiday Inn      |                 |    | 16                 |          |            |        | 3,626      |  |  |       | 8  |  |        |        | 1,595  |       |  |       | 186    |  |  |         | 28,941  |  |  |       | 210   |  |  |         | 34,162  | 
|                           | Express          |                 |    | 10                 |          |            |        | 1,353      |  |  |       | 8  |  |        |        | 821    |       |  |       | 35     |  |  |         | 3,428   |  |  |       | 53    |  |  |         | 5,602   | 
|                           | Staybridge       |                 |    |                   |          |            |        |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                           | Candlewood       |                 |    |                   |          |            |        |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                           | Other            |                 |    |                   |          |            |        |           |  |  |       |   |  |        |        |       |       |  |       | 1      |  |  |         | 222     |  |  |       | 1     |  |  |         | 222     | 
|                           |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total                      |                  |                 | 46 |                    |          |            | 11,282 |            |  |  | 35    |    |  |        | 8,569  |        |       |  | 250   |        |  |  | 39,409  |         |  |  | 331   |       |  |  | 59,260  |        
|                           |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|The Middle East and Africa |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                           | InterContinental |                 |    |                   |          |            |        |           |  |  |       | 30 |  |        |        | 9,172  |       |  |       |       |  |  |         |        |  |  |       | 30    |  |  |         | 9,172   | 
|                           | Crowne Plaza     |                 |    |                   |          |            |        |           |  |  |       | 11 |  |        |        | 3,045  |       |  |       | 4      |  |  |         | 1,211   |  |  |       | 15    |  |  |         | 4,256   | 
|                           | Holiday Inn      |                 |    |                   |          |            |        |           |  |  |       | 18 |  |        |        | 3,305  |       |  |       | 4      |  |  |         | 680     |  |  |       | 22    |  |  |         | 3,985   | 
|                           | Express          |                 |    |                   |          |            |        |           |  |  |       |   |  |        |        |       |       |  |       | 1      |  |  |         | 212     |  |  |       | 1     |  |  |         | 212     | 
|                           | Staybridge       |                 |    |                   |          |            |        |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                           | Candlewood       |                 |    |                   |          |            |        |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                           | Other            |                 |    |                   |          |            |        |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                           |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total                      |                  |                 |   |                    |          |            |       |            |  |  | 59    |    |  |        | 15,522 |        |       |  | 9     |        |  |  | 2,103   |         |  |  | 68    |       |  |  | 17,625  |        
|                           |                  |                 |    |                    |          |            |        |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        

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|                                        |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |         | 
|--------------------------------------- | ---------------- | --------------- | --- | ------------------ | -------- | ---------- | ------ | ---------- |  |  | ----- | --- |  | ------ | ------ | ------ | ----- |  | ----- | ------ |  |  | ------- | ------- |  |  | ----- | ----- |  |  | ------- | ------- | 
|                                        |                  |                 |     |                    |          | Management |        |            |  |  |       |     |  |        |       
|                                        |                  |                 |     | contract and joint |          |            |        |            | 
|                                        |                  | Owned or leased |     |                    | ventures |            |        | Franchised |  |  | Total |    
|                                        |                  |                 |     |                    |          |            |        |            |  |  |       |    
|                                        |                  | Hotels          |     |                    | Rooms    |            |        | Hotels     |  |  | Rooms |     |  | Hotels |        |        | Rooms |  |       | Hotels |  |  | Rooms   |        
|                                        |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |        
|Total EMEA                              |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                                        | InterContinental |                 |     | 12                 |          |            |        | 4,483      |  |  |       | 43  |  |        |        | 13,660 |       |  |       | 7      |  |  |         | 2,149   |  |  |       | 62    |  |  |         | 20,292  | 
|                                        | Crowne Plaza     |                 |     | 15                 |          |            |        | 3,879      |  |  |       | 19  |  |        |        | 5,109  |       |  |       | 29     |  |  |         | 6,759   |  |  |       | 63    |  |  |         | 15,747  | 
|                                        | Holiday Inn      |                 |     | 88                 |          |            |        | 15,735     |  |  |       | 29  |  |        |        | 5,331  |       |  |       | 212    |  |  |         | 32,502  |  |  |       | 329   |  |  |         | 53,568  | 
|                                        | Express          |                 |     | 11                 |          |            |        | 1,473      |  |  |       | 8   |  |        |        | 821    |       |  |       | 134    |  |  |         | 13,627  |  |  |       | 153   |  |  |         | 15,921  | 
|                                        | Staybridge       |                 |     |                   |          |            |        |           |  |  |       |    |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                                        | Candlewood       |                 |     |                   |          |            |        |           |  |  |       |    |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                                        | Other            |                 |     |                   |          |            |        |           |  |  |       |    |  |        |        |       |       |  |       | 1      |  |  |         | 222     |  |  |       | 1     |  |  |         | 222     | 
|                                        |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |        
|Total EMEA                              |                  |                 | 126 |                    |          |            | 25,570 |            |  |  | 99    |     |  |        | 24,921 |        |       |  | 383   |        |  |  | 55,259  |         |  |  | 608   |       |  |  | 105,750 |        
|                                        |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |        
|Far East and Australasia (Asia Pacific) |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                                        | InterContinental |                 |     | 2                  |          |            |        | 729        |  |  |       | 17  |  |        |        | 6,090  |       |  |       | 7      |  |  |         | 2,317   |  |  |       | 26    |  |  |         | 9,136   | 
|                                        | Crowne Plaza     |                 |     | 3                  |          |            |        | 698        |  |  |       | 27  |  |        |        | 9,706  |       |  |       | 6      |  |  |         | 1,831   |  |  |       | 36    |  |  |         | 12,235  | 
|                                        | Holiday Inn      |                 |     | 7                  |          |            |        | 1,581      |  |  |       | 50  |  |        |        | 14,010 |       |  |       | 24     |  |  |         | 4,128   |  |  |       | 81    |  |  |         | 19,719  | 
|                                        | Express          |                 |     |                   |          |            |        |           |  |  |       | 1   |  |        |        | 95     |       |  |       | 1      |  |  |         | 137     |  |  |       | 2     |  |  |         | 232     | 
|                                        | Staybridge       |                 |     |                   |          |            |        |           |  |  |       |    |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                                        | Candlewood       |                 |     |                   |          |            |        |           |  |  |       |    |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                                        | Other            |                 |     |                   |          |            |        |           |  |  |       | 4   |  |        |        | 803    |       |  |       |       |  |  |         |        |  |  |       | 4     |  |  |         | 803     | 
|                                        |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |        
|Total                                   |                  |                 | 12  |                    |          |            | 3,008  |            |  |  | 99    |     |  |        | 30,704 |        |       |  | 38    |        |  |  | 8,413   |         |  |  | 149   |       |  |  | 42,125  |        
|                                        |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |        
|Total                                   |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                                        | InterContinental |                 |     | 24                 |          |            |        | 9,701      |  |  |       | 76  |  |        |        | 25,125 |       |  |       | 32     |  |  |         | 9,690   |  |  |       | 132   |  |  |         | 44,516  | 
|                                        | Crowne Plaza     |                 |     | 24                 |          |            |        | 6,861      |  |  |       | 64  |  |        |        | 21,114 |       |  |       | 127    |  |  |         | 33,652  |  |  |       | 215   |  |  |         | 61,627  | 
|                                        | Holiday Inn      |                 |     | 103                |          |            |        | 19,893     |  |  |       | 132 |  |        |        | 36,386 |       |  |       | 1,249  |  |  |         | 222,508 |  |  |       | 1,484 |  |  |         | 278,787 | 
|                                        | Express          |                 |     | 11                 |          |            |        | 1,473      |  |  |       | 11  |  |        |        | 1,278  |       |  |       | 1,490  |  |  |         | 123,284 |  |  |       | 1,512 |  |  |         | 126,035 | 
|                                        | Staybridge       |                 |     | 4                  |          |            |        | 492        |  |  |       | 36  |  |        |        | 4,442  |       |  |       | 39     |  |  |         | 4,255   |  |  |       | 79    |  |  |         | 9,189   | 
|                                        | Candlewood       |                 |     |                   |          |            |        |           |  |  |       | 76  |  |        |        | 9,189  |       |  |       | 33     |  |  |         | 3,218   |  |  |       | 109   |  |  |         | 12,407  | 
|                                        | Other            |                 |     |                   |          |            |        |           |  |  |       | 8   |  |        |        | 1,419  |       |  |       | 1      |  |  |         | 222     |  |  |       | 9     |  |  |         | 1,641   | 
|                                        |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |        
|Total                                   |                  |                 | 166 |                    |          |            | 38,420 |            |  |  | 403   |     |  |        | 98,953 |        |       |  | 2,971 |        |  |  | 396,829 |         |  |  | 3,540 |       |  |  | 534,202 |        
|                                        |                  |                 |     |                    |          |            |        |            |  |  |       |     |  |        |        |        |       |  |       |        |  |  |         |        

35



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##### Table of Contents





| |         
| | --------
| | Americas





| |     
| | ----
| | EMEA





| |             
| | ------------
| | Asia Pacific





| |                
| | ---------------
| | System Pipeline







| |            
| | -----------
| | Seasonality





| |            
| | -----------
| | Competition



36



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##### Table of Contents







|         |                   |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |   |  |   |        |   |  |  |      |  
|-------- | ----------------- | ------------------ |  | --------- | ------- | - |  | ---------- | --------- | -- | ---- | - | ------ | --------- |  |  | ---- | - |  | - | ------ | - |  |  | ---- | -
|         |                   | Owned & leased     |  |           |         |   | 
|         |                   | comparable         |  |           | Managed |   |  | Franchised |          
|         |                   |                    |  |           |         |   |  |            |          
|         |                   |                    |  | Change vs |         |   |  |            | Change vs |    |      |   |        | Change vs | 
|         |                   | 2004               |  |           | 2003    |   |  | 2004       |           |    | 2003 |   |        | 2004      |  |  | 2003 |  
|         |                   |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |  
|Americas |                   |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |   |  |   |        |   |  | 
|         | InterContinental  |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |   |  |   |        |   |  |  |     
|         |                   | Occupancy          |  |           | 69.5    | % |  |            | 2.0       | %  |      |   | 56.3   | %         |  |  | 7.8  | % |  |   | 58.0   | % |  |  | 5.7  | %
|         |                   | Average daily rate |  | $         | 168.66  |   |  |            | 5.1       | %  |      | $ | 119.77 |           |  |  | 3.2  | % |  | $ | 101.97 |   |  |  | 5.1 | %
|         |                   | RevPAR             |  | $         | 117.15  |   |  |            | 8.1       | %  |      | $ | 67.40  |           |  |  | 19.7 | % |  | $ | 59.15  |   |  |  | 5.3  | %
|         | Crowne Plaza      |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |   |  |   |        |   |  |  |     
|         |                   | Occupancy          |  |           | 74.4    | % |  |            | 1.1       | %  |      |   | 67.4   | %         |  |  | 7.5  | % |  |   | 62.3   | % |  |  | 1.8  | %
|         |                   | Average daily rate |  | $         | 107.73  |   |  |            | 5.3       | %  |      | $ | 107.77 |           |  |  | 5.3  | % |  | $ | 91.28  |   |  |  | 1.5  | %
|         |                   | RevPAR             |  | $         | 80.19   |   |  |            | 6.9       | %  |      | $ | 72.63  |           |  |  | 18.6 | % |  | $ | 56.90  |   |  |  | 4.5  | %
|         | Holiday Inn       |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |   |  |   |        |   |  |  |     
|         |                   | Occupancy          |  |           | 67.6    | % |  |            | (0.3      | %) |      |   | 63.3   | %         |  |  | 0.6  | % |  |   | 60.2   | % |  |  | 1.5  | %
|         |                   | Average daily rate |  | $         | 78.56   |   |  |            | 6.0       | %  |      | $ | 76.57  |           |  |  | 0.9  | % |  | $ | 80.21  |   |  |  | 2.4  | %
|         |                   | RevPAR             |  | $         | 53.12   |   |  |            | 5.6       | %  |      | $ | 48.43  |           |  |  | 1.8  | % |  | $ | 48.25  |   |  |  | 5.0  | %
|         | Express           |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |   |  |   |        |   |  |  |     
|         |                   | Occupancy          |  |           |        |   |  |            |          |    |      |   | 63.9   | %         |  |  | 7.0  | % |  |   | 64.5   | % |  |  | 2.0  | %
|         |                   | Average daily rate |  |           |        |   |  |            |          |    |      | $ | 87.95  |           |  |  | 4.8  | % |  | $ | 75.48  |   |  |  | 3.8  | %
|         |                   | RevPAR             |  |           |        |   |  |            |          |    |      | $ | 56.22  |           |  |  | 17.7 | % |  | $ | 48.67  |   |  |  | 7.1  | %
|         | Staybridge Suites |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |   |  |   |        |   |  |  |     
|         |                   | Occupancy          |  |           | 72.0    | % |  |            | 1.1       | %  |      |   | 73.4   | %         |  |  | 6.7  | % |  |   | 70.6   | % |  |  | 4.6  | %
|         |                   | Average daily rate |  | $         | 89.73   |   |  |            | 4.6       | %  |      | $ | 87.17  |           |  |  | 2.7  | % |  | $ | 86.90  |   |  |  | 4.1  | %
|         |                   | RevPAR             |  | $         | 64.64   |   |  |            | 6.3       | %  |      | $ | 63.95  |           |  |  | 13.0 | % |  | $ | 61.36  |   |  |  | 11.3 | %
|         | Candlewood        |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |   |  |   |        |   |  |  |     
|         |                   | Occupancy          |  |           |        |   |  |            |          |    |      |   | 71.4   | %         |  |  |     |   |  |   | 68.5   | % |  |  |     |  
|         |                   | Average daily rate |  |           |        |   |  |            |          |    |      | $ | 55.87  |           |  |  |     |   |  | $ | 63.92  |   |  |  |     |  
|         |                   | RevPAR             |  |           |        |   |  |            |          |    |      | $ | 39.86  |           |  |  |     |   |  | $ | 43.80  |   |  |  |     |  
|         | Indigo            |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |   |  |   |        |   |  |  |     
|         |                   | Occupancy          |  |           |        |   |  |            |          |    |      |   | 16.7   | %         |  |  |     |   |  |   |       |   |  |  |     |  
|         |                   | Average daily rate |  |           |        |   |  |            |          |    |      | $ | 103.81 |           |  |  |     |   |  |   |       |   |  |  |     |  
|         |                   | RevPAR             |  |           |        |   |  |            |          |    |      | $ | 17.38  |           |  |  |     |   |  |   |       |   |  |  |     |  





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|     |                  |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |    |  |   |        |   |  |  |      |   
|---- | ---------------- | ------------------ |  | --------- | ------- | - |  | ---------- | --------- | -- | ---- | - | ------ | --------- |  |  | ---- | -- |  | - | ------ | - |  |  | ---- | --
|     |                  | Owned & leased     |  |           |         |   | 
|     |                  | comparable         |  |           | Managed |   |  | Franchised |          
|     |                  |                    |  |           |         |   |  |            |          
|     |                  |                    |  | Change vs |         |   |  |            | Change vs |    |      |   |        | Change vs | 
|     |                  | 2004               |  |           | 2003    |   |  | 2004       |           |    | 2003 |   |        | 2004      |  |  | 2003 |   
|     |                  |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |   
|EMEA |                  |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |    |  |   |        |   |  | 
|     | InterContinental |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |    |  |   |        |   |  |  |     
|     |                  | Occupancy          |  |           | 66.8    | % |  |            | 2.3       | %  |      |   | 60.5   | %         |  |  | 3.9  | %  |  |   | 58.2   | % |  |  | (2.8 | %)
|     |                  | Average daily rate |  | $         | 211.21  |   |  |            | (2.4      | %) |      | $ | 128.00 |           |  |  | (2.7 | %) |  | $ | 127.92 |   |  |  | 8.7  | % 
|     |                  | RevPAR             |  | $         | 141.14  |   |  |            | 1.0       | %  |      | $ | 77.41  |           |  |  | 4.0  | %  |  | $ | 74.50  |   |  |  | 3.8  | % 
|     | Crown Plaza      |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |    |  |   |        |   |  |  |     
|     |                  | Occupancy          |  |           | 73.1    | % |  |            | 2.9       | %  |      |   | 70.9   | %         |  |  | 3.9  | %  |  |   | 61.5   | % |  |  | 2.2  | % 
|     |                  | Average daily rate |  | $         | 122.29  |   |  |            | 0.6       | %  |      | $ | 111.18 |           |  |  | 4.3  | %  |  | $ | 121.40 |   |  |  | (0.1 | %)
|     |                  | RevPAR             |  | $         | 89.41   |   |  |            | 4.9       | %  |      | $ | 78.88  |           |  |  | 10.4 | %  |  | $ | 74.62  |   |  |  | 3.6  | % 
|     | Holiday Inn      |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |    |  |   |        |   |  |  |     
|     |                  | Occupancy          |  |           | 70.3    | % |  |            | 1.4       | %  |      |   | 60.9   | %         |  |  | 5.2  | %  |  |   | 64.3   | % |  |  | 1.2  | % 
|     |                  | Average daily rate |  | $         | 111.89  |   |  |            | 4.1       | %  |      | $ | 66.31  |           |  |  | (1.2 | %) |  | $ | 92.23  |   |  |  | 3.6  | % 
|     |                  | RevPAR             |  | $         | 78.68   |   |  |            | 6.2       | %  |      | $ | 40.42  |           |  |  | 7.9  | %  |  | $ | 59.30  |   |  |  | 5.6  | % 
|     | Express          |                    |  |           |         |   |  |            |           |    |      |   |        |           |  |  |      |    |  |   |        |   |  |  |     
|     |                  | Occupancy          |  |           | 63.2    | % |  |            | 2.3       | %  |      |   | 42.7   | %         |  |  | (1.0 | %) |  |   | 68.1   | % |  |  | 5.3  | % 
|     |                  | Average daily rate |  | $         | 75.15   |   |  |            | 2.4       | %  |      | $ | 74.01  |           |  |  | 0.8  | %  |  | $ | 91.54  |   |  |  | 0.8  | % 
|     |                  | RevPAR             |  | $         | 47.47   |   |  |            | 6.3       | %  |      | $ | 31.62  |           |  |  | (1.6 | %) |  | $ | 62.31  |   |  |  | 9.3  | % 





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|             |                  |                    |  |           |         |   |  |            |           |   |      |   |        |           |  |  |       |   |  |   |        |   |  |  |        |  
|------------ | ---------------- | ------------------ |  | --------- | ------- | - |  | ---------- | --------- | - | ---- | - | ------ | --------- |  |  | ----- | - |  | - | ------ | - |  |  | ------ | -
|             |                  | Owned & leased     |  |           |         |   | 
|             |                  | comparable         |  |           | Managed |   |  | Franchised |          
|             |                  |                    |  |           |         |   |  |            |          
|             |                  |                    |  | Change vs |         |   |  |            | Change vs |   |      |   |        | Change vs | 
|             |                  | 2004               |  |           | 2003    |   |  | 2004       |           |   | 2003 |   |        | 2004      |  |  | 2003  |  
|             |                  |                    |  |           |         |   |  |            |           |   |      |   |        |           |  |  |       |  
|Asia Pacific |                  |                    |  |           |         |   |  |            |           |   |      |   |        |           |  |  |       |   |  |   |        |   |  | 
|             | InterContinental |                    |  |           |         |   |  |            |           |   |      |   |        |           |  |  |       |   |  |   |        |   |  |  |       
|             |                  | Occupancy          |  |           | 73.8    | % |  |            | 19.2      | % |      |   | 71.2   | %         |  |  | 11.6% |   |  |   | 62.1   | % |  |  | (5.8%  | )
|             |                  | Average daily rate |  | $         | 198.49  |   |  |            | 8.6       | % |      | $ | 134.39 |           |  |  | (1.3% | ) |  | $ | 123.65 |   |  |  | (5.2%  | )
|             |                  | RevPAR             |  | $         | 146.57  |   |  |            | 46.7      | % |      | $ | 95.64  |           |  |  | 18.0% |   |  | $ | 76.77  |   |  |  | (13.2% | )
|             | Crowne Plaza     |                    |  |           |         |   |  |            |           |   |      |   |        |           |  |  |       |   |  |   |        |   |  |  |       
|             |                  | Occupancy          |  |           | 85.1    | % |  |            | 5.0       | % |      |   | 70.5   | %         |  |  | 10.2% |   |  |   | 73.9   | % |  |  | 1.4%   |  
|             |                  | Average daily rate |  | $         | 112.75  |   |  |            | 2.4       | % |      | $ | 74.88  |           |  |  | 5.5%  |   |  | $ | 92.67  |   |  |  | (1.0%  | )
|             |                  | RevPAR             |  | $         | 95.91   |   |  |            | 8.9       | % |      | $ | 52.82  |           |  |  | 23.3% |   |  | $ | 68.46  |   |  |  | 0.9%   |  
|             | Holiday Inn      |                    |  |           |         |   |  |            |           |   |      |   |        |           |  |  |       |   |  |   |        |   |  |  |       
|             |                  | Occupancy          |  |           | 81.1    | % |  |            | 1.8       | % |      |   | 75.0   | %         |  |  | 10.0% |   |  |   | 69.7   | % |  |  | 4.8%   |  
|             |                  | Average daily rate |  | $         | 86.87   |   |  |            | 0.9       | % |      | $ | 61.22  |           |  |  | 7.7%  |   |  | $ | 59.99  |   |  |  | 1.0%   |  
|             |                  | RevPAR             |  | $         | 70.48   |   |  |            | 3.2       | % |      | $ | 45.89  |           |  |  | 24.3% |   |  | $ | 41.81  |   |  |  | 8.5%   |  
|             | Express          |                    |  |           |         |   |  |            |           |   |      |   |        |           |  |  |       |   |  |   |        |   |  |  |       
|             |                  | Occupancy          |  |           |        |   |  |            |          |   |      |   | 57.5   | %         |  |  | (1.9% | ) |  |   | 65.7   | % |  |  | 2.5%   |  
|             |                  | Average daily rate |  |           |        |   |  |            |          |   |      | $ | 69.72  |           |  |  | 0.6%  |   |  | $ | 56.87  |   |  |  | (0.2%  | )
|             |                  | RevPAR             |  |           |        |   |  |            |          |   |      | $ | 40.10  |           |  |  | (2.6% | ) |  | $ | 37.39  |   |  |  | 3.7%   |  
|             | Other            |                    |  |           |         |   |  |            |           |   |      |   |        |           |  |  |       |   |  |   |        |   |  |  |       
|             |                  | Occupancy          |  |           |        |   |  |            |          |   |      |   | 70.3   | %         |  |  | 5.8%  |   |  |   | 78.8   | % |  |  | 3.8%   |  
|             |                  | Average daily rate |  |           |        |   |  |            |          |   |      | $ | 69.71  |           |  |  | 2.4%  |   |  | $ | 58.46  |   |  |  | 3.5%   |  
|             |                  | RevPAR             |  |           |        |   |  |            |          |   |      | $ | 49.03  |           |  |  | 11.6% |   |  | $ | 46.07  |   |  |  | 8.7%   |  







| |           
| | ----------
| | Regulation






SOFT DRINKS




| |         
| | --------
| | Overview





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| |                              
| | -----------------------------
| | Britvics Business and Brands

2








| |         
| | --------
| | Strategy





| |            
| | -----------
| | Competition





| |                            
| | ---------------------------
| | Production and Distribution





| |          
| | ---------
| | Marketing







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| |                      
| | ---------------------
| | Reliance on Suppliers





| |                      
| | ---------------------
| | Reliance on Customers





| |            
| | -----------
| | Seasonality





| |           
| | ----------
| | Regulation






TRADEMARKS







ORGANIZATIONAL STRUCTURE




| |                                            
| | -------------------------------------------
| | Principal operating subsidiary undertakings





| |                     
| | --------------------
| | Corporate activities





| |       
| | ------
| | Hotels











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| |            
| | -----------
| | Soft Drinks



| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | Britannia Soft Drinks Limited (47.5% Six Continents Investments
    Limited, 23.75% Whitbread PLC, 23.75% Allied Domecq PLC, 5%
    PepsiCo Inc.) (note b)










|  |                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|a | Shares held directly by InterContinental Hotels Group PLC.                                                                                                   
| 
|b | Under UK GAAP and US GAAP the Group exercises control over
    Britannia Soft Drinks Limited, which is, accordingly, treated as
    a subsidiary undertaking.
| 
|c | A list of subsidiary companies as of December 31, 2004 is
    filed as Exhibit 8 to this Annual Report.                                                      




PROPERTY, PLANTS AND EQUIPMENT




|                                     |  |             |       |                 |                 |  |     |               |  |  |               |  |  |       |     |  |  |  |       | 
|------------------------------------ |  | ----------- | ----- | --------------- | --------------- |  | --- | ------------- |  |  | ------------- |  |  | ----- | --- |  |  |  | ----- | 
|                                     |  |             |       | Rest of Europe, |                 |  |     |               |  |  |              
|Net book value of land and buildings |  | United      |       |                 | the Middle East |  |     |               |  |  |               | 
|as at December 31, 2004              |  | Kingdom     |       |                 | and Africa      |  |     | United States |  |  | Rest of World |  |  | Total |    
|                                     |  |             |       |                 |                 |  |     |               |  |  |               |  |  |       |    
|                                     |  | (£ million) |      
|Hotels                               |  |             | 945   |                 |                 |  | 901 |               |  |  | 529           |  |  |       | 257 |  |  |  | 2,632 | 
|Soft Drinks                          |  |             | 67    |                 |                 |  |    |               |  |  |              |  |  |       |    |  |  |  | 67    | 
|                                     |  |             |       |                 |                 |  |     |               |  |  |               |  |  |       |    
|Total                                |  |             | 1,012 |                 |                 |  | 901 |               |  |  | 529           |  |  |       | 257 |  |  |  | 2,699 | 
|                                     |  |             |       |                 |                 |  |     |               |  |  |               |  |  |       |    








ENVIRONMENT








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|        |                                             
|------- | --------------------------------------------
|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS




INTRODUCTION




| |                      
| | ---------------------
| | Business and Overview





| |                                   
| | ----------------------------------
| | Asset Disposals and Capital Return







| |                        
| | -----------------------
| | Operational Performance











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CRITICAL ACCOUNTING POLICIES UNDER UK GAAP AND US GAAP










| |                               
| | ------------------------------
| | Tangible and Intangible Assets



|    |                                     
|--- | ------------------------------------
|(i) | Goodwill and other Intangible assets













|     |                           
|---- | --------------------------
|(ii) | Impairment of fixed assets



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| |                    
| | -------------------
| | Sale of Real Estate





| |             
| | ------------
| | Income Taxes





| |                
| | ---------------
| | Loyalty program



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| |                    
| | -------------------
| | Legal Contingencies






OPERATING RESULTS




| |                      
| | ---------------------
| | Accounting Principles









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| |                                                                         
| | ------------------------------------------------------------------------
| | Year ended December 2004 compared with 15 months
    ended December 2003



| |      
| | -----
| | Group

|                                                                                         |                                              |              |       |              |              |  |           |              |   |           |              |       |   |  |       |       |  
|---------------------------------------------------------------------------------------- | -------------------------------------------- | ------------ | ----- | ------------ | ------------ |  | --------- | ------------ | - | --------- | ------------ | ----- | - |  | ----- | ----- | -
|                                                                                         |                                              |              |       | Three months |              |  | 12 months |              |   | 15 months |             
|                                                                                         |                                              | Year ended   |       |              | ended        |  |           | ended        |   |           | ended        |      
|                                                                                         |                                              | December 31, |       |              | December 31, |  |           | December 31, |   |           | December 31, |      
|                                                                                         |                                              | 2004         |       |              | 2002         |  |           | 2003         |   |           | 2003         |      
|                                                                                         |                                              |              |       |              |              |  |           |              |   |           |              |      
|                                                                                         |                                              | (£ million)  |      
|GROUP RESULTS                                                                            |                                              |              |       |              |              |  |           |              |   |           |              |       |   |  |       |      
|Turnover:                                                                                |                                              |              |       |              |              |  |           |              |   |           |              |       |   |  |       |      
|                                                                                         | Hotels                                       |              |       | 1,498        |              |  |           | 383          |   |           |              | 1,487 |   |  |       | 1,870 |  
|                                                                                         | Soft Drinks                                  |              |       | 706          |              |  |           | 146          |   |           |              | 674   |   |  |       | 820   |  
|                                                                                         |                                              |              |       |              |              |  |           |              |   |           |              |      
|Turnover from continuing operations                                                      |                                              |              | 2,204 |              |              |  | 529       |              |   |           | 2,161        |       |   |  | 2,690 |      
|Discontinued operations                                                                  |                                              |              |      |              |              |  | 342       |              |   |           | 451          |       |   |  | 793   |      
|                                                                                         |                                              |              |       |              |              |  |           |              |   |           |              |      
|Total turnover                                                                           |                                              |              | 2,204 |              |              |  | 871       |              |   |           | 2,612        |       |   |  | 3,483 |      
|                                                                                         |                                              |              |       |              |              |  |           |              |   |           |              |      
|Operating profit before operating exceptional items from
    continuing operations:      |                                              |              |       |              |              |  |           |              |   |           |              |       |   |  |       |      
|                                                                                         | Hotels                                       |              |       | 251          |              |  |           | 48           |   |           |              | 203   |   |  |       | 251   |  
|                                                                                         | Soft Drinks                                  |              |       | 80           |              |  |           | 12           |   |           |              | 83    |   |  |       | 95    |  
|                                                                                         |                                              |              |       |              |              |  |           |              |   |           |              |      
|Total operating profit before operating exceptional items from
    continuing operations |                                              |              | 331   |              |              |  | 60        |              |   |           | 286          |       |   |  | 346   |      
|                                                                                         | Operating exceptional item                   |              |       | (19          | )            |  |           |             |   |           |              | (51   | ) |  |       | (51   | )
|                                                                                         |                                              |              |       |              |              |  |           |              |   |           |              |      
|Operating profit after operating exceptional items from
    continuing operations        |                                              |              | 312   |              |              |  | 60        |              |   |           | 235          |       |   |  | 295   |      
|Discontinued operations                                                                  |                                              |              |      |              |              |  | 52        |              |   |           | 85           |       |   |  | 137   |      
|                                                                                         |                                              |              |       |              |              |  |           |              |   |           |              |      
|Total operating profit after operating exceptional items                                 |                                              |              | 312   |              |              |  | 112       |              |   |           | 320          |       |   |  | 432   |      
|Exceptional items:                                                                       |                                              |              |       |              |              |  |           |              |   |           |              |       |   |  |       |      
|Continuing operations:                                                                   |                                              |              |       |              |              |  |           |              |   |           |              |       |   |  |       |      
|                                                                                         | Cost of fundamental reorganization           |              |       |             |              |  |           |             |   |           |              | (67   | ) |  |       | (67   | )
|                                                                                         | Separation costs                             |              |       |             |              |  |           | (3           | ) |           |              | (48   | ) |  |       | (51   | )
|                                                                                         | Provision for loss on disposal of operations |              |       | (74          | )            |  |           |             |   |           |              |      |   |  |       |      |  
|                                                                                         | Profit on disposal of tangible fixed assets  |              |       | 15           |              |  |           |             |   |           |              | 4     |   |  |       | 4     |  
|                                                                                         | Provision against fixed asset investments    |              |       | (10          | )            |  |           |             |   |           |              | (56   | ) |  |       | (56   | )
|Discontinued operations:                                                                 |                                              |              |       |              |              |  |           |              |   |           |              |       |   |  |       |      
|                                                                                         | Separation costs                             |              |       |             |              |  |           |             |   |           |              | (41   | ) |  |       | (41   | )
|                                                                                         | Loss on disposal of tangible fixed assets    |              |       |             |              |  |           |             |   |           |              | (2    | ) |  |       | (2    | )
|                                                                                         |                                              |              |       |              |              |  |           |              |   |           |              |      
|Profit on ordinary activities before interest                                            |                                              |              | 243   |              |              |  | 109       |              |   |           | 110          |       |   |  | 219   |      
|                                                                                         |                                              |              |       |              |              |  |           |              |   |           |              |      





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| |                  
| | -----------------
| | Exceptional Items
















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| |             
| | ------------
| | Net Interest







| |         
| | --------
| | Taxation









| |                       
| | ----------------------
| | Earnings and Dividends







| |                                  
| | ---------------------------------
| | Cash flow and Capital Expenditure







| |                                                    
| | ---------------------------------------------------
| | Highlights for the year ended December 31,
    2004





49



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| |               
| | --------------
| | Hotels Results

|                                           |              |              |       |           |              |  |       |        |   |  |      |       |  
|------------------------------------------ | ------------ | ------------ | ----- | --------- | ------------ |  | ----- | ------ | - |  | ---- | ----- | -
|                                           |              |              |       | 12 months |              |  |      
|                                           |              | Year ended   |       |           | ended        |  |       |       
|                                           |              | December 31, |       |           | December 31, |  |       |       
|                                           |              | 2004         |       |           | 2003*        |  |       | Change |  
|                                           |              |              |       |           |              |  |       |        |  
|                                           |              |              |       | %         |             
|                                           |              | (£ million)  |       |           |             
|Turnover:                                  |              |              |       |           |              |  |       |        |   |  |      |      
|                                           | Americas     |              |       | 495       |              |  |       | 525    |   |  |      | (5.7  | )
|                                           | EMEA         |              |       | 829       |              |  |       | 807    |   |  |      | 2.7   |  
|                                           | Asia Pacific |              |       | 134       |              |  |       | 114    |   |  |      | 17.5  |  
|                                           | Central      |              |       | 40        |              |  |       | 41     |   |  |      | (2.4  | )
|                                           |              |              |       |           |              |  |       |        |  
|                                           |              |              | 1,498 |           |              |  | 1,487 |        |   |  | 0.7  |      
|                                           |              |              |       |           |              |  |       |        |  
|Operating profit before exceptional items: |              |              |       |           |              |  |       |        |   |  |      |      
|                                           | Americas     |              |       | 163       |              |  |       | 161    |   |  |      | 1.2   |  
|                                           | EMEA         |              |       | 119       |              |  |       | 92     |   |  |      | 29.3  |  
|                                           | Asia Pacific |              |       | 21        |              |  |       | 12     |   |  |      | 75.0  |  
|                                           | Central      |              |       | (52       | )            |  |       | (65    | ) |  |      | (20.0 | )
|                                           |              |              |       |           |              |  |       |        |  
|                                           |              |              | 251   |           |              |  | 200   |        |   |  | 25.5 |      
|                                           |              |              |       |           |              |  |       |        |  






|  |                             
|- | ----------------------------
|* | Unaudited pro forma results.

Turnover.


Operating profit.


50



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| |         
| | --------
| | Americas



| |                 
| | ----------------
| | Americas Results

|                                           |                  |              |     |           |              |  |     |        |  |  |      |      | 
|------------------------------------------ | ---------------- | ------------ | --- | --------- | ------------ |  | --- | ------ |  |  | ---- | ---- | 
|                                           |                  |              |     | 12 months |              |  |    
|                                           |                  | Year ended   |     |           | ended        |  |     |       
|                                           |                  | December 31, |     |           | December 31, |  |     |       
|                                           |                  | 2004         |     |           | 2003         |  |     | Change | 
|                                           |                  |              |     |           |              |  |     |        | 
|                                           |                  |              |     | %         |             
|                                           |                  | ($ million)  |     |           |             
|Turnover:                                  |                  |              |     |           |              |  |     |        |  |  |      |     
|                                           | Owned and leased |              |     | 490       |              |  |     | 481    |  |  |      | 1.9  | 
|                                           | Managed          |              |     | 55        |              |  |     | 46     |  |  |      | 19.6 | 
|                                           | Franchised       |              |     | 357       |              |  |     | 327    |  |  |      | 9.2  | 
|                                           |                  |              |     |           |              |  |     |        | 
|                                           |                  |              | 902 |           |              |  | 854 |        |  |  | 5.6  |     
|                                           |                  |              |     |           |              |  |     |        | 
|Operating profit before exceptional items: |                  |              |     |           |              |  |     |        |  |  |      |     
|                                           | Owned and leased |              |     | 39        |              |  |     | 32     |  |  |      | 21.9 | 
|                                           | Managed          |              |     | 12        |              |  |     | 7      |  |  |      | 71.4 | 
|                                           | Franchised       |              |     | 304       |              |  |     | 279    |  |  |      | 9.0  | 
|                                           |                  |              |     |           |              |  |     |        | 
|                                           |                  |              | 355 |           |              |  | 318 |        |  |  | 11.6 |     
|Regional overheads                         |                  |              | (59 | )         |              |  | (56 | )      |  |  | 5.4  |     
|                                           |                  |              |     |           |              |  |     |        | 
|Total $ million                            |                  |              | 296 |           |              |  | 262 |        |  |  | 13.0 |     
|                                           |                  |              |     |           |              |  |     |        | 
|Sterling equivalent £ million(i)           |                  |              | 163 |           |              |  | 161 |        |  |  | 1.2  |     
|                                           |                  |              |     |           |              |  |     |        | 






|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | The results have been translated into pounds sterling at
    weighted average rates of exchange for the year. The translation
    rates are fiscal 2004: £1 = $1.82 (2003:
    £1 = $1.62).











51



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| |                               
| | ------------------------------
| | Europe, Middle East and Africa



| |             
| | ------------
| | EMEA Results

|                                           |                  |              |     |     |              |  |     |        |  |  |      |      | 
|------------------------------------------ | ---------------- | ------------ | --- | --- | ------------ |  | --- | ------ |  |  | ---- | ---- | 
|                                           |                  | Year         |     |     | 12 months    |  |     |       
|                                           |                  | ended        |     |     | ended        |  |     |       
|                                           |                  | December 31, |     |     | December 31, |  |     |       
|                                           |                  | 2004         |     |     | 2003         |  |     | Change | 
|                                           |                  |              |     |     |              |  |     |        | 
|                                           |                  |              |     | %   |             
|                                           |                  | (£ million)  |     |     |             
|Turnover:                                  |                  |              |     |     |              |  |     |        |  |  |      |     
|                                           | Owned and leased |              |     | 759 |              |  |     | 746    |  |  |      | 1.7  | 
|                                           | Managed          |              |     | 43  |              |  |     | 38     |  |  |      | 13.2 | 
|                                           | Franchised       |              |     | 27  |              |  |     | 23     |  |  |      | 17.4 | 
|                                           |                  |              |     |     |              |  |     |        | 
|                                           |                  |              | 829 |     |              |  | 807 |        |  |  | 2.7  |     
|                                           |                  |              |     |     |              |  |     |        | 
|Operating profit before exceptional items: |                  |              |     |     |              |  |     |        |  |  |      |     
|                                           | Owned and leased |              |     | 97  |              |  |     | 77     |  |  |      | 26.0 | 
|                                           | Managed          |              |     | 24  |              |  |     | 19     |  |  |      | 26.3 | 
|                                           | Franchised       |              |     | 21  |              |  |     | 18     |  |  |      | 16.7 | 
|                                           |                  |              |     |     |              |  |     |        | 
|                                           |                  |              | 142 |     |              |  | 114 |        |  |  | 24.6 |     
|Regional overheads                         |                  |              | (23 | )   |              |  | (22 | )      |  |  | 4.5  |     
|                                           |                  |              |     |     |              |  |     |        | 
|Total £ million                            |                  |              | 119 |     |              |  | 92  |        |  |  | 29.3 |     
|                                           |                  |              |     |     |              |  |     |        | 
|Dollar equivalent $ million(i)             |                  |              | 216 |     |              |  | 149 |        |  |  | 45.0 |     
|                                           |                  |              |     |     |              |  |     |        | 






|    |                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | The results have been translated into US dollars at weighted
    average rates of exchange for the year. The translation rates
    are fiscal 2004: $1 = £0.55 (2003: $1 = £0.62).













52



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| |             
| | ------------
| | Asia Pacific



| |                     
| | --------------------
| | Asia Pacific Results

|                                           |                  |              |     |     |              |  |     |        |  |  |       |       |  
|------------------------------------------ | ---------------- | ------------ | --- | --- | ------------ |  | --- | ------ |  |  | ----- | ----- | -
|                                           |                  | Year         |     |     | 12 months    |  |     |       
|                                           |                  | ended        |     |     | ended        |  |     |       
|                                           |                  | December 31, |     |     | December 31, |  |     |       
|                                           |                  | 2004         |     |     | 2003         |  |     | Change | 
|                                           |                  |              |     |     |              |  |     |        | 
|                                           |                  |              |     | %   |             
|                                           |                  | ($ million)  |     |     |             
|Turnover:                                  |                  |              |     |     |              |  |     |        |  |  |       |      
|                                           | Owned and leased |              |     | 201 |              |  |     | 154    |  |  |       | 30.5  |  
|                                           | Managed          |              |     | 38  |              |  |     | 26     |  |  |       | 46.2  |  
|                                           | Franchised       |              |     | 5   |              |  |     | 5      |  |  |       |      |  
|                                           |                  |              |     |     |              |  |     |        | 
|                                           |                  |              | 244 |     |              |  | 185 |        |  |  | 31.9  |      
|                                           |                  |              |     |     |              |  |     |        | 
|Operating profit before exceptional items: |                  |              |     |     |              |  |     |        |  |  |       |      
|                                           | Owned and leased |              |     | 31  |              |  |     | 18     |  |  |       | 72.2  |  
|                                           | Managed          |              |     | 25  |              |  |     | 15     |  |  |       | 66.7  |  
|                                           | Franchised       |              |     | 3   |              |  |     | 4      |  |  |       | (25.0 | )
|                                           |                  |              |     |     |              |  |     |        | 
|                                           |                  |              | 59  |     |              |  | 37  |        |  |  | 59.5  |      
|Regional overheads                         |                  |              | (20 | )   |              |  | (18 | )      |  |  | 11.1  |      
|                                           |                  |              |     |     |              |  |     |        | 
|Total $ million                            |                  |              | 39  |     |              |  | 19  |        |  |  | 105.3 |      
|                                           |                  |              |     |     |              |  |     |        | 
|Sterling equivalent £ million(i)           |                  |              | 21  |     |              |  | 12  |        |  |  | 75.0  |      
|                                           |                  |              |     |     |              |  |     |        | 






|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | The results have been translated into pounds sterling at
    weighted average rates of exchange for the year. The translation
    rates are fiscal 2004: £1 = $1.82 (2003:
    £1 = $1.62).











53



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| |        
| | -------
| | Central



| |        
| | -------
| | Central

|                               |  |              |     |   |              |  |      |        |  |  |       |  
|------------------------------ |  | ------------ | --- | - | ------------ |  | ---- | ------ |  |  | ----- | -
|                               |  | Year         |     |   | 12 months    |  |      |       
|                               |  | ended        |     |   | ended        |  |      |       
|                               |  | December 31, |     |   | December 31, |  |      |       
|                               |  | 2004         |     |   | 2003         |  |      | Change | 
|                               |  |              |     |   |              |  |      |        | 
|                               |  |              |     | % |             
|                               |  | (£ million)  |     |   |             
|Turnover                       |  |              | 40  |   |              |  | 41   |        |  |  | (2.4  | )
|Gross central costs            |  |              | (92 | ) |              |  | (106 | )      |  |  | (13.2 | )
|                               |  |              |     |   |              |  |      |        | 
|Net central costs £ million    |  |              | (52 | ) |              |  | (65  | )      |  |  | (20.0 | )
|                               |  |              |     |   |              |  |      |        | 
|Dollar equivalent $ million(i) |  |              | (93 | ) |              |  | (105 | )      |  |  | (11.4 | )
|                               |  |              |     |   |              |  |      |        | 






|    |                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | The results have been translated into US dollars at weighted
    average rates of exchange for the year. The translation rates
    are fiscal 2004: $1 = £0.55 (2003: $1 = £0.62).







| |                         
| | ------------------------
| | Cash flow and Investment





| |            
| | -----------
| | Soft Drinks

|                                          |  |              |     |   |              |  |     |        |  |  |      |  
|----------------------------------------- |  | ------------ | --- | - | ------------ |  | --- | ------ |  |  | ---- | -
|                                          |  | Year         |     |   | 12 months    |  |     |       
|                                          |  | ended        |     |   | ended        |  |     |       
|                                          |  | December 31, |     |   | December 31, |  |     |       
|                                          |  | 2004(i)      |     |   | 2003(i)      |  |     | Change | 
|                                          |  |              |     |   |              |  |     |        | 
|                                          |  |              |     | % |             
|                                          |  | (£ million)  |     |   |             
|Turnover                                  |  |              | 706 |   |              |  | 674 |        |  |  | 4.7  |  
|Operating profit before exceptional items |  |              | 80  |   |              |  | 83  |        |  |  | (3.6 | )






|    |                            
|--- | ---------------------------
|(i) | 2004 53 weeks 2003 52 weeks



| |         
| | --------
| | Strategy



54



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##### Table of Contents





| |            
| | -----------
| | Performance

2






| |                         
| | ------------------------
| | Cash flow and Investment





| |                                                         
| | --------------------------------------------------------
| | Highlights for the 12 months ended December 31,
    2003

Turnover.


Operating profit.




| |         
| | --------
| | Americas





55



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##### Table of Contents









| |                               
| | ------------------------------
| | Europe, Middle East and Africa

















56



---



##### Table of Contents







| |             
| | ------------
| | Asia Pacific











| |        
| | -------
| | Central





| |                         
| | ------------------------
| | Cash flow and Investment









57



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##### Table of Contents









| |            
| | -----------
| | Soft Drinks

2


Turnover. 2


Operating profit.




| |                         
| | ------------------------
| | Cash flow and Investment





| |                                                    
| | ---------------------------------------------------
| | Discontinued Operations  Mitchells and
    Butlers







58



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##### Table of Contents










LIQUIDITY AND CAPITAL RESOURCES




| |                     
| | --------------------
| | Sources of Liquidity
















| |                               
| | ------------------------------
| | Cash From Operating Activities





| |                                   
| | ----------------------------------
| | Cash Used for Investing Activities





59



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| |                        
| | -----------------------
| | Contractual Obligations



|                               |  |               |       |  |           |  |     |           |  |  |           |       |  |         |       |  |  |  |     | 
|------------------------------ |  | ------------- | ----- |  | --------- |  | --- | --------- |  |  | --------- | ----- |  | ------- | ----- |  |  |  | --- | 
|                               |  | Total amounts |       |  | Less than |  |     |           |  |  |           | After | 
|                               |  | committed     |       |  | 1 year    |  |     | 1-3 years |  |  | 3-5 years |       |  | 5 years |      
|                               |  |               |       |  |           |  |     |           |  |  |           |       |  |         |      
|                               |  | (£ million)   |      
|Long-term debt                 |  |               | 1,199 |  |           |  | 43  |           |  |  | 41        |       |  |         | 1,111 |  |  |  | 4   | 
|Operating lease obligations    |  |               | 1,106 |  |           |  | 55  |           |  |  | 98        |       |  |         | 69    |  |  |  | 884 | 
|Other long-term obligations(i) |  |               | 62    |  |           |  | 30  |           |  |  | 32        |       |  |         |      |  |  |  |    | 
|Capital contracts placed       |  |               | 53    |  |           |  | 53  |           |  |  |          |       |  |         |      |  |  |  |    | 
|                               |  |               |       |  |           |  |     |           |  |  |           |       |  |         |      
|                               |  |               | 2,420 |  |           |  | 186 |           |  |  | 171       |       |  |         | 1,180 |  |  |  | 888 | 
|                               |  |               |       |  |           |  |     |           |  |  |           |       |  |         |      






|    |                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Other long-term obligations includes credit balances on currency
    swaps, interest rate swaps, forward contracts and pension
    obligations.











| |                         
| | ------------------------
| | Pension Plan Commitments





60



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##### Table of Contents














INTERNATIONAL FINANCIAL REPORTING INFORMATION








| |                         
| | ------------------------
| | IFRS accounting policies



| |                    
| | -------------------
| | Basis of Accounting









| |                            
| | ---------------------------
| | First Time Adoption of IFRS





Business combinations


Property, plant and equipment


Employee benefits


61



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Foreign currencies


Share-based payments




| |                         
| | ------------------------
| | IFRS Accounting Policies





| |                       
| | ----------------------
| | Basis of Consolidation







| |                         
| | ------------------------
| | Investment In Associates







| |                     
| | --------------------
| | Assets Held for Sale









| |                   
| | ------------------
| | Foreign Currencies











| |                      
| | ---------------------
| | Financial Instruments



62



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##### Table of Contents





Trade debtors




Investments




Trade creditors


Bank and other borrowings




Derivative financial instruments and hedging






| |         
| | --------
| | Goodwill











| |                  
| | -----------------
| | Intangible Assets

Acquired through a business combination


Other intangible assets




63



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##### Table of Contents







| |                              
| | -----------------------------
| | Property, Plant and Equipment









|                                 |  |                                               
|-------------------------------- |  | ----------------------------------------------
|Freehold buildings               |  | 50 years                                      
|Leasehold buildings              |  | lesser of unexpired term of lease and 50 years
|Fixtures, fittings and equipment |  | 3-25 years                                    
|Plant and machinery              |  | 4-20 years                                    





| |           
| | ----------
| | Impairment











| |                  
| | -----------------
| | Deferred Taxation







64



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##### Table of Contents





| |       
| | ------
| | Leases





| |         
| | --------
| | Pensions

Defined contribution plans


Defined benefit plans










| |               
| | --------------
| | Self Insurance





| |       
| | ------
| | Stocks







| |                    
| | -------------------
| | Revenue Recognition













65



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##### Table of Contents





| |                
| | ---------------
| | Loyalty Program





| |                 
| | ----------------
| | Use of Estimates





| |                          
| | -------------------------
| | Cash and Cash Equivalents









| |                     
| | --------------------
| | Share-Based Payments









| |                  
| | -----------------
| | Proposed Dividend





| |                                                           
| | ----------------------------------------------------------
| | Accounting policy differences between UK GAAP and
    IFRS



Assets held for sale






Discontinued operations


66



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##### Table of Contents









Goodwill




Impairment




Pension costs








Share-based payment




Deferred taxation






Cash and cash equivalents


67



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##### Table of Contents





Dividends






| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | Reconciliation of earnings under UK GAAP to IFRS for the year
    ended December 31, 2004

|                                                           |  |             |       |             |       |  |     |          |  |  |             |   |  |        |     |   |           |  |     |               |  |  |              |   |  |  |     |   |  |  |     |  
|---------------------------------------------------------- |  | ----------- | ----- | ----------- | ----- |  | --- | -------- |  |  | ----------- | - |  | ------ | --- | - | --------- |  | --- | ------------- |  |  | ------------ | - |  |  | --- | - |  |  | --- | -
|                                                           |  |             |       | Operating   |       |  |     |          |  |  |             |   |  |        |     |   |          
|                                                           |  |             |       | profit      |       |  |     |          |  |  |             |   |  |        |     |   |          
|                                                           |  |             |       | before      |       |  |     |          |  |  |             |   |  |        |     |   | Earnings  | 
|                                                           |  |             |       | exceptional |       |  |     |          |  |  | Exceptional |   |  | Profit |     |   | Minority  |  |     | available for | 
|                                                           |  | Turnover    |       |             | items |  |     | Interest |  |  | Tax         |   |  | items  |     |   | after tax |  |     | interest      |  |  | shareholders |  
|                                                           |  |             |       |             |       |  |     |          |  |  |             |   |  |        |     |   |           |  |     |               |  |  |              |  
|                                                           |  | (£ million) |      
|As reported under UK GAAP                                  |  |             | 2,204 |             |       |  | 331 |          |  |  | (22         | ) |  |        | (50 | ) |           |  | 68  |               |  |  | 327          |   |  |  | (28 | ) |  |  | 299 |  
|Remove goodwill amortization                               |  |             |      |             |       |  | 10  |          |  |  |            |   |  |        | (1  | ) |           |  |    |               |  |  | 9            |   |  |  | (1  | ) |  |  | 8   |  
|Pension accounting adjustments                             |  |             |      |             |       |  | (6  | )        |  |  |            |   |  |        | 2   |   |           |  |    |               |  |  | (4           | ) |  |  | 2   |   |  |  | (2  | )
|Share-based payment adjustments                            |  |             |      |             |       |  | (4  | )        |  |  |            |   |  |        | 3   |   |           |  |    |               |  |  | (1           | ) |  |  |    |   |  |  | (1  | )
|Impairment of previously revalued assets                   |  |             |      |             |       |  |    |          |  |  |            |   |  |        |    |   |           |  | (6  | )             |  |  | (6           | ) |  |  |    |   |  |  | (6  | )
|Depreciation adjustment of held for sale assets            |  |             |      |             |       |  | 15  |          |  |  |            |   |  |        | (5  | ) |           |  |    |               |  |  | 10           |   |  |  |    |   |  |  | 10  |  
|Adjustment to provision for loss on disposal of operations |  |             |      |             |       |  |    |          |  |  |            |   |  |        |    |   |           |  | 74  |               |  |  | 74           |   |  |  |    |   |  |  | 74  |  
|Tax adjustments                                            |  |             |      |             |       |  |    |          |  |  |            |   |  |        | (5  | ) |           |  | 6   |               |  |  | 1            |   |  |  |    |   |  |  | 1   |  
|                                                           |  |             |       |             |       |  |     |          |  |  |             |   |  |        |     |   |           |  |     |               |  |  |              |  
|Under IFRS                                                 |  |             | 2,204 |             |       |  | 346 |          |  |  | (22         | ) |  |        | (56 | ) |           |  | 142 |               |  |  | 410          |   |  |  | (27 | ) |  |  | 383 |  
|                                                           |  |             |       |             |       |  |     |          |  |  |             |   |  |        |     |   |           |  |     |               |  |  |              |  
|Continuing operations                                      |  |             | 1,602 |             |       |  | 228 |          |  |  | (22         | ) |  |        | (18 | ) |           |  | 118 |               |  |  | 306          |   |  |  | (27 | ) |  |  | 279 |  
|Discontinued operations                                    |  |             | 602   |             |       |  | 118 |          |  |  |            |   |  |        | (38 | ) |           |  | 24  |               |  |  | 104          |   |  |  |    |   |  |  | 104 |  
|                                                           |  |             |       |             |       |  |     |          |  |  |             |   |  |        |     |   |           |  |     |               |  |  |              |  



| |               
| | --------------
| | Key indicators

|                                  |  |                       |        |   |      |  |        |  
|--------------------------------- |  | --------------------- | ------ | - | ---- |  | ------ | -
|                                  |  | UK GAAP               |        |   | IFRS | 
|                                  |  |                       |        |   |      | 
|                                  |  | (£ million except per |       
|                                  |  | ordinary share        |       
|                                  |  | amounts)              |       
|Net debt                          |  |                       | (1,116 | ) |      |  | (1,116 | )
|Basic earnings per ordinary share |  |                       | 42.1   | p |      |  | 53.9   | p

68



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| |                                            
| | -------------------------------------------
| | Reconciliation of basic EPS to adjusted EPS

|                        |                                           |           |      |           |       |  |        |        |  
|----------------------- | ----------------------------------------- | --------- | ---- | --------- | ----- |  | ------ | ------ | -
|                        |                                           |           |      | Pence per |      
|                        |                                           |           |      | ordinary  |      
|                        |                                           | £ million |      |           | share | 
|                        |                                           |           |      |           |       | 
|Basic EPS under IFRS    |                                           |           | 383  |           |       |  | 53.9p  |       
|Exceptional items:      |                                           |           |      |           |       |  |        |       
|                        | Impairment of tangible fixed assets       |           |      | 48        |       |  |        | 6.7p   |  
|                        | Administrative expense                    |           |      | 11        |       |  |        | 1.5p   |  
|                        | Other operating income                    |           |      | (20       | )     |  |        | (2.8p  | )
|                        | Profit on disposal of fixed assets        |           |      | (15       | )     |  |        | (2.1p  | )
|                        | Provision against fixed asset investments |           |      | 10        |       |  |        | 1.4p   |  
|                        | Interest receivable                       |           |      | (22       | )     |  |        | (3.1p  | )
|                        | Interest payable                          |           |      | 16        |       |  |        | 2.3p   |  
|                        | Premium on early settlement of debt       |           |      | 17        |       |  |        | 2.4p   |  
|                        | Tax credit on above items                 |           |      | (20       | )     |  |        | (2.8p  | )
|                        | Exceptional tax credit                    |           |      | (167      | )     |  |        | (23.5p | )
|                        |                                           |           |      |           |       | 
|                        |                                           |           | (142 | )         |       |  | (20.0p | )     
|                        |                                           |           |      |           |       | 
|Adjusted EPS under IFRS |                                           |           | 241  |           |       |  | 33.9p  |       
|                        |                                           |           |      |           |       | 



| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Reconciliation of UK GAAP balance sheet to IFRS balance sheet
    at January 1, 2004

|                               |  |             |       |  |         |  |     |             |  |  |             |   |  |           |        |   |            |  |      |        |  |  |       |   |  |  |        |  
|------------------------------ |  | ----------- | ----- |  | ------- |  | --- | ----------- |  |  | ----------- | - |  | --------- | ------ | - | ---------- |  | ---- | ------ |  |  | ----- | - |  |  | ------ | -
|                               |  | Non current |       |  | Current |  |     | Current     |  |  | Non current |   |  | Minority  |        |   |            |  |     
|                               |  | assets      |       |  | assets  |  |     | liabilities |  |  | liabilities |   |  | interests |        |   | Net assets |  |      | Equity | 
|                               |  |             |       |  |         |  |     |             |  |  |             |   |  |           |        |   |            |  |      |        | 
|                               |  | (£ million) |      
|As reported under UK GAAP      |  |             | 4,281 |  |         |  | 999 |             |  |  | (1,085      | ) |  |           | (1,478 | ) |            |  | (163 | )      |  |  | 2,554 |   |  |  | (2,554 | )
|Reclassify proposed dividends  |  |             |      |  |         |  |    |             |  |  | 86          |   |  |           |       |   |            |  |     |        |  |  | 86    |   |  |  | (86    | )
|Pension accounting adjustments |  |             |      |  |         |  | (47 | )           |  |  |            |   |  |           | (131   | ) |            |  | 57   |        |  |  | (121  | ) |  |  | 121    |  
|Deferred tax adjustments       |  |             |      |  |         |  |    |             |  |  |            |   |  |           | (163   | ) |            |  | (17  | )      |  |  | (180  | ) |  |  | 180    |  
|Reclassifications              |  |             | 30    |  |         |  | (30 | )           |  |  |            |   |  |           |       |   |            |  |     |        |  |  |      |   |  |  |       |  
|                               |  |             |       |  |         |  |     |             |  |  |             |   |  |           |        |   |            |  |      |        | 
|Under IFRS at January 1, 2004  |  |             | 4,311 |  |         |  | 922 |             |  |  | (999        | ) |  |           | (1,772 | ) |            |  | (123 | )      |  |  | 2,339 |   |  |  | (2,339 | )
|                               |  |             |       |  |         |  |     |             |  |  |             |   |  |           |        |   |            |  |      |        | 



| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Reconciliation of UK GAAP balance sheet to IFRS balance sheet
    at December 31, 2004

|                                   |  |             |       |  |         |  |      |             |  |  |             |   |  |           |        |   |            |  |      |        |  |  |       |   |  |  |        |  
|---------------------------------- |  | ----------- | ----- |  | ------- |  | ---- | ----------- |  |  | ----------- | - |  | --------- | ------ | - | ---------- |  | ---- | ------ |  |  | ----- | - |  |  | ------ | -
|                                   |  | Non current |       |  | Current |  |      | Current     |  |  | Non current |   |  | Minority  |        |   |            |  |     
|                                   |  | assets      |       |  | assets  |  |      | liabilities |  |  | liabilities |   |  | interests |        |   | Net assets |  |      | Equity | 
|                                   |  |             |       |  |         |  |      |             |  |  |             |   |  |           |        |   |            |  |      |        | 
|                                   |  | (£ million) |      
|As reported under UK GAAP          |  |             | 4,017 |  |         |  | 757  |             |  |  | (1,013      | ) |  |           | (1,634 | ) |            |  | (150 | )      |  |  | 1,977 |   |  |  | (1,977 | )
|Reclassify proposed dividends      |  |             |      |  |         |  |     |             |  |  | 81          |   |  |           |       |   |            |  |     |        |  |  | 81    |   |  |  | (81    | )
|Remove goodwill amortisation       |  |             | 10    |  |         |  |     |             |  |  |            |   |  |           |       |   |            |  | (1   | )      |  |  | 9     |   |  |  | (9     | )
|Pension accounting adjustments     |  |             |      |  |         |  | (110 | )           |  |  |            |   |  |           | (125   | ) |            |  | 75   |        |  |  | (160  | ) |  |  | 160    |  
|Deferred tax adjustments           |  |             |      |  |         |  |     |             |  |  |            |   |  |           | (134   | ) |            |  | (22  | )      |  |  | (156  | ) |  |  | 156    |  
|Reclassify assets as held for sale |  |             | 15    |  |         |  |     |             |  |  |            |   |  |           | 74     |   |            |  |     |        |  |  | 89    |   |  |  | (89    | )
|Reclassifications                  |  |             | 31    |  |         |  | (31  | )           |  |  |            |   |  |           |       |   |            |  |     |        |  |  |      |   |  |  |       |  
|                                   |  |             |       |  |         |  |      |             |  |  |             |   |  |           |        |   |            |  |      |        | 
|Under IFRS at December 31, 2004    |  |             | 4,073 |  |         |  | 616  |             |  |  | (932        | ) |  |           | (1,819 | ) |            |  | (98  | )      |  |  | 1,840 |   |  |  | (1,840 | )
|                                   |  |             |       |  |         |  |      |             |  |  |             |   |  |           |        |   |            |  |      |        | 

69



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|        |                                           
|------- | ------------------------------------------
|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES




DIRECTORS AND SENIOR MANAGEMENT






|                       |  |                                                       |  |              |      |  |                 |  |       | 
|---------------------- |  | ----------------------------------------------------- |  | ------------ | ---- |  | --------------- |  | ----- | 
|                       |  |                                                       |  | Initially    |      |  | Date of next    | 
|                       |  |                                                       |  | appointed to |      |  | reappointment   | 
|Name                   |  | Title                                                 |  | the board    |      |  | by shareholders | 
|                       |  |                                                       |  |              |      |  |                 | 
|Andrew Cosslett        |  | Director and Chief Executive                          |  |              | 2005 |  |                 |  | 2005  | 
|Richard Hartman        |  | Director and Managing Director, EMEA                  |  |              | 2003 |  |                 |  | 2005  | 
|David Kappler(1)       |  | Director and Senior Independent Director              |  |              | 2004 |  |                 |  | 2005  | 
|Ralph Kugler(1)        |  | Director                                              |  |              | 2003 |  |                 |  | 2005  | 
|Robert C. Larson(1)    |  | Director                                              |  |              | 2003 |  |                 |  | 2005  | 
|Stevan Porter          |  | Director and President, the Americas                  |  |              | 2003 |  |                 |  | 2006* | 
|David Prosser(1)       |  | Director                                              |  |              | 2003 |  |                 |  | 2006* | 
|Richard Solomons       |  | Director and Finance Director
    Chairman of Britvic |  |              | 2003 |  |                 |  | 2005  | 
|Sir Howard Stringer(1) |  | Director                                              |  |              | 2003 |  |                 |  | 2006* | 
|David Webster(1)       |  | Chairman                                              |  |              | 2003 |  |                 |  | 2006* | 






|  |                                                                                                                                                                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | One third of the directors are required to retire by rotation at
    each Annual General Meeting. Three of the four directors
    asterisked will be required to retire and/or stand for
    re-election at the Annual General Meeting to be held in 2006.



|    |                        
|--- | -----------------------
|(1) | Non-executive director.



| |         
| | --------
| | Officers

|                      |  |                                                                                               |  |                     |      | 
|--------------------- |  | --------------------------------------------------------------------------------------------- |  | ------------------- | ---- | 
|Name                  |  | Title                                                                                         |  | Initially appointed |     
|                      |  |                                                                                               |  |                     |     
|Peter Gowers          |  | Executive Vice President, Global Brand Services                                               |  |                     | 2003 | 
|A. Patrick Imbardelli |  | Managing Director, Asia Pacific                                                               |  |                     | 2003 | 
|Jim Larson            |  | Executive Vice President, Human Resources                                                     |  |                     | 2003 | 
|Richard Winter        |  | Executive Vice President, Corporate Services, Group Company
    Secretary and General Counsel |  |                     | 2003 | 



| |                              
| | -----------------------------
| | Former Directors and Officers





| |                       
| | ----------------------
| | Directors and Officers

Andrew Cosslett




70



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##### Table of Contents



Peter Gowers




Richard Hartman




A. Patrick Imbardelli




David Kappler




Ralph Kugler




Jim Larson




Robert C. Larson




Stevan Porter




71



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David Prosser




Richard Solomons




Sir Howard Stringer




David Webster




Richard Winter







COMPENSATION








| |                                    
| | -----------------------------------
| | Former Six Continents Share Schemes



72



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| |                                      
| | -------------------------------------
| | Share Plans established on Separation



| |                            
| | ---------------------------
| | Executive Share Option Plan









| |                                   
| | ----------------------------------
| | Short Term Deferred Incentive Plan





| |                                  
| | ---------------------------------
| | Performance Restricted Share Plan





| |               
| | --------------
| | Sharesave Plan



73



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| |                                              
| | ---------------------------------------------
| | Options and Ordinary Shares held by Directors






BOARD PRACTICES




| |                     
| | --------------------
| | Contracts of Service













| |                        
| | -----------------------
| | Payments on Termination







| |                    
| | -------------------
| | Executive Committee





| |                
| | ---------------
| | Audit Committee



74



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##### Table of Contents













| |   |                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | review the Companys public statements on internal control
    and corporate governance compliance prior to their consideration
    by the board;                                                                                                                  
|
| |  | review the Companys processes for detecting and addressing
    fraud, misconduct and control weaknesses and to consider the
    Companys response to any such occurrence, including
    overseeing the process enabling the anonymous submission of
    concerns;
|
| |  | review reports from management, internal audit and external
    audit concerning the effectiveness of internal control,
    financial reporting and risk management processes;                                                                                     
|
| |  | review with management and the external auditor any financial
    statements required under UK or US legislation before submission
    to the board;                                                                                                               
|
| |  | establish, review and maintain the role and effectiveness of the
    Internal Audit function, including overseeing the appointment of
    the Head of Internal Audit;                                                                                              
|
| |  | assume responsibility for the appointment, compensation,
    resignation, dismissal and the overseeing of the external
    auditor, including review of the external audit, its cost and
    effectiveness;                                                        
|
| |  | pre-approve non-audit work to be carried out by the external
    auditor and the fees to be paid for that work along with the
    monitoring of the external auditors independence; and                                                                           
|
| |  | adopt and oversee a specific Code of Ethics for the senior
    financial officers, which is consistent with the Companys
    overall Guidelines for Proper Business Conduct.                                                                                      



Disclosure Committee




Remuneration
Committee




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Nomination Committee









EMPLOYEES






|                              |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |       |  |  |  |        | 
|----------------------------- |  | -------------- | ------ | --------------- | ---------- |  | ----- | ------------- |  |  | ------------- |  |  | ----- | ----- |  |  |  | ------ | 
|                              |  |                |        | Rest of Europe, |            |  |       |               |  |  |              
|                              |  |                |        | the Middle East |            |  |       |               |  |  |              
|                              |  | United Kingdom |        |                 | and Africa |  |       | United States |  |  | Rest of World |  |  | Total |      
|                              |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |      
|2004:                         |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |       |  |  |  |        | 
|Hotels                        |  |                | 9,676  |                 |            |  | 6,601 |               |  |  | 8,241         |  |  |       | 2,317 |  |  |  | 26,835 | 
|Soft drinks                   |  |                | 2,824  |                 |            |  |      |               |  |  |              |  |  |       |      |  |  |  | 2,824  | 
|                              |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |      
|InterContinental Hotels Group |  |                | 12,500 |                 |            |  | 6,601 |               |  |  | 8,241         |  |  |       | 2,317 |  |  |  | 29,659 | 
|                              |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |      
|2003:                         |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |       |  |  |  |        | 
|Hotels                        |  |                | 11,174 |                 |            |  | 5,585 |               |  |  | 5,704         |  |  |       | 4,648 |  |  |  | 27,111 | 
|Soft drinks                   |  |                | 2,698  |                 |            |  |      |               |  |  |              |  |  |       |      |  |  |  | 2,698  | 
|                              |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |      
|InterContinental Hotels Group |  |                | 13,872 |                 |            |  | 5,585 |               |  |  | 5,704         |  |  |       | 4,684 |  |  |  | 29,809 | 
|Discontinued operations       |  |                | 15,014 |                 |            |  |      |               |  |  |              |  |  |       |      |  |  |  | 15,014 | 
|                              |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |      
|                              |  |                | 28,886 |                 |            |  | 5,585 |               |  |  | 5,704         |  |  |       | 4,648 |  |  |  | 44,823 | 
|                              |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |      
|2002:                         |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |       |  |  |  |        | 
|Hotels                        |  |                | 11,872 |                 |            |  | 5,622 |               |  |  | 5,944         |  |  |       | 4,947 |  |  |  | 28,385 | 
|Soft drinks                   |  |                | 2,637  |                 |            |  |      |               |  |  |              |  |  |       |      |  |  |  | 2,637  | 
|                              |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |      
|InterContinental Hotels Group |  |                | 14,509 |                 |            |  | 5,622 |               |  |  | 5,944         |  |  |       | 4,947 |  |  |  | 31,022 | 
|Discontinued operations       |  |                | 36,710 |                 |            |  | 2,037 |               |  |  |              |  |  |       |      |  |  |  | 38,747 | 
|                              |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |      
|                              |  |                | 51,219 |                 |            |  | 7,659 |               |  |  | 5,944         |  |  |       | 4,947 |  |  |  | 69,769 | 
|                              |  |                |        |                 |            |  |       |               |  |  |               |  |  |       |      



76



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SHARE OWNERSHIP




|                      |  |           |        | 
|--------------------- |  | --------- | ------ | 
|                      |  | Ordinary  |       
|                      |  | shares of |       
|                      |  | 112p      |       
|                      |  |           |       
|Directors             |  |           |        | 
|Andrew Cosslett       |  |           | 10,000 | 
|Richard Hartman       |  |           | 95,615 | 
|David Kappler         |  |           | 2,602  | 
|Ralph Kugler          |  |           | 892    | 
|Robert C. Larson      |  |           | 10,714 | 
|Stevan Porter         |  |           | 88,077 | 
|David Prosser         |  |           | 4,464  | 
|Richard Solomons      |  |           | 55,009 | 
|Sir Howard Stringer   |  |           | 7,566  | 
|David Webster         |  |           | 13,395 | 
|                     
|Officers              |  |           |        | 
|Peter Gowers          |  |           | (Nil)  | 
|A. Patrick Imbardelli |  |           | 52,202 | 
|Jim Larson            |  |           | 38,877 | 
|Richard Winter        |  |           | 8,159  | 









77



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|        |                                                  
|------- | -------------------------------------------------
|ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS




MAJOR SHAREHOLDERS




|                            |  |             |            |     |            |  |       |               |  |  |            |  |  |             |       |  |          |  |           |  |  |  |       | 
|--------------------------- |  | ----------- | ---------- | --- | ---------- |  | ----- | ------------- |  |  | ---------- |  |  | ----------- | ----- |  | -------- |  | --------- |  |  |  | ----- | 
|                            |  | April 2005  |            |     | April 2004 |  |       | December 2002 | 
|                            |  |             |            |     |            |  |       |               | 
|                            |  | Number of   |            |     | Percent    |  |       | Number of     |  |  | Percent    |  |  | Number of   |       |  | Percent  | 
|Identity of person or group |  | shares/ADSs |            |     | of class   |  |       | shares/ADSs   |  |  | of class   |  |  | shares/ADSs |       |  | of class | 
|                            |  |             |            |     |            |  |       |               |  |  |            |  |  |             |       |  |          | 
|Lloyds TSB Group Plc        |  |             | 26,773,575 |     |            |  | 4.44% |               |  |  | (1)        |  |  |             | (1)   |  |          |  | (1)       |  |  |  | (1)   | 
|Legal & General Group Plc   |  |             | 24,233,225 | (2) |            |  | 4.02% |               |  |  | 29,924,045 |  |  |             | 4.10% |  |          |  | 24,176,81 |  |  |  | 3.10% | 
|Barclays PLC                |  |             | 20,246,584 |     |            |  | 3.36% |               |  |  | (1)        |  |  |             | (1)   |  |          |  | (1)       |  |  |  | (1)   | 
|AXA SA                      |  |             | 18,121,201 |     |            |  | 3.00% |               |  |  | (1)        |  |  |             | (1)   |  |          |  | (1)       |  |  |  | (1)   | 
|Dodge & Cox Funds           |  |             | (1)        |     |            |  | (1)   |               |  |  | 25,106,594 |  |  |             | 3.40% |  |          |  | (1)       |  |  |  | (1)   | 






|    |                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | No notification of an above 3% shareholding received.                                                                                                                                                                                                                                        
|   
|(2) | The number of shares stated to be beneficially held by
    Legal & General Group Plc (and its subsidiaries)
    is derived from the number of shares notified to the Company by
    Legal & General Group Plc, as adjusted to take
    account of a subsequent 25 for 28 share consolidation.










RELATED PARTY TRANSACTIONS










| |                                                          
| | ---------------------------------------------------------
| | Summary of Main Agreements Relating to the
    Separation



| |                                                                                 
| | --------------------------------------------------------------------------------
| | Share Purchase Agreement to effect the MAB Transfer (the
    MAB Transfer SPA)





78



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| |                     
| | --------------------
| | Separation Agreement









| |                                          
| | -----------------------------------------
| | Relationship with Mitchells & Butlers plc





| |                                               
| | ----------------------------------------------
| | Franchise Agreement for Express by Holiday Inn





| |                         
| | ------------------------
| | Britvic Supply Agreement



79



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|        |                      
|------- | ---------------------
|ITEM 8. | FINANCIAL INFORMATION




CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION




| |                     
| | --------------------
| | Financial Statements





| |                  
| | -----------------
| | Legal Proceedings





| |          
| | ---------
| | Dividends






SIGNIFICANT CHANGES









|        |                      
|------- | ---------------------
|ITEM 9. | THE OFFER AND LISTING





|                        |  |                |      |  |           |  |      |      |  |  |       |  |  |  |      | 
|----------------------- |  | -------------- | ---- |  | --------- |  | ---- | ---- |  |  | ----- |  |  |  | ---- | 
|                        |  | £ per          |      |  |          
|                        |  | Ordinary share |      |  | $ per ADS | 
|                        |  |                |      |  |           | 
|Year ended September 30 |  | High           |      |  | Low       |  |      | High |  |  | Low   | 
|                        |  |                |      |  |           |  |      |      |  |  |       | 
|2000                    |  |                | 8.42 |  |           |  | 5.80 |      |  |  | 13.75 |  |  |  | 8.50 | 
|2001                    |  |                | 8.02 |  |           |  | 5.49 |      |  |  | 12.00 |  |  |  | 7.75 | 
|2002                    |  |                | 7.83 |  |           |  | 5.41 |      |  |  | 11.73 |  |  |  | 7.49 | 

|                                            |  |                |      |  |           |  |      |      |  |  |       |  |  |  |      | 
|------------------------------------------- |  | -------------- | ---- |  | --------- |  | ---- | ---- |  |  | ----- |  |  |  | ---- | 
|                                            |  | £ per          |      |  |          
|                                            |  | Ordinary share |      |  | $ per ADS | 
|                                            |  |                |      |  |           | 
|15 months ended December 31                 |  | High           |      |  | Low       |  |      | High |  |  | Low   | 
|                                            |  |                |      |  |           |  |      |      |  |  |       | 
|2003  October 1 to April 11 Six Continents |  |                | 6.35 |  |           |  | 4.61 |      |  |  | 10.08 |  |  |  | 7.49 | 
|2003  April 15 to December 31 IHG          |  |                | 5.55 |  |           |  | 3.38 |      |  |  | 9.82  |  |  |  | 5.26 | 
|Year ended December 31                      |  |                |      |  |           |  |      |      |  |  |       |  |  |  |      | 
|                                            |  |                |      |  |           |  |      |      |  |  |       | 
|                                           
|2004                                        |  |                | 6.91 |  |           |  | 4.79 |      |  |  | 13.09 |  |  |  | 8.70 | 

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|                                                   |  |                |      |  |           |  |      |      |  |  |       |  |  |  |      | 
|-------------------------------------------------- |  | -------------- | ---- |  | --------- |  | ---- | ---- |  |  | ----- |  |  |  | ---- | 
|                                                   |  | £ per          |      |  |          
|                                                   |  | ordinary share |      |  | $ per ADS | 
|                                                   |  |                |      |  |           | 
|15 months ended December 31                        |  | High           |      |  | Low       |  |      | High |  |  | Low   | 
|                                                   |  |                |      |  |           |  |      |      |  |  |       | 
|2003                                               |  |                |      |  |           |  |      |      |  |  |       |  |  |  |      | 
|First quarter                                      |  |                | 5.90 |  |           |  | 4.61 |      |  |  | 9.23  |  |  |  | 7.49 | 
|Second quarter                                     |  |                | 6.35 |  |           |  | 4.62 |      |  |  | 10.08 |  |  |  | 7.73 | 
|Third quarter  April 1 to April 11 Six Continents |  |                | 6.18 |  |           |  | 5.92 |      |  |  | 9.74  |  |  |  | 9.33 | 
|Third quarter  April 15 to June 30                |  |                | 4.52 |  |           |  | 3.38 |      |  |  | 7.80  |  |  |  | 5.26 | 
|Fourth quarter                                     |  |                | 5.24 |  |           |  | 4.39 |      |  |  | 8.52  |  |  |  | 7.13 | 
|Final quarter                                      |  |                | 5.55 |  |           |  | 4.85 |      |  |  | 9.82  |  |  |  | 8.22 | 

|                                        |  |                |      |  |           |  |      |      |  |  |       |  |  |  |       | 
|--------------------------------------- |  | -------------- | ---- |  | --------- |  | ---- | ---- |  |  | ----- |  |  |  | ----- | 
|                                        |  | £ per          |      |  |          
|                                        |  | Ordinary share |      |  | $ per ADS | 
|                                        |  |                |      |  |           | 
|Year ended December 31                  |  | High           |      |  | Low       |  |      | High |  |  | Low   | 
|                                        |  |                |      |  |           |  |      |      |  |  |       | 
|2004                                    |  |                |      |  |           |  |      |      |  |  |       |  |  |  |       | 
|First quarter                           |  |                | 5.75 |  |           |  | 4.79 |      |  |  | 10.80 |  |  |  | 8.90  | 
|Second quarter                          |  |                | 5.82 |  |           |  | 4.87 |      |  |  | 10.78 |  |  |  | 8.70  | 
|Third quarter                           |  |                | 6.49 |  |           |  | 5.37 |      |  |  | 11.82 |  |  |  | 9.88  | 
|Fourth quarter                          |  |                | 6.91 |  |           |  | 6.45 |      |  |  | 13.09 |  |  |  | 11.80 | 
|2005                                    |  |                |      |  |           |  |      |      |  |  |       |  |  |  |       | 
|First quarter                           |  |                | 6.97 |  |           |  | 6.17 |      |  |  | 13.06 |  |  |  | 11.65 | 
|Second quarter (through April 25, 2005) |  |                | 6.33 |  |           |  | 6.23 |      |  |  | 12.00 |  |  |  | 11.71 | 

|                                       |  |                |      |  |           |  |      |      |  |  |       |  |  |  |       | 
|-------------------------------------- |  | -------------- | ---- |  | --------- |  | ---- | ---- |  |  | ----- |  |  |  | ----- | 
|                                       |  | £ per          |      |  |          
|                                       |  | ordinary share |      |  | $ per ADS | 
|                                       |  |                |      |  |           | 
|Month ended                            |  | High           |      |  | Low       |  |      | High |  |  | Low   | 
|                                       |  |                |      |  |           |  |      |      |  |  |       | 
|October 2004                           |  |                | 6.75 |  |           |  | 6.45 |      |  |  | 12.59 |  |  |  | 11.80 | 
|November 2004                          |  |                | 6.91 |  |           |  | 6.56 |      |  |  | 12.98 |  |  |  | 12.35 | 
|December 2004                          |  |                | 6.72 |  |           |  | 6.47 |      |  |  | 13.09 |  |  |  | 12.61 | 
|January 2005                           |  |                | 6.79 |  |           |  | 6.43 |      |  |  | 12.98 |  |  |  | 12.25 | 
|February 2005                          |  |                | 6.97 |  |           |  | 6.63 |      |  |  | 13.06 |  |  |  | 12.66 | 
|March 2005                             |  |                | 6.77 |  |           |  | 6.17 |      |  |  | 13.06 |  |  |  | 11.65 | 
|April 2005 (through to April 25, 2005) |  |                | 6.42 |  |           |  | 6.12 |      |  |  | 12.61 |  |  |  | 12.31 | 




PLAN OF DISTRIBUTION







SELLING SHAREHOLDERS







DILUTION







EXPENSES OF THE ISSUE




81



---



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|         |                       
|-------- | ----------------------
|ITEM 10. | ADDITIONAL INFORMATION




MEMORANDUM AND ARTICLES OF ASSOCIATION








Principal Objects




Directors










Rights Attaching to
Shares




82



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Voting Rights






| |   |                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the chairman of the meeting;                                                                                                                                                                                                                                  
|
| |  | at least five shareholders entitled to vote at the meeting;                                                                                                                                                                                                   
|
| |  | any shareholder or shareholders representing in the aggregate
    not less than one-tenth of the total voting rights of all
    shareholders entitled to vote at the meeting; or                                                                              
|
| |  | any shareholder or shareholders holding shares conferring a
    right to vote at the meeting on which there have been paid-up
    sums in the aggregate equal to not less than one-tenth of the
    total sum paid up on all the shares conferring that right.









| |   |                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an ordinary resolution, which includes resolutions for the
    election of directors, the approval of financial statements, the
    cumulative annual payment of dividends, the appointment of
    auditors, the increase of authorized share capital or the grant
    of authority to allot shares;
|
| |  | a special resolution, which includes resolutions amending the
    Companys memorandum and articles of association,
    disapplying statutory pre-emption rights or changing the
    Companys name; and                                                                                            
|
| |  | an extraordinary resolution, which includes resolutions
    modifying the rights of any class of the Companys shares
    at a meeting of the holders of such class or relating to certain
    matters concerning the Companys winding up.                                                         









83



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Variation of Rights




Rights in a
Winding-up






| |   |                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | after the payment of all creditors including certain
    preferential creditors, whether statutorily preferred creditors
    or normal creditors; and
|
| |  | subject to any special rights attaching to any class of shares;                                                                                      



Limitations on Voting and
Shareholding







MATERIAL CONTRACTS




Disposal of Bass
Brewers






84



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| |                                 
| | --------------------------------
| | Britvic Joint Venture Agreements





| |                       
| | ----------------------
| | IHG Facility Agreement











| |                      
| | ---------------------
| | Britvic IPO Agreement





85



---



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| |                                                
| | -----------------------------------------------
| | Disposal to Hospitality Properties Trust (2003)







| |                                                
| | -----------------------------------------------
| | Disposal to Hospitality Properties Trust (2004)









| |                   
| | ------------------
| | UK Hotels Disposal





86



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EXCHANGE CONTROLS











TAXATION












87



---



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Investors should consult their own tax advisor regarding the
US federal, state and local, the UK and other tax consequences
of owning and disposing of shares and ADSs in their particular
circumstances, and in particular whether they are eligible for
the benefits of the Treaty.




| |                      
| | ---------------------
| | Taxation of Dividends



| |                        
| | -----------------------
| | United Kingdom Taxation





| |                                      
| | -------------------------------------
| | United States Federal Income Taxation











| |                          
| | -------------------------
| | Taxation of Capital Gains



| |                        
| | -----------------------
| | United Kingdom Taxation





88



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| |                                      
| | -------------------------------------
| | United States Federal Income Taxation





| |           
| | ----------
| | PFIC Rules





| |                              
| | -----------------------------
| | Additional Tax Considerations



| |                               
| | ------------------------------
| | United Kingdom Inheritance Tax





| |                                                                  
| | -----------------------------------------------------------------
| | United Kingdom Stamp Duty and Stamp Duty Reserve Tax
    (SDRT)



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DOCUMENTS ON DISPLAY









|         |                                                               
|-------- | --------------------------------------------------------------
|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK

Exchange and Interest Rate Risk, and Financial Instruments












90



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Quantitative Information about Market Risk




| |                          
| | -------------------------
| | Interest Rate Sensitivity





| |                     
| | --------------------
| | At December 31, 2004

|                                   |  |                                       |      |   |      |  |     |      |  |  |      |   |  |      |      |   |            |  |         |       |  |  |               |   |  |  |         |   |  |  |         | 
|---------------------------------- |  | ------------------------------------- | ---- | - | ---- |  | --- | ---- |  |  | ---- | - |  | ---- | ---- | - | ---------- |  | ------- | ----- |  |  | ------------- | - |  |  | ------- | - |  |  | ------- | 
|                                   |  | Expected to mature before December 31 |      |   |      |  |    
|                                   |  |                                       |      |   |      |  |    
|                                   |  | 2005                                  |      |   | 2006 |  |     | 2007 |  |  | 2008 |   |  | 2009 |      |   | Thereafter |  |         | Total |  |  | Fair value(i) |  
|                                   |  |                                       |      |   |      |  |     |      |  |  |      |   |  |      |      |   |            |  |         |       |  |  |               |  
|                                   |  | (£ million, except percentages)       |     
|Long-Term Debt:                    |  |                                       |      |   |      |  |     |      |  |  |      |   |  |      |      |   |            |  |         |       |  |  |               |   |  |  |         |   |  |  |         | 
|Fixed Rate (US dollar)             |  |                                       |     |   |      |  |    |      |  |  |     |   |  |      |     |   |            |  |        |       |  |  | 0.5           |   |  |  | 0.5     |   |  |  | 0.8     | 
|Average dollar interest rate       |  |                                       |     |   |      |  |    |      |  |  |     |   |  |      |     |   |            |  |        |       |  |  | 11.0          | % |  |  | 11.0    | % |  |  |        | 
|Fixed Rate (£)                     |  |                                       |     |   |      |  |    |      |  |  |     |   |  |      |     |   |            |  |        |       |  |  | 2.8           |   |  |  | 2.8     |   |  |  | 2.2     | 
|Average interest rate              |  |                                       |     |   |      |  |    |      |  |  |     |   |  |      |     |   |            |  |        |       |  |  |              |   |  |  |        |   |  |  |        | 
|Fixed Rate (euro)                  |  |                                       | 0.5  |   |      |  | 0.6 |      |  |  | 31.3 |   |  |      | 0.2  |   |            |  |        |       |  |  |              |   |  |  | 32.6    |   |  |  | 33.3    | 
|Average interest rate              |  |                                       | 7.0  | % |      |  | 6.9 | %    |  |  | 6.3  | % |  |      | 7.8  | % |            |  |        |       |  |  |              |   |  |  | 6.4     | % |  |  |        | 
|Variable Rate (various currencies) |  |                                       | 10.1 |   |      |  | 1.8 |      |  |  | 1.8  |   |  |      | 10.9 |   |            |  | 1,099.6 |       |  |  | 1.2           |   |  |  | 1,125.4 |   |  |  | 1,125.4 | 
|Average interest rate              |  |                                       | 2.7  | % |      |  | 3.9 | %    |  |  | 3.9  | % |  |      | 6.4  | % |            |  | 3.1     | %     |  |  | 3.0           | % |  |  | 3.2     | % |  |  |        | 

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|                                                 |  |                                              |     |   |      |  |     |      |  |  |      |  |  |      |   |  |            |  |   |       |  |  |               |  |  |  |     |   |  |  |    |  
|------------------------------------------------ |  | -------------------------------------------- | --- | - | ---- |  | --- | ---- |  |  | ---- |  |  | ---- | - |  | ---------- |  | - | ----- |  |  | ------------- |  |  |  | --- | - |  |  | -- | -
|                                                 |  | Expected to mature before December 31        |     |   |      |  |    
|                                                 |  |                                              |     |   |      |  |    
|                                                 |  | 2005                                         |     |   | 2006 |  |     | 2007 |  |  | 2008 |  |  | 2009 |   |  | Thereafter |  |   | Total |  |  | Fair value(i) | 
|                                                 |  |                                              |     |   |      |  |     |      |  |  |      |  |  |      |   |  |            |  |   |       |  |  |               | 
|                                                 |  | (local currency million, except percentages) |    
|Interest Rate Swaps and Forward rate agreements: |  |                                              |     |   |      |  |     |      |  |  |      |  |  |      |   |  |            |  |   |       |  |  |               |  |  |  |     |   |  |  |    |  
|Principal (US dollar)                            |  |                                              |    |   |      |  | 200 |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 200 |   |  |  | (4 | )
|Fixed rate payable                               |  |                                              |    |   |      |  | 4.5 | %    |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 4.5 | % |  |  |   |  
|Variable rate receivable                         |  |                                              |    |   |      |  | 2.2 | %    |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 2.2 | % |  |  |   |  
|Principal (euro)                                 |  |                                              | 215 |   |      |  |    |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 215 |   |  |  | (1 | )
|Fixed rate payable                               |  |                                              | 2.9 | % |      |  |    |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 2.9 | % |  |  |   |  
|Variable rate receivable                         |  |                                              | 2.2 | % |      |  |    |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 2.2 | % |  |  |   |  
|Principal (Australian dollar)                    |  |                                              | 60  |   |      |  |    |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 60  |   |  |  |   |  
|Fixed rate payable                               |  |                                              | 5.4 | % |      |  |    |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 5.4 | % |  |  |   |  
|Variable rate receivable                         |  |                                              | 5.4 | % |      |  |    |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 5.4 | % |  |  |   |  
|Principal (Hong Kong dollar)                     |  |                                              | 300 |   |      |  |    |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 300 |   |  |  | (1 | )
|Fixed rate payable                               |  |                                              | 1.5 | % |      |  |    |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 1.5 | % |  |  |   |  
|Variable rate receivable                         |  |                                              | 1.0 | % |      |  |    |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 1.0 | % |  |  |   |  






|    |                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------
|(i) | Represents the net present value of the expected cash flows
    discounted at current market rates of interest.



| |                          
| | -------------------------
| | Exchange Risk Sensitivity





| |                     
| | --------------------
| | At December 31, 2004

|                                |  |               |       |         |               |  |             |          |         |  |               |  |  |  |      | 
|------------------------------- |  | ------------- | ----- | ------- | ------------- |  | ----------- | -------- | ------- |  | ------------- |  |  |  | ---- | 
|                                |  | Receive for $ |       |         | Receive for £ | 
|                                |  |               |       |         |               | 
|                                |  |               |       | Average |               |  |             |          | Average | 
|                                |  | Contract      |       |         | contractual   |  |             | Contract |         |  | contractual   | 
|                                |  | amount        |       |         | exchange rate |  |             | amount   |         |  | exchange rate | 
|                                |  |               |       |         |               |  |             |          |         |  |               | 
|                                |  | (£ million)   |       |         |               |  | (£ million) |          |         | 
|Sterling                        |  |               | 177.8 |         |               |  | 1.83        |          |         |  |              |  |  |  |      | 
|US dollar                       |  |               |      |         |               |  |             |          |         |  | 4.2           |  |  |  | 1.88 | 
|Euro                            |  |               |      |         |               |  |             |          |         |  | 21.7          |  |  |  | 1.38 | 
|                                |  |               |       |         |               |  |             |          |         |  |               | 
|Total                           |  |               | 177.8 |         |               |  |             |          |         |  | 25.9          |  |  |  |      | 
|                                |  |               |       |         |               |  |             |          |         |  |               | 
|Fair value of forward contracts |  |               | 8.4   |         |               |  |             |          |         |  | 1.0           |  |  |  |      | 
|                                |  |               |       |         |               |  |             |          |         |  |               | 





|                              |  |           |     |  |          |    |      | 
|----------------------------- |  | --------- | --- |  | -------- | -- | ---- | 
|                              |  | Deposited |     |  | Borrowed |   
|                              |  | 2004      |     |  | 2004     |   
|                              |  |           |     |  |          |   
|                              |  | (million) |    
|Sterling to US dollar         |  | £         | 52  |  |          | $  | 100  | 
|Sterling to euro              |  | £         | 239 |  |          |    | 350 | 
|Sterling to Australian dollar |  | £         | 48  |  |          | A$ | 120  | 

92



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|         |                                                           
|-------- | ----------------------------------------------------------
|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES






PART II







|         |                                                
|-------- | -----------------------------------------------
|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES








|         |                                                                                 
|-------- | --------------------------------------------------------------------------------
|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
    AND USE OF PROCEEDS








|         |                        
|-------- | -----------------------
|ITEM 15. | CONTROLS AND PROCEDURES










|         |           
|-------- | ----------
|ITEM 16. | [RESERVED]




ITEM 16A.AUDIT
COMMITTEE FINANCIAL EXPERT







ITEM 16B.CODE OF
ETHICS




93



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ITEM 16C.PRINCIPAL
ACCOUNTANT FEES AND SERVICES




|                   |  |              |     |           |              |  |      | 
|------------------ |  | ------------ | --- | --------- | ------------ |  | ---- | 
|                   |  |              |     | 15 months |             
|                   |  | Year ended   |     |           | ended        | 
|                   |  | December 31, |     |           | December 31, | 
|                   |  | 2004         |     |           | 2003         | 
|                   |  |              |     |           |              | 
|                   |  | (£ million)  |    
|Audit fees         |  |              | 3.8 |           |              |  | 2.8  | 
|Audit related fees |  |              | 1.6 |           |              |  | 7.2  | 
|Tax fees           |  |              | 0.5 |           |              |  | 1.2  | 
|                   |  |              |     |           |              | 
|Total              |  |              | 5.9 |           |              |  | 11.2 | 
|                   |  |              |     |           |              | 










|          |                                                               
|--------- | --------------------------------------------------------------
|ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES



94



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|          |                                                                           
|--------- | --------------------------------------------------------------------------
|ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
    AFFILIATED PURCHASERS

|                               |  |  |           |            |  |            |  |  | Total number of    |  |  |                    |  |           
|------------------------------ |  |  | --------- | ---------- |  | ---------- |  |  | ------------------ |  |  | ------------------ |  | ----------
|                               |  |  |           |            |  |            |  |  | shares purchased   |  |  | Maximum number     |  |           
|                               |  |  | Total     |            |  |            |  |  | as part            |  |  | of shares that may |  |           
|                               |  |  | number of |            |  | Average    |  |  | of publicly        |  |  | yet be purchased   |  |           
|                               |  |  | shares    |            |  | price paid |  |  | announced plans or |  |  | under the plans or |  |           
|Period of fiscal year          |  |  | purchased |            |  | per share  |  |  | programs           |  |  | programs           |  |           
|                               |  |  |           |            |  | (£)        |  |  |                    |  |  |                    |  |           
|Month 1                        |  |  |           |           |  |            |  |  |                    |  |  |                    |  |           
|Month 2                        |  |  |           |           |  |            |  |  |                    |  |  |                    |  |           
|Month 3 (03.11.04 - 03.31.04)  |  |  |           | 10,490,000 |  |            |  |  | 4.97               |  |  |                    |  | 10,490,000
|Month 4 (04.01.04 - 04.26.04)  |  |  |           | 9,760,000  |  |            |  |  | 5.11               |  |  |                    |  | 9,760,000 
|Month 5                        |  |  |           |           |  |            |  |  |                    |  |  |                    |  |          
|Month 6 (06.02.04 - 06.25.04)  |  |  |           | 6,620,000  |  |            |  |  | 5.36               |  |  |                    |  | 6,620,000 
|Month 7 (07.13.04  07.30.04)  |  |  |           | 6,236,000  |  |            |  |  | 5.76               |  |  |                    |  | 6,236,000 
|Month 8 (08.02.04  08.06.04)  |  |  |           | 6,730,000  |  |            |  |  | 5.81               |  |  |                    |  | 6,730,000 
|Month 9 (09.13.04  09.30.04)  |  |  |           | 2,250,000  |  |            |  |  | 6.29               |  |  |                    |  | 2,250,000 
|Month 10 (10.01.04  10.22.04) |  |  |           | 1,800,000  |  |            |  |  | 6.61               |  |  |                    |  | 1,800,000 
|Month 11 (11.30.04 only)       |  |  |           | 150,000    |  |            |  |  | 6.68               |  |  |                    |  | 150,000   
|Month 12 (12.01.04  12.03.04) |  |  |           | 599,981    |  |            |  |  | 6.71               |  |  |                    |  | 599,981   
|Month 12 (12.17.04  12.23.04) |  |  |           | 1,750,000  |  |            |  |  | 6.50               |  |  |                    |  | 1,750,000 
|                               |  |  |           |            |  |            |  |  |                    |  |  |                    |  |           
|Total                          |  |  |           | 46,385,981 |  |            |  |  |                    |  |  |                    |  | 46,385,981
|                               |  |  |           |            |  |            |  |  |                    |  |  |                    |  |           










PART III







|         |                     
|-------- | --------------------
|ITEM 17. | FINANCIAL STATEMENTS



95



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|         |                     
|-------- | --------------------
|ITEM 18. | FINANCIAL STATEMENTS



|                                                                                                                                                                                          |  |      |     | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                                                                          |  | Page |    
|                                                                                                                                                                                          |  |      |    
|Report and Consent of Independent
    Registered Public Accounting Firm                                                                                                                   |  |      | F-1 | 
|Financial Statements                                                                                                                                                                      |  |      |     | 
|Consolidated Profit and Loss Account for
    the year ended December 31, 2004, the 15 months ended
    December 31, 2003 and the year ended September 30,
    2002                        |  |      | F-3 | 
|Consolidated Statement of Total Recognized
    Gains and Losses for the year ended December 31, 2004, the
    15 months ended December 31, 2003 and the year ended
    September 30, 2002 |  |      | F-4 | 
|Consolidated Balance Sheet at
    December 31, 2004 and 2003                                                                                                                              |  |      | F-5 | 
|Consolidated Statement of Changes in
    Shareholders Funds for the year ended December 31,
    2004, the 15 months ended December 31, 2003 and the
    year ended September 30, 2002    |  |      | F-6 | 
|Consolidated Statement of Cash Flows for
    the year ended December 31, 2004, the 15 months ended
    December 31, 2003 and the year ended September 30,
    2002                        |  |      | F-8 | 
|Notes to the Financial Statements                                                                                                                                                         |  |      | F-9 | 
|Schedule for the year ended December 31, 2004, the
    15 months ended December 31, 2003 and the year ended
    September 30, 2002                                                        |  |      |     | 
|Schedule II  Valuation and Qualifying Accounts                                                                                                                                           |  |      | S-1 | 






|         |         
|-------- | --------
|ITEM 19. | EXHIBITS





|                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|----------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 1         |  | Memorandum and Articles of Association of IHG (incorporated by
    reference to Exhibit 4 of InterContinental Hotels
    Groups Registration Statement on S-8 (File
    No. 1-10409) filed with the SEC on April 23, 2003)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                 
|Exhibit 2(b)(i)   |  | Instruments defining the Rights of Holders of Long-Term Debt:
    The total amount of long-term debt securities of the Group
    authorized under any individual instrument, other than the
    Amended and Restated Trust Deed dated September
    21, 2000 relating to the Companys
    2000 million
    Debt Issuance Program originally constituted on October 9,
    1998 (incorporated by reference to Exhibit 2 of Six
    Continents PLCs Annual Report on Form 20-F (File
    No. 1-10409), dated December 20, 2001), and the
    Trust Deed dated September 24, 2003 relating to
    the Companys
    1,000 million
    Debt Issuance Program and filed as Exhibit 2(b)(i) hereto
    does not exceed 10% of the total assets of the Group on a
    consolidated basis. The Company agrees to furnish copies of any
    or all such instruments to the Securities and Exchange
    Commission upon request
|                 
|Exhibit 4(a)(i)   |  | Agreement dated June 14, 2000 between the Company and the
    others and Interbrew SA and others relating to the disposal of
    Bass Brewers (incorporated by reference to Exhibit 4 of Six
    Continents PLCs Annual Report on Form 20-F (File
    No. 1-10409), dated December 21, 2000)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                 
|Exhibit 4(a)(ii)  |  | £1,600 million Facility Agreement dated
    November 9, 2004 among Bank of Tokyo-Mitsubishi, Ltd.,
    Barclays Capital, Citigroup Global Markets Limited, HSBC Bank
    plc, JP Morgan plc, Lloyds Bank plc, The Royal Bank of Scotland
    plc, SG Corporate & Investment Banking and West LB AG                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                 
|Exhibit 4(a)(iii) |  | Joint Venture Agreement, dated February 10, 1986, amongst
    Britannia Soft Drinks Limited, InterContinental Hotels Group
    PLC, Whitbread PLC, Allied Domecq PLC, Six Continents
    Investments Limited, Whitbread Group PLC and Allied                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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|                  |  |                                                                                                                                                                                                                                                                                                     
|----------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                  |  | Domecq Overseas (Canada) Limited (incorporated by reference to
    Exhibit 4(a)(iii) of InterContinental Hotels Group PLC
    Annual Report on Form 20-F (File No. 1-10409), dated
    April 8, 2004)                                                                                               
|                 
|Exhibit 4(a)(iv)  |  | Mitchells and Butlers Group Transfer Share Purchase Agreement,
    dated April 15, 2003 (incorporated by reference to
    Exhibit 4(a)(ii) of Mitchells and Butlers plcs
    Registration Statement on Form 20-F (File
    No. 1-31653), dated March 28, 2003)                                     
|                 
|Exhibit 4(a)(v)   |  | Separation Agreement dated April 15, 2003 between IHG and
    the Six Continents Group (incorporated by reference to
    Exhibit 4(a)(i) of Mitchells & Butlers plcs
    Registration Statement on Form 20-F (File
    No. 1-31653), dated March 28, 2003)                                         
|                 
|Exhibit 4(b)(i)   |  | Purchase and Sale Agreement dated July 1, 2003 between
    InterContinental Hotels Group Resources Inc and HPT                                                                                                                                                                                      
|                 
|Exhibit 4(b)(ii)  |  | Amended and Restated Purchase and Sale Agreement dated
    February 9, 2005 among BHR Texas L.P., InterContinental
    Hotels Group Resources Inc, Crowne Plaza LAX, LLC, Crowne Plaza
    Hilton Head Holding Company, Holiday Pacific Partners Limited
    Partnership, Staybridge Markham and HPT
|                 
|Exhibit 4(b)(iii) |  | Britvic IPO Agreement dated April 22, 2005 among Britannia
    Soft Drinks Limited, InterContinental Hotels Group PLC,
    Allied Domecq PLC, Whitbread Group PLC and
    Pepsico Inc                                                                                                               
|                 
|Exhibit 4(b)(iv)  |  | Share Purchase Agreement dated March 10, 2005 between IHC
    London (Holdings) Limited, and LGR Acquisition and LGR Holdings
    Limited                                                                                                                                                           
|                 
|Exhibit 4(b)(v)   |  | Amended and Restated Stock Purchase Agreement dated
    February 9, 2005 between Six Continents International
    Holdings, B.V. and HPT IHG-2                                                                                                                                                      
|                 
|Exhibit 4(c)(i)   |  | Richard Hartmans service contract dated February 12,
    2003 (incorporated by reference to Exhibit 4(c)(i) of
    InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File No. 1-10409) dated April 8, 2004                                                                         
|                 
|Exhibit 4(c)(ii)  |  | Richard Norths service contract dated February 12,
    2003 (incorporated by reference to Exhibit 4(c)(ii) of
    InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File No. 1-10409) dated April 8, 2004                                                                          
|                 
|Exhibit 4(c)(iii) |  | Stevan Porters service contract dated February 12,
    2003 (incorporated by reference to Exhibit 4(c)(iii) of
    InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File No. 1-10409) dated April 8, 2004                                                                         
|                 
|Exhibit 4(c)(iv)  |  | Richard Solomons service contract dated February 12,
    2003 (incorporated by reference to Exhibit 4(c)(iv) of
    InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File No. 1-10409) dated April 8, 2004                                                                        
|                 
|Exhibit 4(c)(v)   |  | Andrew Cossletts service contract dated December 13,
    2004                                                                                                                                                                                                                                      
|                 
|Exhibit 4(c)(vi)  |  | Agreement, dated February 12, 2003, between Thomas R Oliver
    and Six Continents Hotels Limited (incorporated by reference to
    Exhibit 4(c)(iv) of Six Continents PLC Annual Report of
    Form 20-F (File No. 1-10409) dated February 17,
    2003)                                           
|                 
|Exhibit 4(c)(vii) |  | Consultancy Agreement, dated February 12, 2003, between
    Thomas R Oliver and Six Continents Hotels Limited (incorporated
    by reference to Exhibit 4(c)(v) of Six Continents PLC
    Annual Report of Form 20-F (File No. 1-10409) dated
    February 17, 2003)                                
|                 
|Exhibit 8         |  | List of Subsidiaries                                                                                                                                                                                                                                                                                
|                 
|Exhibit 12(a)     |  | Certification of Andrew Cosslett filed pursuant to 17 CFR
    240.13a-14(a)                                                                                                                                                                                                                         

97



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|              |  |                                                                                                                       
|------------- |  | ----------------------------------------------------------------------------------------------------------------------
|Exhibit 12(b) |  | Certification of Richard Solomons filed pursuant to 17 CFR
    240.13a-14(a)                                          
|             
|Exhibit 13(a) |  | Certification of Andrew Cosslett and Richard Solomons furnished
    pursuant to 17 CFR 240.13a-14(b) and 18 U.S.C.1350
|             
|Exhibit 14(a) |  | Consent of Ernst of Young LLP (included on page F-1)                                                                  

98



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INTERCONTINENTAL HOTELS GROUP PLC





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














| |                  
| | -----------------
| | Ernst & Young LLP










F-1



---



##### Table of Contents



CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






| |                  
| | -----------------
| | Ernst & Young LLP







F-2



---



##### Table of Contents



INTERCONTINENTAL HOTELS GROUP PLC





CONSOLIDATED PROFIT AND LOSS ACCOUNT


|                                                             |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |        |       |   |  |      |     |    |   |        |       |    |  
|------------------------------------------------------------ | ------------------------ | ---------------------------------------------- | ------ | ------ | ---------------------------- |  | ----------- | ------------------------ | ------ | ----------- | ----------- | ----- | ----- | ----------- | ----------- | ----- | ----- | ----------- | ----- | ----------- | ----- | - | ----------- | ----- | --- | ----- | ------ | ----- | - |  | ---- | --- | -- | - | ------ | ----- | -- | -
|                                                             |                          | Year ended December 31,                        |        |        | 15 months ended December 31, |  |             | Year ended September 30, |       
|                                                             |                          | 2004                                           |        |        | 2003                         |  |             | 2002                     |       
|                                                             |                          |                                                |        |        |                              |  |             |                          |       
|                                                             |                          |                                                |        | Before |                              |  |             |                          | Before |             |             |      
|                                                             |                          | Before                                         |        |        |                              |  | exceptional |                          |        | Exceptional |             |       |       |             | exceptional |       |       | Exceptional |       |             |      
|                                                             |                          | exceptional                                    |        |        | Exceptional                  |  |             |                          |        | items       |             |       | items |             |             |       |       | items       |       |             | items |   |             |      
|                                                             |                          | items                                          |        |        | items                        |  |             | Total                    |        |             | restated(i) |       |       | restated(i) |             |       | Total |             |       | restated(i) |       |   | restated(i) |       |     | Total |       
|                                                             |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |       
|                                                             |                          | (£ million, except per ordinary share amounts) |       
|Turnover (Note 2)                                           |                          |                                                | 2,204  |        |                              |  |            |                          |        |             | 2,204       |       |       |             | 3,483       |       |       |             |      |             |       |   | 3,483       |       |     |       | 3,615  |       |   |  |     |     |    |   | 3,615  |      
|Analyzed as:                                                 |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |        |       |   |  |      |     |    |   |        |      
|                                                             | Continuing operations    |                                                |        | 2,204  |                              |  |             |                         |        |             |             | 2,204 |       |             |             | 2,690 |       |             |       |            |       |   |             | 2,690 |     |       |        | 2,134 |   |  |      |    |    |   |        | 2,134 |   
|                                                             | Discontinued operations  |                                                |        |       |                              |  |             |                         |        |             |             |      |       |             |             | 793   |       |             |       |            |       |   |             | 793   |     |       |        | 1,481 |   |  |      |    |    |   |        | 1,481 |   
|Cost of sales                                                |                          |                                                | (1,652 | )      |                              |  | (28         | )                        |        |             | (1,680      | )     |       |             | (2,717      | )     |       |             | (51   | )           |       |   | (2,768      | )     |     |       | (2,791 | )     |   |  | (77  | )   |    |   | (2,868 | )    
|                                                             |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |       
|Gross operating profit                                       |                          |                                                | 552    |        |                              |  | (28         | )                        |        |             | 524         |       |       |             | 766         |       |       |             | (51   | )           |       |   | 715         |       |     |       | 824    |       |   |  | (77  | )   |    |   | 747    |      
|Administrative expenses                                      |                          |                                                | (221   | )      |                              |  | (11         | )                        |        |             | (232        | )     |       |             | (283        | )     |       |             |      |             |       |   | (283        | )     |     |       | (206   | )     |   |  |     |     |    |   | (206   | )    
|Other operating income                                       |                          |                                                |       |        |                              |  | 20          |                          |        |             | 20          |       |       |             |            |       |       |             |      |             |       |   |            |       |     |       |       |       |   |  |     |     |    |   |       |      
|                                                             |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |       
|Operating profit  (Note 2)                                  |                          |                                                | 331    |        |                              |  | (19         | )                        |        |             | 312         |       |       |             | 483         |       |       |             | (51   | )           |       |   | 432         |       |     |       | 618    |       |   |  | (77  | )   |    |   | 541    |      
|Analyzed as:                                                 |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |        |       |   |  |      |     |    |   |        |      
|                                                             | Continuing operations    |                                                |        | 331    |                              |  |             | (19                      | )      |             |             | 312   |       |             |             | 346   |       |             |       | (51         | )     |   |             | 295   |     |       |        | 329   |   |  |      | (77 | )  |   |        | 252   |   
|                                                             | Discontinued operations  |                                                |        |       |                              |  |             |                         |        |             |             |      |       |             |             | 137   |       |             |       |            |       |   |             | 137   |     |       |        | 289   |   |  |      |    |    |   |        | 289   |   
|Non-operating exceptional items (Note 5)                    |                          |                                                |       |        |                              |  | (69         | )                        |        |             | (69         | )     |       |             |            |       |       |             | (213  | )           |       |   | (213        | )     |     |       |       |       |   |  | 53   |     |    |   | 53     |      
|Analyzed as:                                                 |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |        |       |   |  |      |     |    |   |        |      
|                                                             | Continuing operations:   |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |        |       |   |  |      |     |    |   |        |       |   
|                                                             |                          | Cost of fundamental reorganization             |        |        |                             |  |             |                          |       |             |             |       |      |             |             |       |      |             |       |             | (67   | ) |             |       | (67 | )     |        |       |  |  |      |     |   |   |        |       |   |  
|                                                             |                          | Separation costs                               |        |        |                             |  |             |                          |       |             |             |       |      |             |             |       |      |             |       |             | (51   | ) |             |       | (51 | )     |        |       |  |  |      |     | (4 | ) |        |       | (4 | )
|                                                             |                          | Profit on disposal of fixed assets             |        |        |                             |  |             |                          | 15     |             |             |       | 15    |             |             |       |      |             |       |             | 4     |   |             |       | 4   |       |        |       |  |  |      |     | 2  |   |        |       | 2  |  
|                                                             |                          | Provision for loss on disposal of operations   |        |        |                             |  |             |                          | (74    | )           |             |       | (74   | )           |             |       |      |             |       |             |      |   |             |       |    |       |        |       |  |  |      |     |   |   |        |       |   |  
|                                                             |                          | Provision against fixed asset investments      |        |        |                             |  |             |                          | (10    | )           |             |       | (10   | )           |             |       |      |             |       |             | (56   | ) |             |       | (56 | )     |        |       |  |  |      |     |   |   |        |       |   |  
|                                                             | Discontinued operations: |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |        |       |   |  |      |     |    |   |        |       |   
|                                                             |                          | Separation costs                               |        |        |                             |  |             |                          |       |             |             |       |      |             |             |       |      |             |       |             | (41   | ) |             |       | (41 | )     |        |       |  |  |      |     |   |   |        |       |   |  
|                                                             |                          | Loss on disposal of fixed assets               |        |        |                             |  |             |                          |       |             |             |       |      |             |             |       |      |             |       |             | (2    | ) |             |       | (2  | )     |        |       |  |  |      |     | (2 | ) |        |       | (2 | )
|                                                             |                          | Profit on disposal of operations               |        |        |                             |  |             |                          |       |             |             |       |      |             |             |       |      |             |       |             |      |   |             |       |    |       |        |       |  |  |      |     | 57 |   |        |       | 57 |  
|                                                             |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |       
|Profit on ordinary activities before interest 
    (Note 2) |                          |                                                | 331    |        |                              |  | (88         | )                        |        |             | 243         |       |       |             | 483         |       |       |             | (264  | )           |       |   | 219         |       |     |       | 618    |       |   |  | (24  | )   |    |   | 594    |      
|Interest receivable                                          |                          |                                                | 48     |        |                              |  | 22          |                          |        |             | 70          |       |       |             | 104         |       |       |             |      |             |       |   | 104         |       |     |       | 116    |       |   |  |     |     |    |   | 116    |      
|Interest payable and similar charges  (Note 6)              |                          |                                                | (70    | )      |                              |  | (16         | )                        |        |             | (86         | )     |       |             | (151        | )     |       |             |      |             |       |   | (151        | )     |     |       | (176   | )     |   |  |     |     |    |   | (176   | )    
|Premium on early settlement of debt  (Note 5)               |                          |                                                |       |        |                              |  | (17         | )                        |        |             | (17         | )     |       |             |            |       |       |             | (136  | )           |       |   | (136        | )     |     |       |       |       |   |  |     |     |    |   |       |      
|                                                             |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |       
|Profit on ordinary activities before taxation                |                          |                                                | 309    |        |                              |  | (99         | )                        |        |             | 210         |       |       |             | 436         |       |       |             | (400  | )           |       |   | 36          |       |     |       | 558    |       |   |  | (24  | )   |    |   | 534    |      
|Tax on profit on ordinary activities  (Note 7)              |                          |                                                | (50    | )      |                              |  | 167         |                          |        |             | 117         |       |       |             | (115        | )     |       |             | 132   |             |       |   | 17          |       |     |       | (171   | )     |   |  | 119  |     |    |   | (52    | )    
|                                                             |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |       
|Profit on ordinary activities after taxation                 |                          |                                                | 259    |        |                              |  | 68          |                          |        |             | 327         |       |       |             | 321         |       |       |             | (268  | )           |       |   | 53          |       |     |       | 387    |       |   |  | 95   |     |    |   | 482    |      
|Minority equity interests                                    |                          |                                                | (28    | )      |                              |  |            |                          |        |             | (28         | )     |       |             | (34         | )     |       |             |      |             |       |   | (34         | )     |     |       | (25    | )     |   |  |     |     |    |   | (25    | )    
|                                                             |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |       
|Earnings available for shareholders(ii)                      |                          |                                                | 231    |        |                              |  | 68          |                          |        |             | 299         |       |       |             | 287         |       |       |             | (268  | )           |       |   | 19          |       |     |       | 362    |       |   |  | 95   |     |    |   | 457    |      
|Dividends on equity shares  (Note 8)                        |                          |                                                | (592   | )      |                              |  |            |                          |        |             | (592        | )     |       |             | (156        | )     |       |             |      |             |       |   | (156        | )     |     |       | (305   | )     |   |  |     |     |    |   | (305   | )    
|                                                             |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |       
|Retained for reinvestment in the business                    |                          |                                                | (361   | )      |                              |  | 68          |                          |        |             | (293        | )     |       |             | 131         |       |       |             | (268  | )           |       |   | (137        | )     |     |       | 57     |       |   |  | 95   |     |    |   | 152    |      
|                                                             |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |       
|Earnings per ordinary share  (Note 9)                       |                          |                                                |        |        |                              |  |             |                          |        |             |             |       |       |             |             |       |       |             |       |             |       |   |             |       |     |       |        |       |   |  |      |     |    |   |        |      
|Basic                                                        |                          |                                                | 32.5   | p      |                              |  | 9.6         | p                        |        |             | 42.1        | p     |       |             | 39.1        | p     |       |             | (36.5 | )p          |       |   | 2.6         | p     |     |       | 49.5   | p     |   |  | 13.0 | p   |    |   | 62.5   | p    
|Diluted                                                      |                          |                                                |       |        |                              |  |            |                          |        |             | 41.6        | p     |       |             |            |       |       |             |      |             |       |   | 2.6         | p     |     |       |       |       |   |  |     |     |    |   | 62.3   | p    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Restated to show exceptional tax credits on a basis consistent
    with 2004, comprising prior year adjustments which are
    exceptional by reason of their size or incidence. Also restated
    to present the period ended December 31, 2003 and year
    ended September 30, 2002 on a consistent basis with the
    year ended December 31, 2004 (see Note 1 of the Notes
    to the Financial Statements).



|     |                                                                                                                                                                                                                                                                                                                                  
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii) | A summary of the significant adjustments to earnings available
    for shareholders (net income) that would be required had United
    States generally accepted accounting principles been applied
    instead of those generally accepted in the United Kingdom is set
    out in Note 35 of Notes to the Financial Statements.



F-3



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##### Table of Contents



INTERCONTINENTAL HOTELS GROUP PLC





CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND
LOSSES


|                                                         |                                 |              |      |           |              |  |     |               |   |  |      |     |  
|-------------------------------------------------------- | ------------------------------- | ------------ | ---- | --------- | ------------ |  | --- | ------------- | - |  | ---- | --- | -
|                                                         |                                 |              |      | 15 months |              |  |    
|                                                         |                                 | Year ended   |      |           | ended        |  |     | Year ended    |  
|                                                         |                                 | December 31, |      |           | December 31, |  |     | September 30, |  
|                                                         |                                 | 2004         |      |           | 2003         |  |     | 2002          |  
|                                                         |                                 |              |      |           |              |  |     |               |  
|                                                         |                                 | (£ million)  |     
|Earnings available for shareholders                      |                                 |              | 299  |           |              |  | 19  |               |   |  | 457  |    
|                                                         |                                 |              |      |           |              |  |     |               |  
|Reversal of previous revaluation gains due to impairment |                                 |              | (20  | )         |              |  | (22 | )             |   |  | (36  | )  
|Exchange differences(i)                                  |                                 |              |      |           |              |  |     |               |   |  |      |    
|                                                         | Goodwill eliminated  (Note 26) |              |      | (110      | )            |  |     | (139          | ) |  |      | (98 | )
|                                                         | Other assets and liabilities    |              |      | (21       | )            |  |     | 79            |   |  |      | 62  |  
|                                                         |                                 |              |      |           |              |  |     |               |  
|Other recognized gains and losses                        |                                 |              | (151 | )         |              |  | (82 | )             |   |  | (72  | )  
|                                                         |                                 |              |      |           |              |  |     |               |  
|Total recognized gains and losses for the period         |                                 |              | 148  |           |              |  | (63 | )             |   |  | 385  |    
|Prior year adjustment on adoption of FRS 19              |                                 |              |     |           |              |  |    |               |   |  | (264 | )  
|                                                         |                                 |              |      |           |              |  |     |               |  
|Total recognized gains since previous year end           |                                 |              | 148  |           |              |  | (63 | )             |   |  | 121  |    
|                                                         |                                 |              |      |           |              |  |     |               |  






|     |  |                                                                                                                                                                                                                                                                                                                                                                                           
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)  |  | Foreign currency denominated net assets, including goodwill
    purchased prior to September 30, 1998 and eliminated
    against Group reserves, and related foreign currency borrowings
    and currency swaps, are translated at each balance sheet date
    giving rise to exchange differences which are taken to Group
    reserves as recognized gains and losses during the period.
|    
|(ii) |  | The statement of comprehensive income required under United
    States generally accepted accounting principles is set out in
    Note 35 of Notes to the Financial Statements.                                                                                                                                                                                                           

Note of historical cost Group profits and losses


|                                                                                                   |  |              |      |           |              |  |      |               |  |  |     |  
|-------------------------------------------------------------------------------------------------- |  | ------------ | ---- | --------- | ------------ |  | ---- | ------------- |  |  | --- | -
|                                                                                                   |  |              |      | 15 months |              |  |     
|                                                                                                   |  | Year ended   |      |           | ended        |  |      | Year ended    | 
|                                                                                                   |  | December 31, |      |           | December 31, |  |      | September 30, | 
|                                                                                                   |  | 2004         |      |           | 2003         |  |      | 2002          | 
|                                                                                                   |  |              |      |           |              |  |      |               | 
|                                                                                                   |  | (£ million)  |     
|Reported profit on ordinary activities before taxation                                             |  |              | 210  |           |              |  | 36   |               |  |  | 534 |  
|Realization of revaluation gains of previous periods                                               |  |              | 3    |           |              |  | 16   |               |  |  | 3   |  
|Adjustment for previously recognized revaluation losses                                            |  |              |     |           |              |  |     |               |  |  | (37 | )
|                                                                                                   |  |              |      |           |              |  |      |               | 
|Historical cost profit on ordinary activities before taxation                                      |  |              | 213  |           |              |  | 52   |               |  |  | 500 |  
|                                                                                                   |  |              |      |           |              |  |      |               | 
|Historical cost (loss)/profit retained after taxation, minority
    equity interests and dividends |  |              | (290 | )         |              |  | (121 | )             |  |  | 118 |  
|                                                                                                   |  |              |      |           |              |  |      |               | 



F-4



---



##### Table of Contents



INTERCONTINENTAL HOTELS GROUP PLC





CONSOLIDATED BALANCE SHEET


|                                                               |                                     |              |        |      |              |  |        |      |  
|-------------------------------------------------------------- | ----------------------------------- | ------------ | ------ | ---- | ------------ |  | ------ | ---- | -
|                                                               |                                     | December 31, |        |      | December 31, | 
|                                                               |                                     | 2004         |        |      | 2003         | 
|                                                               |                                     |              |        |      |              | 
|                                                               |                                     | (£ million)  |       
|Fixed assets                                                   |                                     |              |        |      |              |  |        |     
|Intangible assets  (Note 15)                                  |                                     |              | 142    |      |              |  | 158    |     
|Tangible assets  (Note 16)                                    |                                     |              | 3,776  |      |              |  | 3,951  |     
|Investments  (Note 17)                                        |                                     |              | 99     |      |              |  | 172    |     
|                                                               |                                     |              |        |      |              | 
|                                                               |                                     |              | 4,017  |      |              |  | 4,281  |     
|Current assets                                                 |                                     |              |        |      |              |  |        |     
|Stocks  (Note 18)                                             |                                     |              | 42     |      |              |  | 44     |     
|Debtors  (Note 19)                                            |                                     |              | 556    |      |              |  | 523    |     
|Analyzed as:                                                   |                                     |              |        |      |              |  |        |     
|                                                               | Amounts falling due within one year |              |        | 419  |              |  |        | 447  |  
|                                                               | Amounts falling due after one year  |              |        | 137  |              |  |        | 76   |  
|Investments  (Note 20)                                        |                                     |              | 116    |      |              |  | 377    |     
|Cash at bank and in hand                                       |                                     |              | 43     |      |              |  | 55     |     
|                                                               |                                     |              |        |      |              | 
|                                                               |                                     |              | 757    |      |              |  | 999    |     
|Creditors: amounts falling due within one year 
    (Note 21) |                                     |              | (1,013 | )    |              |  | (1,085 | )   
|                                                               |                                     |              |        |      |              | 
|Net current liabilities                                        |                                     |              | (256   | )    |              |  | (86    | )   
|                                                               |                                     |              |        |      |              | 
|Total assets less current liabilities                          |                                     |              | 3,761  |      |              |  | 4,195  |     
|Creditors: amounts falling due after one year 
    (Note 22)  |                                     |              | (1,252 | )    |              |  | (1,085 | )   
|Provisions for liabilities and charges  (Note 23)             |                                     |              | (382   | )    |              |  | (393   | )   
|Analyzed as:                                                   |                                     |              |        |      |              |  |        |     
|                                                               | Deferred taxation                   |              |        | (248 | )            |  |        | (314 | )
|                                                               | Other provisions                    |              |        | (134 | )            |  |        | (79  | )
|Minority equity interests                                      |                                     |              | (150   | )    |              |  | (163   | )   
|                                                               |                                     |              |        |      |              | 
|Net assets  (Note 2)                                          |                                     |              | 1,977  |      |              |  | 2,554  |     
|                                                               |                                     |              |        |      |              | 
|Capital and reserves                                           |                                     |              |        |      |              |  |        |     
|Equity share capital                                           |                                     |              | 697    |      |              |  | 739    |     
|Share premium account                                          |                                     |              | 26     |      |              |  | 14     |     
|Revaluation reserve                                            |                                     |              | 233    |      |              |  | 258    |     
|Capital redemption reserve                                     |                                     |              | 46     |      |              |  |       |     
|Merger reserve                                                 |                                     |              | 1,164  |      |              |  | 1,164  |     
|Other reserves                                                 |                                     |              | (22    | )    |              |  | (11    | )   
|Profit and loss account                                        |                                     |              | (167   | )    |              |  | 390    |     
|                                                               |                                     |              |        |      |              | 
|Equity shareholders funds(i)                                  |                                     |              | 1,977  |      |              |  | 2,554  |     
|                                                               |                                     |              |        |      |              | 






|    |                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | A summary of the significant adjustments to shareholders
    funds that would be required had United States generally
    accepted accounting principles been applied instead of those
    generally accepted in the United Kingdom is set out in
    Note 35 of Notes to the Financial Statements.



F-5



---



##### Table of Contents



INTERCONTINENTAL HOTELS GROUP PLC





CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS
FUNDS


|                                                         |                                               |               |     |      |                                      |  |       |         |   |  |             |         |   |            |       |      |         |  |     |         |   |  |          |       |  |               |     |   |  |  |       |        |   |  |       |        |  
|-------------------------------------------------------- | --------------------------------------------- | ------------- | --- | ---- | ------------------------------------ |  | ----- | ------- | - |  | ----------- | ------- | - | ---------- | ----- | ---- | ------- |  | --- | ------- | - |  | -------- | ----- |  | ------------- | --- | - |  |  | ----- | ------ | - |  | ----- | ------ | -
|                                                         |                                               | Share capital |     |      | Retained earnings and other reserves | 
|                                                         |                                               |               |     |      |                                      | 
|                                                         |                                               | Number of     |     |      |                                      |  | Share |         |   |  |             | Capital |   |            |      
|                                                         |                                               | ordinary      |     |      | Ordinary                             |  |       | premium |   |  | Revaluation |         |   | redemption |       |      | Merger  |  |     | Other   |   |  | Profit   |       |  | Total         |    
|                                                         |                                               | shares        |     |      | shares                               |  |       | account |   |  | reserve     |         |   | reserve    |       |      | reserve |  |     | reserve |   |  | and loss |       |  | shareholders |    
|                                                         |                                               | (i)           |     |      | (i)                                  |  |       | (ii)    |   |  | (ii)        |         |   | (ii)       |       |      | (ii)    |  |     | (iii)   |   |  | account  |       |  | funds         |    
|                                                         |                                               |               |     |      |                                      |  |       |         |   |  |             |         |   |            |       |      |         |  |     |         |   |  |          |       |  |               |    
|                                                         |                                               | (£ million)   |    
|At October 1, 2001(iv)                                   |                                               |               | 866 |      |                                      |  | 242   |         |   |  | 799         |         |   |            | 1,025 |      |         |  | 853 |         |   |  |         |       |  |               | (32 | ) |  |  | 2,266 |        |   |  | 5,153 |       
|Goodwill (Note 26)                                       |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | 98    |        |   |  | 98    |       
|Exchange adjustments on: assets                          |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            | (3    | )    |         |  |    |         |   |  |         |       |  |               |    |   |  |  | (161  | )      |   |  | (164  | )     
|                                                         | borrowings and currency swaps                 |               |     |     |                                      |  |       |        |   |  |             |        |   |            |       |     |         |  |     |        |   |  |          |      |  |               |     |  |  |  |       | 128    |   |  |       | 128    |  
|Allotment of ordinary shares:                            |                                               |               |     |      |                                      |  |       |         |   |  |             |         |   |            |       |      |         |  |     |         |   |  |          |       |  |               |     |   |  |  |       |        |   |  |       |       
|                                                         | Option schemes(v)                             |               |     | 1    |                                      |  |       | 1       |   |  |             | 3       |   |            |       |     |         |  |     |        |   |  |          |      |  |               |     |  |  |  |       | (1     | ) |  |       | 3      |  
|Revaluation surplus realized on disposals                |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            | (3    | )    |         |  |    |         |   |  |         |       |  |               |    |   |  |  | 3     |        |   |  |      |       
|Transfer of previously recognized revaluation losses     |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            | 37    |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | (37   | )      |   |  |      |       
|Reversal of previous revaluation gains due to impairment |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            | (36   | )    |         |  |    |         |   |  |         |       |  |               |    |   |  |  |      |        |   |  | (36   | )     
|Allocation of shares in employee share trusts            |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               | 1   |   |  |  |      |        |   |  | 1     |       
|Retained income                                          |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | 152   |        |   |  | 152   |       
|                                                         |                                               |               |     |      |                                      |  |       |         |   |  |             |         |   |            |       |      |         |  |     |         |   |  |          |       |  |               |    
|At September 30, 2002(iv)                                |                                               |               | 867 |      |                                      |  | 243   |         |   |  | 802         |         |   |            | 1,020 |      |         |  | 853 |         |   |  |         |       |  |               | (31 | ) |  |  | 2,448 |        |   |  | 5,335 |       
|Separation of MAB:                                       |                                               |               |     |      |                                      |  |       |         |   |  |             |         |   |            |       |      |         |  |     |         |   |  |          |       |  |               |     |   |  |  |       |        |   |  |       |       
|                                                         | Net Assets of MAB eliminated                  |               |     |     |                                      |  |       |        |   |  |             |        |   |            |       | (743 | )       |  |     |        |   |  |          |      |  |               |     |  |  |  |       | (2,034 | ) |  |       | (2,777 | )
|                                                         | Transfer to merger reserve                    |               |     | (133 | )                                    |  |       | 491     |   |  |             | (802    | ) |            |       |     |         |  |     | (853    | ) |  |          | 1,164 |  |               |     |  |  |  |       |       |   |  |       |       |  
|MAB goodwill eliminated                                  |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | 50    |        |   |  | 50    |       
|Minority interest on transfer of pension prepayment      |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | (7    | )      |   |  | (7    | )     
|Reduction of shares in employee share trusts             |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               | 13  |   |  |  | (5    | )      |   |  | 8     |       
|Allotment of ordinary shares:                            |                                               |               |     |      |                                      |  |       |         |   |  |             |         |   |            |       |      |         |  |     |         |   |  |          |       |  |               |     |   |  |  |       |        |   |  |       |       
|                                                         | Option schemes(v)                             |               |     | 5    |                                      |  |       | 5       |   |  |             | 14      |   |            |       |     |         |  |     |        |   |  |          |      |  |               |     |  |  |  |       | (1     | ) |  |       | 18     |  
|                                                         | Allocation of shares in employee share trusts |               |     |     |                                      |  |       |        |   |  |             |        |   |            |       |     |         |  |     |        |   |  |          |      |  |               |     | 7 |  |  |       |       |   |  |       | 7      |  
|Goodwill  (Note 26)                                     |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | 139   |        |   |  | 139   |       
|Revaluation surplus realized on disposals                |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            | (16   | )    |         |  |    |         |   |  |         |       |  |               |    |   |  |  | 16    |        |   |  |      |       
|Reversal of previous revaluation gains due to impairment |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            | (22   | )    |         |  |    |         |   |  |         |       |  |               |    |   |  |  |      |        |   |  | (22   | )     
|Exchange adjustments on: assets                          |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            | 19    |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | (142  | )      |   |  | (123  | )     
|                                                         | borrowings and currency swaps                 |               |     |     |                                      |  |       |        |   |  |             |        |   |            |       |     |         |  |     |        |   |  |          |      |  |               |     |  |  |  |       | 63     |   |  |       | 63     |  
|Retained loss                                            |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | (137  | )      |   |  | (137  | )     
|                                                         |                                               |               |     |      |                                      |  |       |         |   |  |             |         |   |            |       |      |         |  |     |         |   |  |          |       |  |               |    
|At December 31, 2003(iv)                                 |                                               |               | 739 |      |                                      |  | 739   |         |   |  | 14          |         |   |            | 258   |      |         |  |    |         |   |  | 1,164    |       |  |               | (11 | ) |  |  | 390   |        |   |  | 2,554 |       
|Goodwill  (Note 26)                                     |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | 110   |        |   |  | 110   |       
|Premium on allotment of ordinary shares:                 |                                               |               |     |      |                                      |  |       |         |   |  |             |         |   |            |       |      |         |  |     |         |   |  |          |       |  |               |     |   |  |  |       |        |   |  |       |       
|                                                         | Option schemes(v)                             |               |     | 4    |                                      |  |       | 4       |   |  |             | 12      |   |            |       |     |         |  |     |        |   |  |          |      |  |               |     |  |  |  |       |       |   |  |       | 16     |  
|                                                         | Share capital consolidation                   |               |     | (75  | )                                    |  |       |        |   |  |             |        |   |            |       |     |         |  |     |        |   |  |          |      |  |               |     |  |  |  |       |       |   |  |       |       |  
|                                                         | Repurchase of ordinary shares                 |               |     | (46  | )                                    |  |       | (46     | ) |  |             |        |   |            |       |     |         |  |     |        |   |  |          |      |  |               |     |  |  |  |       | (211   | ) |  |       | (257   | )
|Transfer to capital redemption reserve                   |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  | 46  |         |   |  |         |       |  |               |    |   |  |  | (46   | )      |   |  |      |       
|Purchase of own shares by employee share trusts          |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               | (33 | ) |  |  |      |        |   |  | (33   | )     
|Release of own shares by employee share trusts           |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               | 22  |   |  |  | (6    | )      |   |  | 16    |       
|Credit in respect of employee share schemes              |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | 15    |        |   |  | 15    |       
|Revaluation surplus realized on disposals                |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            | (3    | )    |         |  |    |         |   |  |         |       |  |               |    |   |  |  | 3     |        |   |  |      |       
|Reversal of previous revaluation gains due to impairment |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            | (20   | )    |         |  |    |         |   |  |         |       |  |               |    |   |  |  |      |        |   |  | (20   | )     
|Exchange adjustments on: assets                          |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            | (2    | )    |         |  |    |         |   |  |         |       |  |               |    |   |  |  | (73   | )      |   |  | (75   | )     
|                                                         | borrowings and currency swaps                 |               |     |     |                                      |  |       |        |   |  |             |        |   |            |       |     |         |  |     |        |   |  |          |      |  |               |     |  |  |  |       | (56    | ) |  |       | (56    | )
|Retained loss                                            |                                               |               |    |      |                                      |  |      |         |   |  |            |         |   |            |      |      |         |  |    |         |   |  |         |       |  |               |    |   |  |  | (293  | )      |   |  | (293  | )     
|                                                         |                                               |               |     |      |                                      |  |       |         |   |  |             |         |   |            |       |      |         |  |     |         |   |  |          |       |  |               |    
|At December 31, 2004(iv)                                 |                                               |               | 622 |      |                                      |  | 697   |         |   |  | 26          |         |   |            | 233   |      |         |  | 46  |         |   |  | 1,164    |       |  |               | (22 | ) |  |  | (167  | )      |   |  | 1,977 |       
|                                                         |                                               |               |     |      |                                      |  |       |         |   |  |             |         |   |            |       |      |         |  |     |         |   |  |          |       |  |               |    






|    |                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | At September 30, 2002 the authorized share capital of Six
    Continents PLC was £1,149 million, comprising
    1,073 million ordinary shares of 28p each and
    889 million cumulative preference shares of 95.5p each.

F-6



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##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | InterContinental Hotels Group PLC (IHG) was
    incorporated in Great Britain and registered in England and
    Wales with registered number 4551528 on October 2, 2002 as
    a public limited company under the Companies Act 1985 with the
    name Hackplimco (No. 112) plc, and changed its name to
    InterContinental Hotels Group PLC on January 17, 2003.                                                                                                                                                                                                                                                               
|
| | On incorporation, the Company had an authorized share capital of
    £50,000, divided into 50,000 ordinary shares of £1
    each, of which two ordinary shares were allotted, called up and
    fully paid. On February 6, 2003, the authorized share
    capital was increased to £10,000,050,000 by the creation of
    9,999,950,000 additional ordinary shares of £1 each and one
    redeemable preference share of £50,000. The redeemable
    preference share so created was allotted and treated as paid up
    in full on this date.                                                                                      
|
| | On April 15, 2003, the Separation of Six Continents PLC was
    completed and the entire issued share capital of Six Continents
    PLC was transferred to InterContinental Hotels Group PLC at fair
    market value, in exchange for the issue of 734 million
    fully paid ordinary shares of £1 each, which were admitted
    to the Official List of the UK Listing Authority and admitted to
    trading on the London Stock Exchange on that date. In accordance
    with the merger relief provisions of Sections 131 and 133
    of the Companies Act 1985, the 734 million shares are
    recorded only at nominal value.
|
| | The redeemable preference share which was redeemed at par value
    and cancelled on June 5, 2003, did not carry any right to
    receive dividends nor to participate in the profits of IHG, was
    replaced in accordance with the Companys Articles of
    Association by £50,000 ordinary shares of £1 each.                                                                                                                                                                                                                                                                                                                  
|
| | During 2004, the Company undertook to return funds of up to
    £500 million to shareholders by way of two consecutive
    £250 million share repurchase programs, the second of
    which commenced in December 2004. During the year, 46,385,981
    ordinary shares were repurchased and canceled under the
    authorities granted by shareholders at general meetings held
    during 2003 and 2004.                                                                                                                                                                                                                           
|
| | The aggregate consideration in respect of ordinary shares issued
    in respect of option schemes during the period was
    £16 million (2003 £18 million, 2002
    £3 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | At an Extraordinary General Meeting on December 10, 2004,
    shareholders approved a share capital consolidation on the basis
    of 25 new ordinary shares for every 28 existing ordinary shares
    except for the 50,000 £1 ordinary shares created on
    June 5, 2003.                                                                                                                                                                                                                                                                                                                                                        
|
| | At the Extraordinary General Meeting held on December 10,
    2004 authority was given to the Company to purchase up to 14.99%
    of its own shares until the next Annual General Meeting, which
    will be held on June 1, 2005.                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | At December 31, 2004, the authorized share capital was
    £10,000,049,999, comprising 8,928,571,428 ordinary shares
    of 112 pence each and 50,000 ordinary shares of £1.                                                                                                                                                                                                                                                                                                                                                                                                                                                        



|      |                                                                                                                                                                                                                                                                                             
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii)  | The share premium account, capital redemption reserve,
    revaluation reserve and merger reserve are not distributable.                                                                                                                                                                    
|     
|(iii) | The other reserve comprises £21.8 million (2003
    £10.5 million) in respect of 3.1 million (2003
    2.2 million) InterContinental Hotels Group PLC ordinary
    shares held by employee share trusts, with a market value at
    December 31, 2004 of £20 million (2003
    £12 million).
|     
|(iv)  | Retained earnings and other reserves at December 31, 2004
    were decreased by cumulative exchange adjustments of
    £84 million (2003 £63 million, 2002
    £142 million and £200 million at
    October 1, 2001).                                                                       
|     
|(v)   | Includes transfer of £ nil million (2003
    £1 million, 2002 £1 million) from the profit
    and loss account in respect of shares issued to the qualifying
    employee share ownership trust.                                                                                            



F-7



---



##### Table of Contents



INTERCONTINENTAL HOTELS GROUP PLC





CONSOLIDATED STATEMENT OF CASH FLOWS


|                                                |                         |              |      |           |              |  |      |               |   |  |      |      |  
|----------------------------------------------- | ----------------------- | ------------ | ---- | --------- | ------------ |  | ---- | ------------- | - |  | ---- | ---- | -
|                                                |                         |              |      | 15 months |              |  |     
|                                                |                         | Year ended   |      |           | ended        |  |      | Year ended    |  
|                                                |                         | December 31, |      |           | December 31, |  |      | September 30, |  
|                                                |                         | 2004         |      |           | 2003         |  |      | 2002          |  
|                                                |                         |              |      |           |              |  |      |               |  
|                                                |                         | (£ million)  |     
|Operating activities  (Note 10)                |                         |              | 515  |           |              |  | 795  |               |   |  | 720  |     
|                                                |                         |              |      |           |              |  |      |               |  
|Interest paid                                   |                         |              | (91  | )         |              |  | (141 | )             |   |  | (186 | )   
|Costs associated with new facilities            |                         |              | (5   | )         |              |  | (20  | )             |   |  |     |     
|Premium on early settlement of debt             |                         |              | (17  | )         |              |  | (136 | )             |   |  |     |     
|Dividends paid to minority shareholders         |                         |              | (26  | )         |              |  | (22  | )             |   |  | (13  | )   
|Interest received                               |                         |              | 72   |           |              |  | 111  |               |   |  | 124  |     
|                                                |                         |              |      |           |              |  |      |               |  
|Returns on investments and servicing of finance |                         |              | (67  | )         |              |  | (208 | )             |   |  | (75  | )   
|                                                |                         |              |      |           |              |  |      |               |  
|UK corporation tax (paid)/received              |                         |              | (4   | )         |              |  | 25   |               |   |  | (96  | )   
|Overseas corporate tax paid                     |                         |              | (31  | )         |              |  | (21  | )             |   |  | (27  | )   
|                                                |                         |              |      |           |              |  |      |               |  
|Taxation                                        |                         |              | (35  | )         |              |  | 4    |               |   |  | (123 | )   
|                                                |                         |              |      |           |              |  |      |               |  
|Paid:                                           |                         |              |      |           |              |  |      |               |   |  |      |     
|                                                | Intangible fixed assets |              |      |          |              |  |      | (10           | ) |  |      |     |  
|                                                | Tangible fixed assets   |              |      | (245      | )            |  |      | (475          | ) |  |      | (648 | )
|                                                | Fixed asset investments |              |      | (12       | )            |  |      | (37           | ) |  |      | (14  | )
|Received:                                       |                         |              |      |           |              |  |      |               |   |  |      |     
|                                                | Tangible fixed assets   |              |      | 101       |              |  |      | 265           |   |  |      | 134  |  
|                                                | Fixed asset investments |              |      | 5         |              |  |      | 9             |   |  |      | 15   |  
|                                                |                         |              |      |           |              |  |      |               |  
|Capital expenditure and financial investment    |                         |              | (151 | )         |              |  | (248 | )             |   |  | (513 | )   
|                                                |                         |              |      |           |              |  |      |               |  
|Acquisitions                                    |                         |              |     |           |              |  |     |               |   |  | (24  | )   
|Disposals                                       |                         |              |     |           |              |  |     |               |   |  | 9    |     
|Separation costs                                |                         |              |     |           |              |  | (66  | )             |   |  |     |     
|                                                |                         |              |      |           |              |  |      |               |  
|Acquisitions and disposals                      |                         |              |     |           |              |  | (66  | )             |   |  | (15  | )   
|                                                |                         |              |      |           |              |  |      |               |  
|Equity dividends                                |                         |              | (600 | )         |              |  | (299 | )             |   |  | (299 | )   
|                                                |                         |              |      |           |              |  |      |               |  
|Net cash flow                                   |                         |              | (338 | )         |              |  | (22  | )             |   |  | (305 | )   
|Management of liquid resources  (Note 14)      |                         |              | 320  |           |              |  | (129 | )             |   |  | 232  |     
|Financing  (Note 14)                           |                         |              |     |           |              |  | 206  |               |   |  | 63   |     
|                                                |                         |              |      |           |              |  |      |               |  
|Movement in cash and overdrafts                 |                         |              | (18  | )         |              |  | 55   |               |   |  | (10  | )   
|                                                |                         |              |      |           |              |  |      |               |  





F-8



---



##### Table of Contents








|         |                    
|-------- | -------------------
|Note 1  | Accounting Policies



| |                     
| | --------------------
| | Basis of preparation





| |                    
| | -------------------
| | Basis of accounting





| |                       
| | ----------------------
| | Basis of consolidation







| |                   
| | ------------------
| | Foreign currencies







| |                     
| | --------------------
| | Treasury instruments









F-9



---



##### Table of Contents





| |                              
| | -----------------------------
| | Fixed assets and depreciation

Goodwill




Other intangible assets




Tangible assets






Revaluation




Impairment




Depreciation and
amortization






|                                 |  |                                               
|-------------------------------- |  | ----------------------------------------------
|Freehold buildings               |  | 50 years                                      
|Leasehold buildings              |  | Lesser of unexpired term of lease and 50 years
|Fixtures, fittings and equipment |  | 3-25 years                                    
|Plant and machinery              |  | 4-20 years                                    



Investments






| |                  
| | -----------------
| | Deferred taxation



F-10



---



##### Table of Contents











| |       
| | ------
| | Leases





| |         
| | --------
| | Pensions









| |               
| | --------------
| | Self insurance





| |       
| | ------
| | Stocks





| |              
| | -------------
| | Trade debtors





| |                    
| | -------------------
| | Revenue recognition



F-11



---



##### Table of Contents













| |                
| | ---------------
| | Loyalty program





| |                 
| | ----------------
| | Use of estimates





|         |                   
|-------- | ------------------
|Note 2  | Segmental Analysis

  


  


|                                              |                                              |                                 |     |      |      |  |     |         |       |  |         |      |   |        |       |   |        |  |       |       |   |  |     |   |  |  |       |     |  
|--------------------------------------------- | -------------------------------------------- | ------------------------------- | --- | ---- | ---- |  | --- | ------- | ----- |  | ------- | ---- | - | ------ | ----- | - | ------ |  | ----- | ----- | - |  | --- | - |  |  | ----- | --- | -
|                                              |                                              | Year ended December 31, 2004(i) |    
|                                              |                                              |                                 |    
|                                              |                                              |                                 |     | Asia |      |  |     |         | Total |  |         | Soft |   |        | Total |  
|                                              |                                              | Americas                        |     |      | EMEA |  |     | Pacific |       |  | Central |      |   | Hotels |       |   | Drinks |  |       | Group |  
|                                              |                                              |                                 |     |      |      |  |     |         |       |  |         |      |   |        |       |   |        |  |       |       |  
|                                              |                                              | (£ million)                     |    
|Turnover                                      |                                              |                                 | 495 |      |      |  | 829 |         |       |  | 134     |      |   |        | 40    |   |        |  | 1,498 |       |   |  | 706 |   |  |  | 2,204 |    
|                                              |                                              |                                 |     |      |      |  |     |         |       |  |         |      |   |        |       |   |        |  |       |       |  
|Operating profit before exceptional items     |                                              |                                 | 163 |      |      |  | 119 |         |       |  | 21      |      |   |        | (52   | ) |        |  | 251   |       |   |  | 80  |   |  |  | 331   |    
|Operating exceptional items                   |                                              |                                 | (14 | )    |      |  | (19 | )       |       |  | (4      | )    |   |        | 18    |   |        |  | (19   | )     |   |  |    |   |  |  | (19   | )  
|                                              |                                              |                                 |     |      |      |  |     |         |       |  |         |      |   |        |       |   |        |  |       |       |  
|Operating profit                              |                                              |                                 | 149 |      |      |  | 100 |         |       |  | 17      |      |   |        | (34   | ) |        |  | 232   |       |   |  | 80  |   |  |  | 312   |    
|Non-operating exceptional items:              |                                              |                                 |     |      |      |  |     |         |       |  |         |      |   |        |       |   |        |  |       |       |   |  |     |   |  |  |       |    
|                                              | Provision for loss on disposal of operations |                                 |     | (9   | )    |  |     | (65     | )     |  |         |     |   |        |       |  |        |  |       | (74   | ) |  |     |  |  |  |       | (74 | )
|                                              | (Loss)/ profit on disposal of fixed assets   |                                 |     | (1   | )    |  |     | 14      |       |  |         | 2    |   |        |       |  |        |  |       | 15    |   |  |     |  |  |  |       | 15  |  
|                                              | Provision against fixed asset investments    |                                 |     | 8    |      |  |     | (16     | )     |  |         | (2   | ) |        |       |  |        |  |       | (10   | ) |  |     |  |  |  |       | (10 | )
|                                              |                                              |                                 |     |      |      |  |     |         |       |  |         |      |   |        |       |   |        |  |       |       |  
|Profit on ordinary activities before interest |                                              |                                 | 147 |      |      |  | 33  |         |       |  | 17      |      |   |        | (34   | ) |        |  | 163   |       |   |  | 80  |   |  |  | 243   |    
|                                              |                                              |                                 |     |      |      |  |     |         |       |  |         |      |   |        |       |   |        |  |       |       |  

Footnotes on page F-14.


F-12



---



##### Table of Contents



|                                              |                                           |                                      |     |      |      |  |       |         |       |  |         |      |   |        |      |     |        |  |       |       |   |  |                  |   |  |       |       |     |   |  |     |     |   |  |       |     |  
|--------------------------------------------- | ----------------------------------------- | ------------------------------------ | --- | ---- | ---- |  | ----- | ------- | ----- |  | ------- | ---- | - | ------ | ---- | --- | ------ |  | ----- | ----- | - |  | ---------------- | - |  | ----- | ----- | --- | - |  | --- | --- | - |  | ----- | --- | -
|                                              |                                           | 15 months ended December 31, 2003(i) |    
|                                              |                                           |                                      |    
|                                              |                                           |                                      |     | Asia |      |  |       |         | Total |  |         | Soft |   |        |      |     | Total  | 
|                                              |                                           | Americas                             |     |      | EMEA |  |       | Pacific |       |  | Central |      |   | Hotels |      |     | Drinks |  |       | Total |   |  | Discontinued(ii) |   |  | Group |      
|                                              |                                           |                                      |     |      |      |  |       |         |       |  |         |      |   |        |      |     |        |  |       |       |   |  |                  |   |  |       |      
|                                              |                                           | (£ million)                          |    
|Turnover                                      |                                           |                                      | 661 |      |      |  | 1,010 |         |       |  | 148     |      |   |        | 51   |     |        |  | 1,870 |       |   |  | 820              |   |  |       | 2,690 |     |   |  | 793 |     |   |  | 3,483 |    
|                                              |                                           |                                      |     |      |      |  |       |         |       |  |         |      |   |        |      |     |        |  |       |       |   |  |                  |   |  |       |      
|Operating profit before exceptional items     |                                           |                                      | 195 |      |      |  | 114   |         |       |  | 22      |      |   |        | (80  | )   |        |  | 251   |       |   |  | 95               |   |  |       | 346   |     |   |  | 137 |     |   |  | 483   |    
|Operating exceptional items                   |                                           |                                      | (9  | )    |      |  | (41   | )       |       |  | (1      | )    |   |        |     |     |        |  | (51   | )     |   |  |                 |   |  |       | (51   | )   |   |  |    |     |   |  | (51   | )  
|                                              |                                           |                                      |     |      |      |  |       |         |       |  |         |      |   |        |      |     |        |  |       |       |   |  |                  |   |  |       |      
|Operating profit                              |                                           |                                      | 186 |      |      |  | 73    |         |       |  | 21      |      |   |        | (80  | )   |        |  | 200   |       |   |  | 95               |   |  |       | 295   |     |   |  | 137 |     |   |  | 432   |    
|Non-operating exceptional items:              |                                           |                                      |     |      |      |  |       |         |       |  |         |      |   |        |      |     |        |  |       |       |   |  |                  |   |  |       |       |     |   |  |     |     |   |  |       |    
|                                              | Cost of fundamental reorganization        |                                      |     | (11  | )    |  |       | (17     | )     |  |         | (2   | ) |        |      | (37 | )      |  |       | (67   | ) |  |                  |  |  |       |       | (67 | ) |  |     |    |   |  |       | (67 | )
|                                              | Separation costs                          |                                      |     |     |      |  |       |        |       |  |         |     |   |        |      | (51 | )      |  |       | (51   | ) |  |                  |  |  |       |       | (51 | ) |  |     | (41 | ) |  |       | (92 | )
|                                              | Profit/(loss) on disposal of fixed assets |                                      |     | 10   |      |  |       | (6      | )     |  |         |     |   |        |      |    |        |  |       | 4     |   |  |                  |  |  |       |       | 4   |   |  |     | (2  | ) |  |       | 2   |  
|                                              | Provision against fixed asset investments |                                      |     | (9   | )    |  |       |        |       |  |         |     |   |        |      | (47 | )      |  |       | (56   | ) |  |                  |  |  |       |       | (56 | ) |  |     |    |   |  |       | (56 | )
|                                              |                                           |                                      |     |      |      |  |       |         |       |  |         |      |   |        |      |     |        |  |       |       |   |  |                  |   |  |       |      
|Profit on ordinary activities before interest |                                           |                                      | 176 |      |      |  | 50    |         |       |  | 19      |      |   |        | (215 | )   |        |  | 30    |       |   |  | 95               |   |  |       | 125   |     |   |  | 94  |     |   |  | 219   |    
|                                              |                                           |                                      |     |      |      |  |       |         |       |  |         |      |   |        |      |     |        |  |       |       |   |  |                  |   |  |       |      

|                                              |                                           |                                  |     |      |      |  |     |         |       |  |         |      |  |        |     |    |        |  |       |       |   |  |                  |   |  |       |       |    |   |  |       |    |   |  |       |    |  
|--------------------------------------------- | ----------------------------------------- | -------------------------------- | --- | ---- | ---- |  | --- | ------- | ----- |  | ------- | ---- |  | ------ | --- | -- | ------ |  | ----- | ----- | - |  | ---------------- | - |  | ----- | ----- | -- | - |  | ----- | -- | - |  | ----- | -- | -
|                                              |                                           | Year ended September 30, 2002(i) |    
|                                              |                                           |                                  |    
|                                              |                                           |                                  |     | Asia |      |  |     |         | Total |  |         | Soft |  |        |     |    | Total  | 
|                                              |                                           | Americas                         |     |      | EMEA |  |     | Pacific |       |  | Central |      |  | Hotels |     |    | Drinks |  |       | Total |   |  | Discontinued(ii) |   |  | Group |      
|                                              |                                           |                                  |     |      |      |  |     |         |       |  |         |      |  |        |     |    |        |  |       |       |   |  |                  |   |  |       |      
|                                              |                                           | (£ million)                      |    
|Turnover                                      |                                           |                                  | 570 |      |      |  | 794 |         |       |  | 128     |      |  |        | 40  |    |        |  | 1,532 |       |   |  | 602              |   |  |       | 2,134 |    |   |  | 1,481 |    |   |  | 3,615 |   
|                                              |                                           |                                  |     |      |      |  |     |         |       |  |         |      |  |        |     |    |        |  |       |       |   |  |                  |   |  |       |      
|Operating profit before exceptional items     |                                           |                                  | 173 |      |      |  | 125 |         |       |  | 23      |      |  |        | (55 | )  |        |  | 266   |       |   |  | 63               |   |  |       | 329   |    |   |  | 289   |    |   |  | 618   |   
|Operating exceptional items                   |                                           |                                  | (39 | )    |      |  | (24 | )       |       |  | (14     | )    |  |        |    |    |        |  | (77   | )     |   |  |                 |   |  |       | (77   | )  |   |  |      |    |   |  | (77   | ) 
|                                              |                                           |                                  |     |      |      |  |     |         |       |  |         |      |  |        |     |    |        |  |       |       |   |  |                  |   |  |       |      
|Operating profit                              |                                           |                                  | 134 |      |      |  | 101 |         |       |  | 9       |      |  |        | (55 | )  |        |  | 189   |       |   |  | 63               |   |  |       | 252   |    |   |  | 289   |    |   |  | 541   |   
|Non-operating exceptional items:              |                                           |                                  |     |      |      |  |     |         |       |  |         |      |  |        |     |    |        |  |       |       |   |  |                  |   |  |       |       |    |   |  |       |    |   |  |       |   
|                                              | Separation costs                          |                                  |     |     |      |  |     |        |       |  |         |     |  |        |     | (4 | )      |  |       | (4    | ) |  |                  |  |  |       |       | (4 | ) |  |       |   |   |  |       | (4 | )
|                                              | (Loss)/profit on disposal of fixed assets |                                  |     | (7   | )    |  |     | 9       |       |  |         |     |  |        |     |   |        |  |       | 2     |   |  |                  |  |  |       |       | 2  |   |  |       | (2 | ) |  |       |   |  
|                                              | Profit on disposal of operations          |                                  |     |     |      |  |     |        |       |  |         |     |  |        |     |   |        |  |       |      |   |  |                  |  |  |       |       |   |   |  |       | 57 |   |  |       | 57 |  
|                                              |                                           |                                  |     |      |      |  |     |         |       |  |         |      |  |        |     |    |        |  |       |       |   |  |                  |   |  |       |      
|Profit on ordinary activities before interest |                                           |                                  | 127 |      |      |  | 110 |         |       |  | 9       |      |  |        | (59 | )  |        |  | 187   |       |   |  | 63               |   |  |       | 250   |    |   |  | 344   |    |   |  | 594   |   
|                                              |                                           |                                  |     |      |      |  |     |         |       |  |         |      |  |        |     |    |        |  |       |       |   |  |                  |   |  |       |      



| |         
| | --------
| | Turnover

|                                           |  |              |       |  |                    |  |       |               |  |  |                |  |  |           |       |  |                |  |       |  |  |  |       | 
|------------------------------------------ |  | ------------ | ----- |  | ------------------ |  | ----- | ------------- |  |  | -------------- |  |  | --------- | ----- |  | -------------- |  | ----- |  |  |  | ----- | 
|                                           |  | Year ended   |       |  | 15 months          |  |       | Year ended    | 
|                                           |  | December 31, |       |  | ended December 31, |  |       | September 30, | 
|                                           |  | 2004(i)      |       |  | 2003(i)            |  |       | 2002(i)       | 
|                                           |  |              |       |  |                    |  |       |               | 
|                                           |  | By origin    |       |  | By destination     |  |       | By origin     |  |  | By destination |  |  | By origin |       |  | By destination | 
|                                           |  |              |       |  |                    |  |       |               |  |  |                |  |  |           |       |  |                | 
|                                           |  | (£ million)  |      
|United Kingdom                             |  |              | 1,126 |  |                    |  | 1,103 |               |  |  | 2,131          |  |  |           | 2,124 |  |                |  | 2,491 |  |  |  | 2,485 | 
|Rest of Europe, the Middle East and Africa |  |              | 419   |  |                    |  | 442   |               |  |  | 506            |  |  |           | 513   |  |                |  | 411   |  |  |  | 416   | 
|United States of America                   |  |              | 423   |  |                    |  | 423   |               |  |  | 571            |  |  |           | 571   |  |                |  | 476   |  |  |  | 476   | 
|Rest of Americas                           |  |              | 102   |  |                    |  | 102   |               |  |  | 127            |  |  |           | 127   |  |                |  | 108   |  |  |  | 108   | 
|Asia Pacific                               |  |              | 134   |  |                    |  | 134   |               |  |  | 148            |  |  |           | 148   |  |                |  | 129   |  |  |  | 130   | 
|                                           |  |              |       |  |                    |  |       |               |  |  |                |  |  |           |       |  |                | 
|                                           |  |              | 2,204 |  |                    |  | 2,204 |               |  |  | 3,483          |  |  |           | 3,483 |  |                |  | 3,615 |  |  |  | 3,615 | 
|                                           |  |              |       |  |                    |  |       |               |  |  |                |  |  |           |       |  |                | 

Footnotes on page F-14.


F-13



---



##### Table of Contents



Profit on ordinary
activities before interest


|                                           |  |              |     |  |                 |  |     |               |  |  |     | 
|------------------------------------------ |  | ------------ | --- |  | --------------- |  | --- | ------------- |  |  | --- | 
|                                           |  | Year ended   |     |  | 15 months ended |  |     | Year ended    | 
|                                           |  | December 31, |     |  | December 31,    |  |     | September 30, | 
|                                           |  | 2004(i)      |     |  | 2003(i)         |  |     | 2002(i)       | 
|                                           |  |              |     |  |                 |  |     |               | 
|                                           |  | (£ million)  |    
|United Kingdom                             |  |              | 60  |  |                 |  | 117 |               |  |  | 436 | 
|Rest of Europe, the Middle East and Africa |  |              | 26  |  |                 |  | (7  | )             |  |  | 57  | 
|United States of America                   |  |              | 110 |  |                 |  | 63  |               |  |  | 78  | 
|Rest of Americas                           |  |              | 30  |  |                 |  | 28  |               |  |  | 16  | 
|Asia Pacific                               |  |              | 17  |  |                 |  | 18  |               |  |  | 7   | 
|                                           |  |              |     |  |                 |  |     |               | 
|                                           |  |              | 243 |  |                 |  | 219 |               |  |  | 594 | 
|                                           |  |              |     |  |                 |  |     |               | 






|     |                                                                                                                                                                                                                                                                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)  | Other than for Soft Drinks which reflects the 53 weeks
    ended December 25, 2004 (64 weeks ended December 20,
    2003, 52 weeks ended September 30, 2002) and
    Mitchells & Butlers plc which reflects the
    28 weeks ended April 12, 2003 (2002 52 weeks).
|    
|(ii) | Discontinued operations relate to Mitchell & Butlers
    plc for all periods presented and in 2002 also included a profit
    on disposal of Bass Brewers of £57 million relating to
    the finalization of completion accounts.                                 

Depreciation and
Amortization


|                        |              |              |     |    |                 |  |     |               |  |  |     |    | 
|----------------------- | ------------ | ------------ | --- | -- | --------------- |  | --- | ------------- |  |  | --- | -- | 
|                        |              | Year ended   |     |    | 15 months ended |  |     | Year ended    | 
|                        |              | December 31, |     |    | December 31,    |  |     | September 30, | 
|                        |              | 2004         |     |    | 2003            |  |     | 2002          | 
|                        |              |              |     |    |                 |  |     |               | 
|                        |              | (£ million)  |    
|Hotels                  |              |              |     |    |                 |  |     |               |  |  |     |   
|                        | Americas     |              |     | 36 |                 |  |     | 54            |  |  |     | 46 | 
|                        | Asia Pacific |              |     | 15 |                 |  |     | 16            |  |  |     | 11 | 
|                        | EMEA         |              |     | 77 |                 |  |     | 95            |  |  |     | 66 | 
|                        | Central      |              |     | 22 |                 |  |     | 30            |  |  |     | 16 | 
|                        |              |              |     |    |                 |  |     |               | 
|                        |              |              | 150 |    |                 |  | 195 |               |  |  | 139 |   
|Soft Drinks             |              |              | 48  |    |                 |  | 54  |               |  |  | 46  |   
|                        |              |              |     |    |                 |  |     |               | 
|Continuing operations   |              |              | 198 |    |                 |  | 249 |               |  |  | 185 |   
|Discontinued operations |              |              |    |    |                 |  | 54  |               |  |  | 86  |   
|                        |              |              |     |    |                 |  |     |               | 
|                        |              |              | 198 |    |                 |  | 303 |               |  |  | 271 |   
|                        |              |              |     |    |                 |  |     |               | 

F-14



---



##### Table of Contents



Assets


|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           |  |       |       |  |  |        |        |  
|------------------------------------------ | ------------------------------------------- | ----------------- | ----- | ----- | ----------------- |  | ------ | ------------------ | --- |  | --------- | ----- |  | ----- | ------ | ------ | --------- |  | ----- | ----- |  |  | ------ | ------ | -
|                                           |                                             | December 31, 2004 |       |       | December 31, 2003 |  |        | September 30, 2002 |    
|                                           |                                             |                   |       |       |                   |  |        |                    |    
|                                           |                                             |                   |       | Net   |                   |  |        |                    | Net |  |           |       |  | Net   |       
|                                           |                                             | Total             |       |       | operating         |  |        | Total              |     |  | operating |       |  | Total |        |        | operating | 
|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           | 
|                                           |                                             | (£ million)       |      
|Hotels                                     |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           |  |       |       |  |  |        |       
|                                           | Americas                                    |                   |       | 1,073 |                   |  |        | 765                |     |  |           | 1,146 |  |       |        | 859    |           |  |       | 1,458 |  |  |        | 1,134  |  
|                                           | EMEA                                        |                   |       | 2,755 |                   |  |        | 2,334              |     |  |           | 3,183 |  |       |        | 2,422  |           |  |       | 3,036 |  |  |        | 2,502  |  
|                                           | Asia Pacific                                |                   |       | 444   |                   |  |        | 414                |     |  |           | 481   |  |       |        | 457    |           |  |       | 467   |  |  |        | 448    |  
|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           | 
|                                           |                                             |                   | 4,272 |       |                   |  | 3,513  |                    |     |  | 4,810     |       |  |       | 3,738  |        |           |  | 4,961 |       |  |  | 4,084  |       
|Soft Drinks                                |                                             |                   | 502   |       |                   |  | 306    |                    |     |  | 470       |       |  |       | 300    |        |           |  | 405   |       |  |  | 246    |       
|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           | 
|InterContinental Hotels Group PLC(i)       |                                             |                   | 4,774 |       |                   |  | 3,819  |                    |     |  | 5,280     |       |  |       | 4,038  |        |           |  | 5,366 |       |  |  | 4,330  |       
|Discontinued operations(i)                 |                                             |                   |      |       |                   |  |       |                    |     |  |          |       |  |       |       |        |           |  | 3,682 |       |  |  | 3,493  |       
|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           | 
|                                           |                                             |                   | 4,774 |       |                   |  | 3,819  |                    |     |  | 5,280     |       |  |       | 4,038  |        |           |  | 9,048 |       |  |  | 7,823  |       
|Non-operating assets:                      |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           |  |       |       |  |  |        |       
|                                           | Current asset investments                   |                   |       |       |                   |  |        | 40                 |     |  |           |       |  |       |        | 377    |           |  |       |       |  |  |        | 218    |  
|                                           | Cash at bank and in hand                    |                   |       |       |                   |  |        | 43                 |     |  |           |       |  |       |        | 55     |           |  |       |       |  |  |        | 84     |  
|                                           | Corporate taxation                          |                   |       |       |                   |  |        | 14                 |     |  |           |       |  |       |        | 37     |           |  |       |       |  |  |        | 1      |  
|Non-operating liabilities:                 |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           |  |       |       |  |  |        |       
|                                           | Borrowings                                  |                   |       |       |                   |  |        | (1,199             | )   |  |           |       |  |       |        | (1,001 | )         |  |       |       |  |  |        | (1,479 | )
|                                           | Proposed dividend of parent company         |                   |       |       |                   |  |        | (62                | )   |  |           |       |  |       |        | (70    | )         |  |       |       |  |  |        | (213   | )
|                                           | Proposed dividend for minority shareholders |                   |       |       |                   |  |        | (19                | )   |  |           |       |  |       |        | (16    | )         |  |       |       |  |  |        |       |  
|                                           | Corporate taxation                          |                   |       |       |                   |  |        | (261               | )   |  |           |       |  |       |        | (389   | )         |  |       |       |  |  |        | (455   | )
|                                           | Deferred taxation                           |                   |       |       |                   |  |        | (248               | )   |  |           |       |  |       |        | (314   | )         |  |       |       |  |  |        | (495   | )
|                                           | Minority equity interests                   |                   |       |       |                   |  |        | (150               | )   |  |           |       |  |       |        | (163   | )         |  |       |       |  |  |        | (149   | )
|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           | 
|Net assets                                 |                                             |                   | 4,774 |       |                   |  | 1,977  |                    |     |  | 5,280     |       |  |       | 2,554  |        |           |  | 9,048 |       |  |  | 5,335  |       
|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           | 
|United Kingdom                             |                                             |                   | 1,972 |       |                   |  | 1,512  |                    |     |  | 2,329     |       |  |       | 1,586  |        |           |  | 5,963 |       |  |  | 5,202  |       
|Rest of Europe, the Middle East and Africa |                                             |                   | 1,285 |       |                   |  | 1,128  |                    |     |  | 1,324     |       |  |       | 1,136  |        |           |  | 1,160 |       |  |  | 1,039  |       
|United States of America                   |                                             |                   | 958   |       |                   |  | 667    |                    |     |  | 1,020     |       |  |       | 751    |        |           |  | 1,328 |       |  |  | 1,013  |       
|Rest of Americas                           |                                             |                   | 115   |       |                   |  | 98     |                    |     |  | 126       |       |  |       | 108    |        |           |  | 130   |       |  |  | 121    |       
|Asia Pacific                               |                                             |                   | 444   |       |                   |  | 414    |                    |     |  | 481       |       |  |       | 457    |        |           |  | 467   |       |  |  | 448    |       
|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           | 
|                                           |                                             |                   | 4,774 |       |                   |  | 3,819  |                    |     |  | 5,280     |       |  |       | 4,038  |        |           |  | 9,048 |       |  |  | 7,823  |       
|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           | 
|Net non-operating liabilities              |                                             |                   |       |       |                   |  | (1,842 | )                  |     |  |           |       |  |       | (1,484 | )      |           |  |       |       |  |  | (2,488 | )     
|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           | 
|Net assets                                 |                                             |                   |       |       |                   |  | 1,977  |                    |     |  |           |       |  |       | 2,554  |        |           |  |       |       |  |  | 5,335  |       
|                                           |                                             |                   |       |       |                   |  |        |                    |     |  |           |       |  |       |        |        |           | 






|    |                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|(i) | InterContinental Hotels Group PLC comprises continuing
    operations. Discontinued operations relate to
    Mitchells & Butlers plc.

F-15



---



##### Table of Contents





|         |                 
|-------- | ----------------
|Note 3  | Operating Profit

|                                           |  |              |     |   |                                   |  |     |                 |  |  |       |  |  |  |       |  
|------------------------------------------ |  | ------------ | --- | - | --------------------------------- |  | --- | --------------- |  |  | ----- |  |  |  | ----- | -
|                                           |  | Year ended   |     |   |                                   |  |     |                 | 
|                                           |  | December 31, |     |   |                                  
|                                           |  | 2004         |     |   | 15 months ended December 31, 2003 | 
|                                           |  |              |     |   |                                   | 
|                                           |  | Total        |     |   | Continuing(i)                     |  |     | Discontinued(i) |  |  | Total | 
|                                           |  |              |     |   |                                   |  |     |                 |  |  |       | 
|                                           |  | (£ million)  |    
|Operating profit is stated after charging: |  |              |     |   |                                   |  |     |                 |  |  |       |  |  |  |       |  
|Staff costs (Note 4)                       |  |              | 659 |   |                                   |  | 815 |                 |  |  | 198   |  |  |  | 1,013 |  
|Depreciation of tangible fixed assets      |  |              | 188 |   |                                   |  | 236 |                 |  |  | 54    |  |  |  | 290   |  
|Impairment of tangible fixed assets        |  |              | 28  |   |                                   |  | 51  |                 |  |  |      |  |  |  | 51    |  
|Amortization of goodwill                   |  |              | 10  |   |                                   |  | 13  |                 |  |  |      |  |  |  | 13    |  
|Hire of plant and machinery                |  |              | 14  |   |                                   |  | 18  |                 |  |  | 17    |  |  |  | 35    |  
|Property rentals                           |  |              | 53  |   |                                   |  | 65  |                 |  |  | 24    |  |  |  | 89    |  
|Income from fixed asset investments        |  |              | (1  | ) |                                   |  | (3  | )               |  |  |      |  |  |  | (3    | )
|Operating exceptionals included above      |  |              | 28  |   |                                   |  | 51  |                 |  |  |      |  |  |  | 51    |  

|                                           |  |                               |     |   |                 |  |     |       |  |  |       |  
|------------------------------------------ |  | ----------------------------- | --- | - | --------------- |  | --- | ----- |  |  | ----- | -
|                                           |  | Year ended September 30, 2002 |    
|                                           |  |                               |    
|                                           |  | Continuing(i)                 |     |   | Discontinued(i) |  |     | Total | 
|                                           |  |                               |     |   |                 |  |     |       | 
|                                           |  | (£ million)                   |    
|Operating profit is stated after charging: |  |                               |     |   |                 |  |     |       |  |  |       |  
|Staff costs  (Note 4)                     |  |                               | 659 |   |                 |  | 378 |       |  |  | 1,037 |  
|Depreciation of tangible fixed assets      |  |                               | 175 |   |                 |  | 86  |       |  |  | 261   |  
|Impairment of tangible fixed assets        |  |                               | 77  |   |                 |  |    |       |  |  | 77    |  
|Amortization of goodwill                   |  |                               | 9   |   |                 |  | 1   |       |  |  | 10    |  
|Hire of plant and machinery                |  |                               | 19  |   |                 |  | 30  |       |  |  | 49    |  
|Property rentals                           |  |                               | 58  |   |                 |  | 42  |       |  |  | 100   |  
|Income from fixed asset investments        |  |                               | (8  | ) |                 |  |    |       |  |  | (8    | )
|Operating exceptionals included above      |  |                               | 77  |   |                 |  |    |       |  |  | 77    |  






|    |                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Continuing operations comprises InterContinental Hotels Group
    PLC. Discontinued operations relate to Mitchells &
    Butlers plc for 2003 and 2002, and in 2002 also included a
    profit on disposal of Bass Brewers of £57 million.



| |                                                     
| | ----------------------------------------------------
| | Auditors remuneration paid to Ernst & Young
    LLP

|                   |  |              |     |           |              |  |      |               |  |  |     | 
|------------------ |  | ------------ | --- | --------- | ------------ |  | ---- | ------------- |  |  | --- | 
|                   |  |              |     | 15 months |              |  |     
|                   |  | Year ended   |     |           | ended        |  |      | Year ended    | 
|                   |  | December 31, |     |           | December 31, |  |      | September 30, | 
|                   |  | 2004         |     |           | 2003         |  |      | 2002          | 
|                   |  |              |     |           |              |  |      |               | 
|                   |  | (£ million)  |    
|Audit fees         |  |              | 3.8 |           |              |  | 2.8  |               |  |  | 1.9 | 
|Audit related fees |  |              | 1.6 |           |              |  | 7.2  |               |  |  | 3.2 | 
|Tax fees           |  |              | 0.5 |           |              |  | 1.2  |               |  |  | 1.2 | 
|Other fees         |  |              |    |           |              |  |     |               |  |  | 0.4 | 
|                   |  |              |     |           |              |  |      |               | 
|                   |  |              | 5.9 |           |              |  | 11.2 |               |  |  | 6.7 | 
|                   |  |              |     |           |              |  |      |               | 



F-16



---



##### Table of Contents







|         |      
|-------- | -----
|Note 4  | Staff

Costs


|                      |  |              |     |           |              |  |       |               |  |  |       | 
|--------------------- |  | ------------ | --- | --------- | ------------ |  | ----- | ------------- |  |  | ----- | 
|                      |  |              |     | 15 months |              |  |      
|                      |  | Year ended   |     |           | ended        |  |       | Year ended    | 
|                      |  | December 31, |     |           | December 31, |  |       | September 30, | 
|                      |  | 2004         |     |           | 2003         |  |       | 2002          | 
|                      |  |              |     |           |              |  |       |               | 
|                      |  | (£ million)  |    
|Wages and salaries    |  |              | 570 |           |              |  | 884   |               |  |  | 942   | 
|Social security costs |  |              | 66  |           |              |  | 96    |               |  |  | 84    | 
|Pensions              |  |              | 23  |           |              |  | 33    |               |  |  | 11    | 
|                      |  |              |     |           |              |  |       |               | 
|                      |  |              | 659 |           |              |  | 1,013 |               |  |  | 1,037 | 
|                      |  |              |     |           |              |  |       |               | 

Employee numbers




|                                     |  |              |        |           |              |  |        |               |  |  |        | 
|------------------------------------ |  | ------------ | ------ | --------- | ------------ |  | ------ | ------------- |  |  | ------ | 
|                                     |  |              |        | 15 months |              |  |       
|                                     |  | Year ended   |        |           | ended        |  |        | Year ended    | 
|                                     |  | December 31, |        |           | December 31, |  |        | September 30, | 
|                                     |  | 2004         |        |           | 2003         |  |        | 2002          | 
|                                     |  |              |        |           |              |  |        |               | 
|                                     |  | (Number)     |       
|Hotels                               |  |              | 26,835 |           |              |  | 27,111 |               |  |  | 28,385 | 
|Soft Drinks                          |  |              | 2,824  |           |              |  | 2,698  |               |  |  | 2,637  | 
|                                     |  |              |        |           |              |  |        |               | 
|InterContinental Hotels Group PLC(i) |  |              | 29,659 |           |              |  | 29,809 |               |  |  | 31,022 | 
|Discontinued operations(i)           |  |              |       |           |              |  | 15,014 |               |  |  | 38,747 | 
|                                     |  |              |        |           |              |  |        |               | 
|                                     |  |              | 29,659 |           |              |  | 44,823 |               |  |  | 69,769 | 
|                                     |  |              |        |           |              |  |        |               | 






|    |                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|(i) | InterContinental Hotels Group PLC relates to continuing
    operations. Discontinued operations relate to
    Mitchells & Butlers plc.

Pensions


|                                               |  |              |    |           |              |  |    |               |  |  |     |  
|---------------------------------------------- |  | ------------ | -- | --------- | ------------ |  | -- | ------------- |  |  | --- | -
|                                               |  |              |    | 15 months |              |  |   
|                                               |  | Year ended   |    |           | ended        |  |    | Year ended    | 
|                                               |  | December 31, |    |           | December 31, |  |    | September 30, | 
|                                               |  | 2004         |    |           | 2003         |  |    | 2002          | 
|                                               |  |              |    |           |              |  |    |               | 
|                                               |  | (£ million)  |   
|Regular cost                                   |  |              | 16 |           |              |  | 33 |               |  |  | 35  |  
|Variations from regular cost                   |  |              | (2 | )         |              |  | (7 | )             |  |  | (28 | )
|Notional interest on prepayment                |  |              | (3 | )         |              |  | (4 | )             |  |  | (3  | )
|                                               |  |              |    |           |              |  |    |               | 
|Pension cost in respect of the principal plans |  |              | 11 |           |              |  | 22 |               |  |  | 4   |  
|Other plans                                    |  |              | 12 |           |              |  | 11 |               |  |  | 7   |  
|                                               |  |              |    |           |              |  |    |               | 
|                                               |  |              | 23 |           |              |  | 33 |               |  |  | 11  |  
|                                               |  |              |    |           |              |  |    |               | 

F-17



---



##### Table of Contents















FRS 17 disclosures




F-18



---



##### Table of Contents





|                             |  |              |     |  |              |  |     |               |  |  |     |  |  |    |     |  |    |  |     |  |  |  |     | 
|---------------------------- |  | ------------ | --- |  | ------------ |  | --- | ------------- |  |  | --- |  |  | -- | --- |  | -- |  | --- |  |  |  | --- | 
|                             |  | December 31, |     |  | December 31, |  |     | September 30, | 
|                             |  | 2004         |     |  | 2003         |  |     | 2002          | 
|                             |  |              |     |  |              |  |     |               | 
|                             |  | UK           |     |  | US           |  |     | UK            |  |  | US  |  |  | UK |     |  | US | 
|                             |  |              |     |  |              |  |     |               |  |  |     |  |  |    |     |  |    | 
|                             |  | (%)          |    
|Wages and salaries increases |  |              | 4.3 |  |              |  |    |               |  |  | 4.3 |  |  |    |    |  |    |  | 3.8 |  |  |  |    | 
|Pension increases            |  |              | 2.8 |  |              |  |    |               |  |  | 2.8 |  |  |    |    |  |    |  | 2.3 |  |  |  |    | 
|Discount rate                |  |              | 5.3 |  |              |  | 5.8 |               |  |  | 5.4 |  |  |    | 6.3 |  |    |  | 5.5 |  |  |  | 6.8 | 
|Inflation rate               |  |              | 2.8 |  |              |  |    |               |  |  | 2.8 |  |  |    |    |  |    |  | 2.3 |  |  |  |    | 



|                             |  |                |     |  |              |  |                |              |  |  |              |                |  |               |     |  |               |  |     |  |  |  |     | 
|---------------------------- |  | -------------- | --- |  | ------------ |  | -------------- | ------------ |  |  | ------------ | -------------- |  | ------------- | --- |  | ------------- |  | --- |  |  |  | --- | 
|                             |  | Long-term rate |     |  |              |  | Long-term      |              |  |  |              | Long-term      |  |               |    
|                             |  | of return      |     |  |              |  | rate of return |              |  |  |              | rate of return |  |               |    
|                             |  | expected at    |     |  | Value at     |  |                | expected at  |  |  | Value at     |                |  | expected at   |     |  | Value at      | 
|                             |  | December 31,   |     |  | December 31, |  |                | December 31, |  |  | December 31, |                |  | September 30, |     |  | September 30, | 
|                             |  | 2004           |     |  | 2004         |  |                | 2003         |  |  | 2003         |                |  | 2002          |     |  | 2002          | 
|                             |  |                |     |  |              |  |                |              |  |  |              |                |  |               |     |  |               | 
|                             |  | (%)            |     |  | (£ million)  |  |                | (%)          |  |  | (£ million)  |                |  | (%)           |     |  | (£ million)   | 
|UK Schemes                   |  |                |     |  |              |  |                |              |  |  |              |                |  |               |     |  |               |  |     |  |  |  |     | 
|Equities                     |  |                | 8.0 |  |              |  | 272            |              |  |  | 8.0          |                |  |               | 238 |  |               |  | 8.0 |  |  |  | 507 | 
|Bonds                        |  |                | 4.9 |  |              |  | 173            |              |  |  | 5.4          |                |  |               | 117 |  |               |  | 4.7 |  |  |  | 397 | 
|Other                        |  |                | 8.0 |  |              |  | 27             |              |  |  |             |                |  |               |    |  |               |  | 8.0 |  |  |  | 92  | 
|                             |  |                |     |  |              |  |                |              |  |  |              |                |  |               |     |  |               | 
|Total market value of assets |  |                |     |  |              |  | 472            |              |  |  |              |                |  |               | 355 |  |               |  |     |  |  |  | 996 | 
|                             |  |                |     |  |              |  |                |              |  |  |              |                |  |               |     |  |               | 

|                             |  |                |     |  |              |  |                |              |  |  |              |                |  |               |    |  |               |  |      |  |  |  |    | 
|---------------------------- |  | -------------- | --- |  | ------------ |  | -------------- | ------------ |  |  | ------------ | -------------- |  | ------------- | -- |  | ------------- |  | ---- |  |  |  | -- | 
|                             |  | Long-term      |     |  |              |  | Long-term      |              |  |  |              | Long-term      |  |               |   
|                             |  | rate of return |     |  |              |  | rate of return |              |  |  |              | rate of return |  |               |   
|                             |  | expected at    |     |  | Value at     |  |                | expected at  |  |  | Value at     |                |  | expected at   |    |  | Value at      | 
|                             |  | December 31,   |     |  | December 31, |  |                | December 31, |  |  | December 31, |                |  | September 30, |    |  | September 30, | 
|                             |  | 2004           |     |  | 2004         |  |                | 2003         |  |  | 2003         |                |  | 2002          |    |  | 2002          | 
|                             |  |                |     |  |              |  |                |              |  |  |              |                |  |               |    |  |               | 
|                             |  | (%)            |     |  | (£ million)  |  |                | (%)          |  |  | (£ million)  |                |  | (%)           |    |  | (£ million)   | 
|US Schemes                   |  |                |     |  |              |  |                |              |  |  |              |                |  |               |    |  |               |  |      |  |  |  |    | 
|Equities                     |  |                | 9.6 |  |              |  | 34             |              |  |  | 9.2          |                |  |               | 29 |  |               |  | 11.2 |  |  |  | 27 | 
|Bonds                        |  |                | 5.5 |  |              |  | 22             |              |  |  | 6.0          |                |  |               | 19 |  |               |  | 6.2  |  |  |  | 22 | 
|                             |  |                |     |  |              |  |                |              |  |  |              |                |  |               |    |  |               | 
|Total market value of assets |  |                |     |  |              |  | 56             |              |  |  |              |                |  |               | 48 |  |               |  |      |  |  |  | 49 | 
|                             |  |                |     |  |              |  |                |              |  |  |              |                |  |               |    |  |               | 

|                                    |  |                   |      |   |                   |               |      |       |  |  |      |   |  |    |      |   |       |  |      |       |  |  |      |   |  |  |        |  
|----------------------------------- |  | ----------------- | ---- | - | ----------------- | ------------- | ---- | ----- |  |  | ---- | - |  | -- | ---- | - | ----- |  | ---- | ----- |  |  | ---- | - |  |  | ------ | -
|                                    |  |                   |      |   |                   | September 30, |     
|                                    |  | December 31, 2004 |      |   | December 31, 2003 |               |      | 2002  | 
|                                    |  |                   |      |   |                   |               |      |       | 
|                                    |  | UK                |      |   | US                |               |      | Total |  |  | UK   |   |  | US |      |   | Total |  |      | Total | 
|                                    |  |                   |      |   |                   |               |      |       |  |  |      |   |  |    |      |   |       |  |      |       | 
|                                    |  | (£ million)       |     
|Total market value of assets        |  |                   | 472  |   |                   |               | 56   |       |  |  | 528  |   |  |    | 355  |   |       |  | 48   |       |  |  | 403  |   |  |  | 1,045  |  
|Present value of scheme liabilities |  |                   | (600 | ) |                   |               | (100 | )     |  |  | (700 | ) |  |    | (477 | ) |       |  | (102 | )     |  |  | (579 | ) |  |  | (1,415 | )
|                                    |  |                   |      |   |                   |               |      |       |  |  |      |   |  |    |      |   |       |  |      |       | 
|Deficit in the scheme               |  |                   | (128 | ) |                   |               | (44  | )     |  |  | (172 | ) |  |    | (122 | ) |       |  | (54  | )     |  |  | (176 | ) |  |  | (370   | )
|Related deferred tax asset          |  |                   | 40   |   |                   |               | 17   |       |  |  | 57   |   |  |    | 37   |   |       |  | 21   |       |  |  | 58   |   |  |  | 116    |  
|                                    |  |                   |      |   |                   |               |      |       |  |  |      |   |  |    |      |   |       |  |      |       | 
|Net pension liability               |  |                   | (88  | ) |                   |               | (27  | )     |  |  | (115 | ) |  |    | (85  | ) |       |  | (33  | )     |  |  | (118 | ) |  |  | (254   | )
|                                    |  |                   |      |   |                   |               |      |       |  |  |      |   |  |    |      |   |       |  |      |       | 

F-19



---



##### Table of Contents





| |                                                                                                       
| | ------------------------------------------------------------------------------------------------------
| | If FRS 17 had been recognized in the financial statements, the
    effects would have been as follows:

|                                                                                     |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       |  |  |      |   |  |  |      |  
|------------------------------------------------------------------------------------ |  | ------------ | ---- | - | ------------------ |  | --- | ------------- |  |  | ---- | - |  | -- | ---- | - | ----- |  | --- | ----- |  |  | ---- | - |  |  | ---- | -
|                                                                                     |  | Year ended   |      |   | 15 months          |  |     | Year ended    | 
|                                                                                     |  | December 31, |      |   | ended December 31, |  |     | September 30, | 
|                                                                                     |  | 2004         |      |   | 2003               |  |     | 2002          | 
|                                                                                     |  |              |      |   |                    |  |     |               | 
|                                                                                     |  | UK           |      |   | US                 |  |     | Total         |  |  | UK   |   |  | US |      |   | Total |  |     | Total | 
|                                                                                     |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       | 
|                                                                                     |  | (£ million)  |     
|Operating profit charge                                                              |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       |  |  |      |   |  |  |      |  
|Current service cost                                                                 |  |              | 18   |   |                    |  |    |               |  |  | 18   |   |  |    | 32   |   |       |  |    |       |  |  | 32   |   |  |  | 31   |  
|Past service cost                                                                    |  |              | 1    |   |                    |  |    |               |  |  | 1    |   |  |    | 2    |   |       |  |    |       |  |  | 2    |   |  |  |     |  
|                                                                                     |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       | 
|Total operating profit charge                                                        |  |              | 19   |   |                    |  |    |               |  |  | 19   |   |  |    | 34   |   |       |  |    |       |  |  | 34   |   |  |  | 31   |  
|                                                                                     |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       | 
|Finance income                                                                       |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       |  |  |      |   |  |  |      |  
|Expected return on pension scheme assets                                             |  |              | 27   |   |                    |  | 4   |               |  |  | 31   |   |  |    | 49   |   |       |  | 5   |       |  |  | 54   |   |  |  | 80   |  
|Interest on pension scheme liabilities                                               |  |              | (27  | ) |                    |  | (6  | )             |  |  | (33  | ) |  |    | (53  | ) |       |  | (8  | )     |  |  | (61  | ) |  |  | (76  | )
|                                                                                     |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       | 
|Net (expense)/return                                                                 |  |              |     |   |                    |  | (2  | )             |  |  | (2   | ) |  |    | (4   | ) |       |  | (3  | )     |  |  | (7   | ) |  |  | 4    |  
|                                                                                     |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       | 
|Items recognized in the Statement of Total Recognized Gains
    and Losses (STRGL) |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       |  |  |      |   |  |  |      |  
|Actuarial loss:                                                                      |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       |  |  |      |   |  |  |      |  
|Actual return less expected return on pension scheme assets                          |  |              | 11   |   |                    |  | 1   |               |  |  | 12   |   |  |    | 32   |   |       |  | 5   |       |  |  | 37   |   |  |  | (182 | )
|Experience gains and losses arising on the scheme liabilities                        |  |              | 13   |   |                    |  |    |               |  |  | 13   |   |  |    | (17  | ) |       |  | (1  | )     |  |  | (18  | ) |  |  | (23  | )
|Changes in assumptions underlying the present value of the
    scheme liabilities    |  |              | (70  | ) |                    |  | (6  | )             |  |  | (76  | ) |  |    | (111 | ) |       |  | (10 | )     |  |  | (121 | ) |  |  | (126 | )
|                                                                                     |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       | 
|Actuarial loss recognized in the STRGL                                               |  |              | (46  | ) |                    |  | (5  | )             |  |  | (51  | ) |  |    | (96  | ) |       |  | (6  | )     |  |  | (102 | ) |  |  | (331 | )
|Other:                                                                               |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       |  |  |      |   |  |  |      |  
|Deficit transferred in respect of previous acquisitions                              |  |              | 6    |   |                    |  |    |               |  |  | 6    |   |  |    |     |   |       |  |    |       |  |  |     |   |  |  |     |  
|Exchange adjustments                                                                 |  |              |     |   |                    |  | (4  | )             |  |  | (4   | ) |  |    | (8   | ) |       |  |    |       |  |  | (8   | ) |  |  | (3   | )
|Movement in deficit during the period                                                |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       |  |  |      |   |  |  |      |  
|At start of period                                                                   |  |              | (122 | ) |                    |  | (54 | )             |  |  | (176 | ) |  |    | (315 | ) |       |  | (55 | )     |  |  | (370 | ) |  |  | (55  | )
|Current service cost                                                                 |  |              | (18  | ) |                    |  |    |               |  |  | (18  | ) |  |    | (32  | ) |       |  |    |       |  |  | (32  | ) |  |  | (31  | )
|Past service cost                                                                    |  |              | (1   | ) |                    |  |    |               |  |  | (1   | ) |  |    | (2   | ) |       |  |    |       |  |  | (2   | ) |  |  |     |  
|Contributions                                                                        |  |              | 72   |   |                    |  | 13  |               |  |  | 85   |   |  |    | 39   |   |       |  | 2   |       |  |  | 41   |   |  |  | 40   |  
|Finance income                                                                       |  |              |     |   |                    |  | (2  | )             |  |  | (2   | ) |  |    | (4   | ) |       |  | (3  | )     |  |  | (7   | ) |  |  | 4    |  
|Actuarial loss                                                                       |  |              | (46  | ) |                    |  | (5  | )             |  |  | (51  | ) |  |    | (96  | ) |       |  | (6  | )     |  |  | (102 | ) |  |  | (331 | )
|Deficit transferred in respect of previous acquisitions(i)                           |  |              | (13  | ) |                    |  |    |               |  |  | (13  | ) |  |    |     |   |       |  |    |       |  |  |     |   |  |  |     |  
|Separation of MAB                                                                    |  |              |     |   |                    |  |    |               |  |  |     |   |  |    | 288  |   |       |  |    |       |  |  | 288  |   |  |  |     |  
|Exchange adjustments                                                                 |  |              |     |   |                    |  | 4   |               |  |  | 4    |   |  |    |     |   |       |  | 8   |       |  |  | 8    |   |  |  | 3    |  
|                                                                                     |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       | 
|At end of period                                                                     |  |              | (128 | ) |                    |  | (44 | )             |  |  | (172 | ) |  |    | (122 | ) |       |  | (54 | )     |  |  | (176 | ) |  |  | (370 | )
|                                                                                     |  |              |      |   |                    |  |     |               |  |  |      |   |  |    |      |   |       |  |     |       | 






|    |                                                        
|--- | -------------------------------------------------------
|(i) | Relates to the acquisition of Posthouse hotels in 2001.

F-20



---



##### Table of Contents



|                                                                        |                                                           |              |  |     |                    |  |  |               |    |  |    |     |    |    |  |     |       |  |  |       |    |  |  |      |    |  |  |      |   
|----------------------------------------------------------------------- | --------------------------------------------------------- | ------------ |  | --- | ------------------ |  |  | ------------- | -- |  | -- | --- | -- | -- |  | --- | ----- |  |  | ----- | -- |  |  | ---- | -- |  |  | ---- | --
|                                                                        |                                                           | Year ended   |  |     | 15 months          |  |  |              
|                                                                        |                                                           | December 31, |  |     | ended December 31, |  |  | September 30, |   
|                                                                        |                                                           | 2004         |  |     | 2003               |  |  | 2002          |   
|                                                                        |                                                           |              |  |     |                    |  |  |               |   
|                                                                        |                                                           | UK           |  |     | US                 |  |  | Total         |    |  | UK |     |    | US |  |     | Total |  |  | Total |   
|                                                                        |                                                           |              |  |     |                    |  |  |               |    |  |    |     |    |    |  |     |       |  |  |       |   
|                                                                        |                                                           | (£ million)  | 
|History of experience gains and losses                                  |                                                           |              |  |     |                    |  |  |               |    |  |    |     |    |    |  |     |       |  |  |       |    |  |  |      |    |  |  |     
|Difference between the expected and actual return on scheme
    assets: |                                                           |              |  |     |                    |  |  |               |    |  |    |     |    |    |  |     |       |  |  |       |    |  |  |      |    |  |  |     
|                                                                        | Amount (£ million)                                        |              |  | 11  |                    |  |  | 1             |    |  |    | 12  |    |    |  | 32  |       |  |  | 5     |    |  |  | 37   |    |  |  | (182 | ) 
|                                                                        | Percentage of scheme assets                               |              |  | 2   | %                  |  |  | 2             | %  |  |    | 2   | %  |    |  | 9   | %     |  |  | 10    | %  |  |  | 9    | %  |  |  | (17  | %)
|Experience gains and losses on scheme liabilities:                      |                                                           |              |  |     |                    |  |  |               |    |  |    |     |    |    |  |     |       |  |  |       |    |  |  |      |    |  |  |     
|                                                                        | Amount (£ million)                                        |              |  | 13  |                    |  |  |              |    |  |    | 13  |    |    |  | (17 | )     |  |  | (1    | )  |  |  | (18  | )  |  |  | (23  | ) 
|                                                                        | Percentage of the present value of the scheme liabilities |              |  | 2   | %                  |  |  |              |    |  |    | 2   | %  |    |  | (4  | %)    |  |  | (1    | %) |  |  | (3   | %) |  |  | (2%  | ) 
|Total amount recognized in the STRGL:                                   |                                                           |              |  |     |                    |  |  |               |    |  |    |     |    |    |  |     |       |  |  |       |    |  |  |      |    |  |  |     
|                                                                        | Amount (£ million)                                        |              |  | (46 | )                  |  |  | (5            | )  |  |    | (51 | )  |    |  | (96 | )     |  |  | (6    | )  |  |  | (102 | )  |  |  | (331 | ) 
|                                                                        | Percentage of the present value of the scheme liabilities |              |  | (8  | %)                 |  |  | (5            | %) |  |    | (7  | %) |    |  | (20 | %)    |  |  | (6    | %) |  |  | (18  | %) |  |  | (23  | %)

|                                                                                                          |  |                   |       |              |                   |  |      |                    |              |  |         |   |  |              |      |   |         |  |       |   |  |  |       |  
|--------------------------------------------------------------------------------------------------------- |  | ----------------- | ----- | ------------ | ----------------- |  | ---- | ------------------ | ------------ |  | ------- | - |  | ------------ | ---- | - | ------- |  | ----- | - |  |  | ----- | -
|                                                                                                          |  | December 31, 2004 |       |              | December 31, 2003 |  |      | September 30, 2002 |             
|                                                                                                          |  |                   |       |              |                   |  |      |                    |             
|                                                                                                          |  |                   |       | Profit and   |                   |  |      |                    | Profit and   |  |         |   |  | Profit and   |     
|                                                                                                          |  |                   |       | loss account |                   |  |      |                    | loss account |  |         |   |  | loss account |     
|                                                                                                          |  | Net assets        |       |              | reserve           |  |      | Net assets         |              |  | reserve |   |  | Net assets   |      |   | reserve | 
|                                                                                                          |  |                   |       |              |                   |  |      |                    |              |  |         |   |  |              |      |   |         | 
|                                                                                                          |  | (£ million)       |      
|Group net assets and reserves reconciliation                                                              |  |                   |       |              |                   |  |      |                    |              |  |         |   |  |              |      |   |         |  |       |   |  |  |       |  
|As reported                                                                                               |  |                   | 1,977 |              |                   |  | (167 | )                  |              |  | 2,554   |   |  |              | 390  |   |         |  | 5,335 |   |  |  | 2,448 |  
|Less: SSAP 24 pension prepayment (net of tax
    of £23 million (2003
    £14 million, 2002 £26 million)) |  |                   | (87   | )            |                   |  | (87  | )                  |              |  | (33     | ) |  |              | (33  | ) |         |  | (62   | ) |  |  | (62   | )
|SSAP 24 pension provision (net of tax of £18 million
    (2003
    £16 million, 2002 £14 million))        |  |                   | 31    |              |                   |  | 31   |                    |              |  | 30      |   |  |              | 30   |   |         |  | 25    |   |  |  | 25    |  
|FRS 17 net pension liability                                                                              |  |                   | (115  | )            |                   |  | (115 | )                  |              |  | (118    | ) |  |              | (118 | ) |         |  | (254  | ) |  |  | (254  | )
|                                                                                                          |  |                   |       |              |                   |  |      |                    |              |  |         |   |  |              |      |   |         | 
|Restated for FRS 17                                                                                       |  |                   | 1,806 |              |                   |  | (338 | )                  |              |  | 2,433   |   |  |              | 269  |   |         |  | 5,044 |   |  |  | 2,157 |  
|                                                                                                          |  |                   |       |              |                   |  |      |                    |              |  |         |   |  |              |      |   |         | 



| |                                                                        
| | -----------------------------------------------------------------------
| | Policy on remuneration of executive directors and senior
    executives





| |                            
| | ---------------------------
| | Total level of remuneration





| |   |                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------
| |  | attract high quality executives in an environment where
    compensation levels are based on global market practice;
|
| |  | provide appropriate retention strength against loss of key
    executives;                                          
|
| |  | drive aligned focus and attention to key business initiatives
    and appropriately reward their achievement;       

F-21



---



##### Table of Contents





| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | support equitable treatment between members of the same
    executive team; and
|
| |  | facilitate global assignments and relocation.                                  





| |                    
| | -------------------
| | The main components









Basic
salary






Annual
performance bonus








Executive
share options




F-22



---



##### Table of Contents













Sharesave plan


Performance restricted shares






| |   |                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the increase in IHG PLC Total Shareholder Return
    (TSR) over the performance period relative to 10
    identified comparator companies; Accor, De Vere, Hilton Group,
    Hilton Hotels Corp., Host Marriott, Marriott Hotels, Millennium
    & Copthorne, NH Hotels, Sol Melia and Starwood Hotels; and
|
| |  | the increase in IHG Return On Capital Employed
    (ROCE) over the performance period.                                                                                                                                                                                                                     







F-23



---



##### Table of Contents





| |                              
| | -----------------------------
| | Companies used for comparison





| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | size  turnover, profits and the number of people
    employed;
|
| |  | diversity and complexity of businesses;                        
|
| |  | geographical spread of businesses;                             
|
| |  | industry type; and                                             
|
| |  | relevance as:                                                  



| |                                                           
| | ----------------------------------------------------------
| | a) a potential recruitment target                         
|
| | b) a potential threat in respect of attracting IHG talent.





| |                                
| | -------------------------------
| | Policy on external appointments





| |                     
| | --------------------
| | Contracts of service



| |          
| | ---------
| | a) Policy











F-24



---



##### Table of Contents





| |                        
| | -----------------------
| | b) Directors contracts

|                 |  |                |         |  |                 |  |            | 
|---------------- |  | -------------- | ------- |  | --------------- |  | ---------- | 
|                 |  | Contract       |         |  | Unexpired term/ | 
|Directors        |  | effective date |         |  | notice period   | 
|                 |  |                |         |  |                 | 
|Andrew Cosslett  |  |                | 2.3.05  |  |                 |  | 21 months  | 
|Richard Hartman  |  |                | 4.15.03 |  |                 |  | 12 months  | 
|Stevan Porter    |  |                | 4.15.03 |  |                 |  | 12 months  | 
|Richard Solomons |  |                | 4.15.03 |  |                 |  | 12 months  | 
|Richard North    |  |                | 4.15.03 |  |                 |  | Terminated | 



Policy regarding pensions




Directors
Emoluments


|                        |  |              |       |  |             |  |     |                                     |  |            |              |  |       |              |       |            |              |  |       |  |  |  |       | 
|----------------------- |  | ------------ | ----- |  | ----------- |  | --- | ----------------------------------- |  | ---------- | ------------ |  | ----- | ------------ | ----- | ---------- | ------------ |  | ----- |  |  |  | ----- | 
|                        |  |              |       |  |             |  |     | Total emoluments excluding pensions | 
|                        |  |              |       |  |             |  |     |                                     | 
|                        |  | Basic        |       |  |             |  |     |                                     |  |            | 15 months    |  |       |             
|                        |  | salaries     |       |  | Performance |  |     |                                     |  | Year ended |              |  | ended |              |       | Year ended |             
|                        |  | and fees     |       |  | payments    |  |     | Benefits                            |  |            | Dec 31, 2004 |  |       | Dec 31, 2003 |       |            | Sep 30, 2002 | 
|                        |  |              |       |  |             |  |     |                                     |  |            |              |  |       |              |       |            |              | 
|                        |  | (£ thousand) |      
|Executive directors     |  |              |       |  |             |  |     |                                     |  |            |              |  |       |              |       |            |              |  |       |  |  |  |       | 
|Richard North(1)        |  |              | 638   |  |             |  | 553 |                                     |  |            | 57           |  |       |              | 1,248 |            |              |  | 1,183 |  |  |  | 629   | 
|Richard Hartman         |  |              | 476   |  |             |  |    |                                     |  |            | 299          |  |       |              | 775   |            |              |  | 663   |  |  |  |      | 
|Stevan Porter(2)        |  |              | 360   |  |             |  |    |                                     |  |            | 8            |  |       |              | 368   |            |              |  | 510   |  |  |  |      | 
|Richard Solomons        |  |              | 372   |  |             |  |    |                                     |  |            | 28           |  |       |              | 400   |            |              |  | 497   |  |  |  |      | 
|David Webster(3)        |  |              | 148   |  |             |  |    |                                     |  |            |             |  |       |              | 148   |            |              |  |      |  |  |  |      | 
|Non-executive directors |  |              |       |  |             |  |     |                                     |  |            |              |  |       |              |       |            |              |  |       |  |  |  |       | 
|David Kappler(4)        |  |              | 35    |  |             |  |    |                                     |  |            |             |  |       |              | 35    |            |              |  |      |  |  |  |      | 
|Ralph Kugler(5)         |  |              | 42    |  |             |  |    |                                     |  |            |             |  |       |              | 42    |            |              |  | 30    |  |  |  |      | 
|Robert C. Larson(6)     |  |              | 42    |  |             |  |    |                                     |  |            |             |  |       |              | 42    |            |              |  | 53    |  |  |  | 36    | 
|David Prosser(7)        |  |              | 50    |  |             |  |    |                                     |  |            |             |  |       |              | 50    |            |              |  | 35    |  |  |  |      | 
|Sir Howard Stringer(6)  |  |              | 42    |  |             |  |    |                                     |  |            |             |  |       |              | 42    |            |              |  | 53    |  |  |  | 13    | 
|David Webster(8)        |  |              | 275   |  |             |  |    |                                     |  |            | 1            |  |       |              | 276   |            |              |  | 57    |  |  |  |      | 
|Former directors(9)     |  |              |      |  |             |  |    |                                     |  |            |             |  |       |              |      |            |              |  | 2,987 |  |  |  | 2,739 | 
|                        |  |              |       |  |             |  |     |                                     |  |            |              |  |       |              |       |            |              | 
|Total                   |  |              | 2,480 |  |             |  | 553 |                                     |  |            | 393          |  |       |              | 3,426 |            |              |  | 6,068 |  |  |  | 3,417 | 
|                        |  |              |       |  |             |  |     |                                     |  |            |              |  |       |              |       |            |              | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Resigned as a director and as Chief Executive on
    September 30, 2004 and ceased employment with the Group on
    December 31, 2004. The emoluments shown are for the full
    year. Richard Norths performance payment relates to his
    participation in the Short Term Deferred Incentive Plan which,
    in accordance with plan rules, must be paid in cash due to his
    employment ending. He remains eligible to participate in the

F-25



---



##### Table of Contents



|    |                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Short Term Deferred Incentive Plan for the 2005 performance
    year. Any award will be made in cash and pro-rated to
    September 30, 2005.                                                                                                                                                                                   
|   
|(2) | Emoluments for Stevan Porter include £10,731 that were
    chargeable to UK income tax.                                                                                                                                                                                                                                         
|   
|(3) | Fees paid to David Webster represent £41,667 per month
    paid to him in his capacity as interim Chief Executive with
    effect from September 15, 2004.                                                                                                                                                                      
|   
|(4) | Became Senior Independent Director and Chairman of the Audit
    Committee on June 21, 2004 for which a fixed fee of
    £65,000 pa was paid. With effect from January 1, 2005,
    David Kappler receives a total annual fee of £80,000.                                                                                       
|   
|(5) | All fees due to Ralph Kugler are paid to Unilever. With effect
    from January 1, 2005, Ralph Kuglers fee as a
    non-executive director is £50,000 pa.                                                                                                                                                                      
|   
|(6) | Both Robert C. Larson and Sir Howard Stringer served
    as non-executive directors of Six Continents PLC during the
    period up to April 15, 2003 for which they each received a
    fee of £23,000. With effect from January 1, 2005,
    Robert C Larson and Sir Howard Stringer each receive
    an annual fee of £50,000.
|   
|(7) | Fees paid to David Prosser included a £7,500 pa fee payable
    to the Chairman of the Remuneration Committee in recognition of
    the additional responsibilities of this role. With effect from
    January 1, 2005, David Prosser receives a total annual fee
    of £65,000.                                               
|   
|(8) | Became non-executive Chairman on January 1, 2004 for which
    a fixed fee of £275,000 pa was paid. With effect from
    January 1, 2005, David Websters fee as non-executive
    Chairman is £350,000 pa.                                                                                                                     
|   
|(9) | The total emoluments earned by former directors of both Six
    Continents PLC and IHG PLC during the period October 1,
    2002 to December 31, 2003 and the year October 1, 2001
    to September 30, 2002 are shown.                                                                                                         



Benefits




Directors
pensions








F-26



---



##### Table of Contents







|                            |  |            |    |            |               |                   |                  |             |                |               |                 |             |         |               |             |         |         |         |            |            |  |     |        |  |  |  |        |  |  |  |         | 
|--------------------------- |  | ---------- | -- | ---------- | ------------- | ----------------- | ---------------- | ----------- | -------------- | ------------- | --------------- | ----------- | ------- | ------------- | ----------- | ------- | ------- | ------- | ---------- | ---------- |  | --- | ------ |  |  |  | ------ |  |  |  | ------- | 
|                            |  |            |    |            |               |                   |                  | Increase in |                |               |                 |             |         |               |            
|                            |  |            |    |            |               | Transfer value of |                  |             | transfer value |               |                 | Increase in |         |               | Increase in |         |         | Accrued |           
|                            |  |            |    | Directors |               |                   | accrued benefits |             |                | over the year |                 |             | accrued |               |             | accrued |         |         | pension at |           
|                            |  | Age at     |    |            | contributions |                   |                  |             |                |               | less directors |             |         | pension       |             |         | pension |         |            | Dec 31, 04 | 
|Directors pension benefits |  | Dec 31, 04 |    |            | (1)           |                   |                  | Jan 1, 04   |                |               | Dec 31, 04      |             |         | contributions |             |         | (2)     |         |            | (3)        |  |     | (4)(5) | 
|                            |  |            |    |            |               |                   |                  |             |                |               |                 |             |         |               |             |         |         |         |            |            |  |     |        | 
|                            |  |            |    | £          |               |                   | £                |             |                | £             |                 |             | £       |               |             | £pa     |         |         | £pa        |            |  | £pa |       
|Richard Hartman             |  |            | 58 |            |               |                   | 15,200           |             |                |               | 652,200         |             |         |               | 1,189,800   |         |         |         | 522,400    |            |  |     | 24,800 |  |  |  | 23,700 |  |  |  | 63,200  | 
|Richard North               |  |            | 54 |            |               |                   | 15,200           |             |                |               | 2,423,800       |             |         |               | 3,581,400   |         |         |         | 1,142,400  |            |  |     | 60,300 |  |  |  | 55,200 |  |  |  | 240,300 | 
|Richard Solomons            |  |            | 43 |            |               |                   | 15,100           |             |                |               | 569,400         |             |         |               | 834,100     |         |         |         | 249,600    |            |  |     | 21,300 |  |  |  | 19,200 |  |  |  | 96,800  | 






|    |                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Contributions paid in the year by the directors under the terms
    of the plans. Richard Hartmans contributions exclude
    £3,700 paid in 2004, but relating to 2003.



|    |                                                            
|--- | -----------------------------------------------------------
|(2) | The absolute increase in accrued pension during the period.



|    |                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | The increase in accrued pension during the period excluding any
    increase for inflation, on the basis that increases to accrued
    pensions are applied at October 1.



|    |                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------
|(4) | Accrued pension is that which would be paid annually on
    retirement at 60, based on service to December 31, 2004.



|    |                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | Richard North ceased pensionable service with the Group on
    December 31, 2004 and his deferred pension at that date is
    £240,300 pa, payable from his 60th birthday
    (inclusive of an augmentation agreed as part of his severance
    arrangements).



|              |  |                 |        |  |                 |  |       |     |  |  |        |  |  |  |       | 
|------------- |  | --------------- | ------ |  | --------------- |  | ----- | --- |  |  | ------ |  |  |  | ----- | 
|              |  | Directors      |        |  | Company         | 
|              |  | contribution to |        |  | contribution to | 
|              |  |                 |        |  |                 | 
|              |  | DCP             |        |  | 401(k)          |  |       | DCP |  |  | 401(k) | 
|              |  |                 |        |  |                 |  |       |     |  |  |        | 
|              |  | £               |        |  | £               |  |       | £   |  |  | £      | 
|Stevan Porter |  |                 | 19,000 |  |                 |  | 7,100 |     |  |  | 56,800 |  |  |  | 5,700 | 

Directors emoluments




|           |  |                    |     | 
|---------- |  | ------------------ | --- | 
|           |  | Employers pension |    
|           |  | contributions      |    
|           |  |                    |    
|           |  | (£ thousand)       |    
|Total 2004 |  |                    | 141 | 
|Total 2003 |  |                    | 430 | 
|Total 2002 |  |                    | 374 | 



Dependants
Pensions




F-27



---



##### Table of Contents



Early Retirement
Rights




Pension Increases




Other Discretionary
Benefits






| |                 
| | ----------------
| | Long Term Reward

Performance Restricted Share
Plan (PRSP)






|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               |  |  |         |  |  |  |            | 
|---------------- |  | ------------ | ------- | ----------- | -------------- |  | ------- | ----- | ------ | --------- | -------- |  | ----------- | ------------- | ----- | ----------- | ------- |  | -------------- | ------------- |  |  | ------- |  |  |  | ---------- | 
|                 |  |              |         | PRSP shares |                |  |         |       | Market |           |          |  |             |               |       | Value based |        
|                 |  | PRSP         |         |             | awarded during |  |         |       |        | price per |          |  | PRSP shares |               |       | Planned     |         |  | on share price |              
|                 |  | shares held  |         |             | the year ended |  |         | Award |        |           | share at |  |             | held at       |       |             | vesting |  |                | of 647.50p at | 
|                 |  | at Jan 1, 04 |         |             | Dec 31, 04     |  |         | date  |        |           | award    |  |             | Dec 31, 04(1) |       |             | date    |  |                | Dec 31, 04    | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             | £             |      
|Richard Hartman  |  |              | 111,930 | (2)         |                |  |         |       |        |           | 6.18.03  |  |             |               | 445   | p           |         |  | 111,930        |               |  |  | 3.11.05 |  |  |  | 724,747    | 
|                 |  |              | 167,900 | (3)         |                |  |         |       |        |           | 6.18.03  |  |             |               | 445   | p           |         |  | 167,900        |               |  |  | 3.3.06  |  |  |  | 1,087,153  | 
|                 |  |              |         |             |                |  | 165,130 | (4)   |        |           | 6.24.04  |  |             |               | 549.5 | p           |         |  | 165,130        |               |  |  | 3.9.07  |  |  |  | 1,069,217  | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|Total            |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  | 444,960        |               |  |  |         |  |  |  | 2,881,117  | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|Richard North    |  |              | 188,760 | (2)         |                |  |         |       |        |           | 6.18.03  |  |             |               | 445   | p           |         |  | 188,760        |               |  |  | 3.11.05 |  |  |  | 1,222,221  | 
|                 |  |              | 283,140 | (3)         |                |  |         |       |        |           | 6.18.03  |  |             |               | 445   | p           |         |  | 259,545        | (5)           |  |  | 3.3.06  |  |  |  | 1,680,554  | 
|                 |  |              |         |             |                |  | 248,560 | (4)   |        |           | 6.24.04  |  |             |               | 549.5 | p           |         |  | 144,993        | (5)           |  |  | 3.9.07  |  |  |  | 938,830    | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|Total            |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  | 593,298        |               |  |  |         |  |  |  | 3,841,605  | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|Stevan Porter    |  |              | 113,810 | (2)         |                |  |         |       |        |           | 6.18.03  |  |             |               | 445   | p           |         |  | 113,810        |               |  |  | 3.11.05 |  |  |  | 736,920    | 
|                 |  |              | 170,710 | (3)         |                |  |         |       |        |           | 6.18.03  |  |             |               | 445   | p           |         |  | 170,710        |               |  |  | 3.3.06  |  |  |  | 1,105,347  | 
|                 |  |              |         |             |                |  | 142,290 | (4)   |        |           | 6.24.04  |  |             |               | 549.5 | p           |         |  | 142,290        |               |  |  | 3.9.07  |  |  |  | 921,328    | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|Total            |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  | 426,810        |               |  |  |         |  |  |  | 2,763,595  | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|Sir Ian Prosser  |  |              | 65,410  | (2)(6)      |                |  |         |       |        |           | 6.18.03  |  |             |               | 445   | p           |         |  | 65,410         |               |  |  | 3.11.05 |  |  |  | 423,530    | 
|                 |  |              | 65,410  | (3)(6)      |                |  |         |       |        |           | 6.18.03  |  |             |               | 445   | p           |         |  | 65,410         |               |  |  | 3.3.06  |  |  |  | 423,530    | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|Total            |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  | 130,820        |               |  |  |         |  |  |  | 847,060    | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|Richard Solomons |  |              | 110,110 | (2)         |                |  |         |       |        |           | 6.18.03  |  |             |               | 445   | p           |         |  | 110,110        |               |  |  | 3.11.05 |  |  |  | 712,962    | 
|                 |  |              | 165,160 | (3)         |                |  |         |       |        |           | 6.18.03  |  |             |               | 445   | p           |         |  | 165,160        |               |  |  | 3.3.06  |  |  |  | 1,069,411  | 
|                 |  |              |         |             |                |  | 144,990 | (4)   |        |           | 6.24.04  |  |             |               | 549.5 | p           |         |  | 144,990        |               |  |  | 3.9.07  |  |  |  | 938,810    | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|Total            |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  | 420,260        |               |  |  |         |  |  |  | 2,721,183  | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 
|Total            |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               |  |  |         |  |  |  | 13,054,560 | 
|                 |  |              |         |             |                |  |         |       |        |           |          |  |             |               |       |             |         |  |                |               | 

F-28



---



##### Table of Contents








|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In the case of Richard North, who resigned as a director of the
    Company on September 30, 2004, the figures shown are as at
    cessation of employment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(2) | This transitional award is based on performance to
    December 31, 2004 where the performance measure relates to
    the Companys total shareholder return against a group of
    11 other comparator companies. The number of shares released is
    graded, according to where the Company finishes in the
    comparator group, with 100% of the award being released for
    first or second position and 20% of the award being released for
    sixth place. The Company finished in fourth place and
    accordingly 60% of the award vested on March 11, 2005, with
    67,158; 113,256; 68,286; 39,246 and 66,066 shares released to
    Messrs. Hartman, North, Porter, Prosser and Solomons
    respectively.
|   
|(3) | This award is based on performance to December 31, 2005
    where the performance measure relates to both the Companys
    total shareholder return against a group of 11 other comparator
    companies and growth in return on capital employed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(4) | This award is based on performance to December 31, 2006
    where the performance measure relates to both the Companys
    total shareholder return against a group of 10 other comparator
    companies and growth in return on capital employed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(5) | Richard Norths awards were pro-rated to reflect his
    contractual service during the applicable performance periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(6) | Sir Ian Prosser was a director of the Company until his
    retirement on December 31, 2004. His awards were pro-rated
    to reflect his actual service during the applicable performance
    periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-29



---



##### Table of Contents



Short Term Deferred
Incentive Plan (STDIP)




|                 |  |            |          |  |              |                  |        |                |     |  |                |  |  |  |         | 
|---------------- |  | ---------- | -------- |  | ------------ | ---------------- | ------ | -------------- | --- |  | -------------- |  |  |  | ------- | 
|                 |  |            |          |  |              | Market price per |        |                |    
|                 |  | Award date |          |  | No of shares |                  |        | share at award |     |  | Value on award | 
|                 |  |            |          |  |              |                  |        |                |     |  |                | 
|                 |  |            |          |  |              | (p)              |        |                | (£) | 
|Richard Hartman  |  |            | 03.16.05 |  |              |                  | 88,341 |                |     |  | 653.67         |  |  |  | 577,459 | 
|Stevan Porter    |  |            | 03.16.05 |  |              |                  | 80,934 |                |     |  | 653.67         |  |  |  | 529,041 | 
|Richard Solomons |  |            | 03.16.05 |  |              |                  | 87,061 |                |     |  | 653.67         |  |  |  | 569,092 | 





|              |  |              |        |  |                |  |  |       |  |           |          |  |               |            |       |   |         |           |        |            |  |  |             |  |  |            |       |          |          |  |         |            |  |  |   |  |  |  |   |  |  |  |   | 
|------------- |  | ------------ | ------ |  | -------------- |  |  | ----- |  | --------- | -------- |  | ------------- | ---------- | ----- | - | ------- | --------- | ------ | ---------- |  |  | ----------- |  |  | ---------- | ----- | -------- | -------- |  | ------- | ---------- |  |  | - |  |  |  | - |  |  |  | - | 
|              |  |              |        |  |                |  |  |       |  | STDIP     |          |  |               |            |       |   |         |           |        |            |  |  | Value based | 
|              |  | STDIP        |        |  | STDIP shares   |  |  |       |  | Market    |          |  | shares vested |            |       |   |         | Market    |        |            |  |  | STDIP       |  |  |            |       | on share |         
|              |  | shares held  |        |  | awarded during |  |  |       |  | price per |          |  | during the    |            |       |   |         | price per |        |            |  |  | shares held |  |  | Planned    |       |          | price of | 
|              |  | at           |        |  | the year ended |  |  | Award |  |           | share at |  |               | year ended |       |   | Vesting |           |        | share at   |  |  | Value at    |  |  | at         |       |          | vesting  |  |         | 647.50p at | 
|              |  | Jan 1, 04(1) |        |  | Dec 31, 04     |  |  | date  |  |           | award    |  |               | Dec 31, 04 |       |   | date    |           |        | vesting(2) |  |  | vesting     |  |  | Dec 31, 04 |       |          | date     |  |         | Dec 31, 04 | 
|              |  |              |        |  |                |  |  |       |  |           |          |  |               |            |       |   |         |           |        |            |  |  |             |  |  |            |       |          |          |  |         |            | 
|              |  |              |        |  |                |  |  |       |  |           |          |  |               |            |       | £ |         |           |        |            |  |  | £           | 
|Directors     |  |              |        |  |                |  |  |       |  |           |          |  |               |            |       |   |         |           |        |            |  |  |             |  |  |            |       |          |          |  |         |            |  |  |   |  |  |  |   |  |  |  |   | 
|Richard North |  |              | 3,789  |  |                |  |  |       |  |           | 4.15.03  |  |               |            | 372   | p |         |           | 3,789  |            |  |  | 6.2.04      |  |  |            | 529.5 | p        |          |  | 20,063  |            |  |  |  |  |  |  |  |  |  |  |  | 
|Stevan Porter |  |              | 55,428 |  |                |  |  |       |  |           | 12.18.01 |  |               |            | 434.3 | p |         |           | 55,428 |            |  |  | 12.20.04    |  |  |            | 654.5 | p        |          |  | 362,776 |            |  |  |  |  |  |  |  |  |  |  |  | 






|    |                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | IHG PLC shares provided at 372p per share in equal value
    exchange for Six Continents PLC shares outstanding at 4.14.03
    under the Six Continents Special Deferred Incentive Plan.     
|   
|(2) | Award originally made in Six Continents PLC shares. The share
    prices shown are the equivalent IHG PLC share prices, based on a
    five day average immediately preceding the award date.

Share Options


|                |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        |  |  |        |  |  |  |        | 
|--------------- |  | --------- | --------- |  | -------- |  | ------- | -------- |  |  | --------- | -------- |  | ------------- | --- |  | ------- |  | --------- | ------ |  |  | ------ |  |  |  | ------ | 
|                |  |           |           |  |          |  |         |          |  |  |           | Weighted |  |               |    
|                |  | Options   |           |  | Granted  |  |         | Lapsed   |  |  | Exercised |          |  | Options       |     |  | average |  |           |       
|                |  | held at   |           |  | during   |  |         | during   |  |  | during    |          |  | held at       |     |  | option  |  |           | Option | 
|                |  | Jan 1, 04 |           |  | the year |  |         | the year |  |  | the year  |          |  | Dec 31, 04(1) |     |  | price   |  |           | price  | 
|                |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        | 
|                |  |           |           |  |          |  |         |          |  |  |           | (p)      |  |               | (p) | 
|Richard Hartman |  |           | 615,072   |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        |  |  | 414.88 |  |  |  |        | 
|                |  |           |           |  |          |  | 218,950 |          |  |  |           |          |  |               |     |  |         |  |           |        |  |  |        |  |  |  | 494.17 | 
|A               |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  | 364,388   |        |  |  | 398.98 |  |  |  |        | 
|B               |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  | 469,634   |        |  |  | 464.19 |  |  |  |        | 
|                |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        | 
|Total           |  |           | 615,072   |  |          |  | 218,950 |          |  |  |          |          |  |               |    |  |         |  | 834,022   |        |  |  | 435.70 |  |  |  |        | 
|                |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        | 
|Richard North   |  |           | 1,125,168 |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        |  |  | 412.69 |  |  |  |        | 
|                |  |           |           |  |          |  | 394,840 |          |  |  |           |          |  |               |     |  |         |  |           |        |  |  |        |  |  |  | 494.17 | 
|A               |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  | 712,017   |        |  |  | 398.05 |  |  |  |        | 
|B               |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  | 807,991   |        |  |  | 465.40 |  |  |  |        | 
|                |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        | 
|Total           |  |           | 1,125,168 |  |          |  | 394,840 |          |  |  |          |          |  |               |    |  |         |  | 1,520,008 |        |  |  | 433.85 |  |  |  |        | 
|                |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        | 
|Stevan Porter   |  |           | 433,059   |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        |  |  | 426.22 |  |  |  |        | 
|                |  |           |           |  |          |  | 225,260 |          |  |  |           |          |  |               |     |  |         |  |           |        |  |  |        |  |  |  | 494.17 | 
|A               |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  | 178,176   |        |  |  | 409.36 |  |  |  |        | 
|B               |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  | 480,143   |        |  |  | 464.35 |  |  |  |        | 
|                |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        | 
|Total           |  |           | 433,059   |  |          |  | 225,260 |          |  |  |          |          |  |               |    |  |         |  | 658,319   |        |  |  | 449.47 |  |  |  |        | 
|                |  |           |           |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |           |        | 

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##### Table of Contents



|                 |  |           |         |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |         |        |  |  |        |  |  |  |        | 
|---------------- |  | --------- | ------- |  | -------- |  | ------- | -------- |  |  | --------- | -------- |  | ------------- | --- |  | ------- |  | ------- | ------ |  |  | ------ |  |  |  | ------ | 
|                 |  |           |         |  |          |  |         |          |  |  |           | Weighted |  |               |    
|                 |  | Options   |         |  | Granted  |  |         | Lapsed   |  |  | Exercised |          |  | Options       |     |  | average |  |         |       
|                 |  | held at   |         |  | during   |  |         | during   |  |  | during    |          |  | held at       |     |  | option  |  |         | Option | 
|                 |  | Jan 1, 04 |         |  | the year |  |         | the year |  |  | the year  |          |  | Dec 31, 04(1) |     |  | price   |  |         | price  | 
|                 |  |           |         |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |         |        | 
|                 |  |           |         |  |          |  |         |          |  |  |           | (p)      |  |               | (p) | 
|Richard Solomons |  |           | 601,040 |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |         |        |  |  | 400.55 |  |  |  |        | 
|                 |  |           |         |  |          |  | 230,320 |          |  |  |           |          |  |               |     |  |         |  |         |        |  |  |        |  |  |  | 494.17 | 
|A                |  |           |         |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  | 357,545 |        |  |  | 375.24 |  |  |  |        | 
|B                |  |           |         |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  | 473,815 |        |  |  | 465.16 |  |  |  |        | 
|                 |  |           |         |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |         |        | 
|Total            |  |           | 601,040 |  |          |  | 230,320 |          |  |  |          |          |  |               |    |  |         |  | 831,360 |        |  |  | 426.49 |  |  |  |        | 
|                 |  |           |         |  |          |  |         |          |  |  |           |          |  |               |     |  |         |  |         |        | 






|    |                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In the case of Richard North, who resigned as a director of the
    Company on September 30, 2004, the figures shown are as at
    cessation of employment. In accordance with plan rules, Richard
    Norths unvested options will lapse three and a half years
    from the date of cessation of employment.



|    |                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------
|(A) | Where options are exercisable and the market price per share at
    December 31, 2004 was above the option price; and



|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(B) | Where options are not yet exercisable. A performance condition
    has to be met before options can be exercised, in accordance
    with the policy set out earlier.











Directors
Shareholdings


|                        |  |                                   |        |  |                                   |  |        | 
|----------------------- |  | --------------------------------- | ------ |  | --------------------------------- |  | ------ | 
|                        |  | December 31, 2004                 |        |  | January 1, 2004                   | 
|                        |  | InterContinental Hotels Group PLC |        |  | InterContinental Hotels Group PLC | 
|                        |  | ordinary shares of 112p           |        |  | ordinary shares of £1(1)(2)       | 
|                        |  |                                   |        |  |                                   | 
|Executive directors     |  |                                   |        |  |                                   |  |        | 
|Richard Hartman         |  |                                   | 45,247 |  |                                   |  | 30,345 | 
|Stevan Porter           |  |                                   | 88,077 |  |                                   |  | 56,754 | 
|Richard Solomons        |  |                                   | 16,031 |  |                                   |  | 17,956 | 
|David Webster           |  |                                   | 13,395 |  |                                   |  | 824    | 
|Non-executive directors |  |                                   |        |  |                                   |  |        | 
|David Kappler           |  |                                   | 2,602  |  |                                   |  | 2,915  | 
|Ralph Kugler            |  |                                   | 892    |  |                                   |  | 1,000  | 
|Robert C Larson(3)      |  |                                   | 10,714 |  |                                   |  | 9,805  | 
|David Prosser           |  |                                   | 4,464  |  |                                   |  | 5,000  | 
|Sir Howard Stringer     |  |                                   | 7,566  |  |                                   |  | 8,474  | 






|    |                                  
|--- | ---------------------------------
|(1) | Or date of appointment, if later.

F-31



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##### Table of Contents





|    |                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | These share interests were in InterContinental Hotels Group PLC
    £1 ordinary shares prior to the share consolidation
    effective from December 13, 2004. For every 28 existing
    InterContinental Hotels Group PLC shares held on
    December 10, 2004, shareholders received 25 new ordinary
    shares of 112p each.
|   
|(3) | Held in the form of American Depositary Receipts.                                                                                                                                                                                                                                                                             









|         |                  
|-------- | -----------------
|Note 5  | Exceptional Items

|                                                     |                                              |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |     |     |   |  |     |    |    |  |     |     |    | 
|---------------------------------------------------- | -------------------------------------------- | ---------------------------- | --- | --------------------------------- | ------------- | - | - | ----------------------------- | - | ------------- | ------------ | --- | ------------ | ------------- | ---- | ----- | ------------ |  | ---------- | ------------- | - | ------------ | ------------- | --- | - | ----- | --- | --- | - |  | --- | -- | -- |  | --- | --- | -- | 
|                                                     |                                              |                              |     | 15 months ended December 31, 2003 |               |   |  
|                                                     |                                              | Year ended December 31, 2004 |     |                                   |               |   |   | Year ended September 30, 2002 |  
|                                                     |                                              |                              |     |                                   | Continuing    |   |   |                               |   |               |             
|                                                     |                                              | Continuing                   |     |                                   | Discontinued  |   |   |                               |   | operations(i) |              |     | Discontinued |               |      | Total |              |  | Continuing |               |   | Discontinued |               |     |  
|                                                     |                                              | operations(i)                |     |                                   | operations(i) |   |   | Total                         |   |               | restated(ii) |     |              | operations(i) |      |       | restated(ii) |  |            | operations(i) |   |              | operations(i) |     |   | Total |    
|                                                     |                                              |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |    
|                                                     |                                              | (£ million)                  |    
|Operating exceptional items:                         |                                              |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |     |     |   |  |     |    |    |  |     |    
|                                                     | Cost of sales(iii)                           |                              |     | (28                               | )             |   |   |                              |   |               |              | (28 | )            |               |      | (51   | )            |  |            |              |   |              |               | (51 | ) |       |     | (77 | ) |  |     |   |    |  |     | (77 | ) 
|                                                     | Administrative expenses(iv)                  |                              |     | (11                               | )             |   |   |                              |   |               |              | (11 | )            |               |      |      |              |  |            |              |   |              |               |    |   |       |     |    |   |  |     |   |    |  |     |    |   
|                                                     | Other operating income(v)                    |                              |     | 20                                |               |   |   |                              |   |               |              | 20  |              |               |      |      |              |  |            |              |   |              |               |    |   |       |     |    |   |  |     |   |    |  |     |    |   
|                                                     |                                              |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |    
|Total operating exceptional items                    |                                              |                              | (19 | )                                 |               |   |  |                               |   |               | (19          | )   |              |               | (51  | )     |              |  |           |               |   |              | (51           | )   |   |       | (77 | )   |   |  |    |    |    |  | (77 | )  
|                                                     |                                              |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |    
|Non-operating exceptional items:                     |                                              |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |     |     |   |  |     |    |    |  |     |    
|                                                     | Cost of fundamental reorganization(vi)       |                              |     |                                  |               |   |   |                              |   |               |              |    |              |               |      | (67   | )            |  |            |              |   |              |               | (67 | ) |       |     |    |   |  |     |   |    |  |     |    |   
|                                                     | Separation costs(vii)                        |                              |     |                                  |               |   |   |                              |   |               |              |    |              |               |      | (51   | )            |  |            | (41           | ) |              |               | (92 | ) |       |     | (4  | ) |  |     |   |    |  |     | (4  | ) 
|                                                     | Profit/(loss) on disposal of fixed assets    |                              |     | 15                                |               |   |   |                              |   |               |              | 15  |              |               |      | 4     |              |  |            | (2            | ) |              |               | 2   |   |       |     | 2   |   |  |     | (2 | )  |  |     |    |   
|                                                     | (Loss)/profit on disposal of operations      |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |     |     |   |  |     |    |    |  |     |     |   
|                                                     |                                              | Hotels(viii)                 |     |                                   | (74           | ) |   |                               |  |               |              |     | (74          | )             |      |       |             |  |            |               |  |              |               |     |  |       |     |     |  |  |     |    |   |  |     |     |   | 
|                                                     |                                              | Bass Brewers(ix)             |     |                                   |              |   |   |                               |  |               |              |     |             |               |      |       |             |  |            |               |  |              |               |     |  |       |     |     |  |  |     |    | 57 |  |     |     | 57 | 
|                                                     | Provision against fixed asset investments(x) |                              |     | (10                               | )             |   |   |                              |   |               |              | (10 | )            |               |      | (56   | )            |  |            |              |   |              |               | (56 | ) |       |     |    |   |  |     |   |    |  |     |    |   
|                                                     |                                              |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |    
|                                                     |                                              |                              | (69 | )                                 |               |   |  |                               |   |               | (69          | )   |              |               | (170 | )     |              |  | (43        | )             |   |              | (213          | )   |   |       | (2  | )   |   |  | 55  |    |    |  | 53  |    
|                                                     |                                              |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |    
|Total exceptional items before interest and taxation |                                              |                              | (88 | )                                 |               |   |  |                               |   |               | (88          | )   |              |               | (221 | )     |              |  | (43        | )             |   |              | (264          | )   |   |       | (79 | )   |   |  | 55  |    |    |  | (24 | )  
|Interest receivable(xi)                              |                                              |                              | 22  |                                   |               |   |  |                               |   |               | 22           |     |              |               |     |       |              |  |           |               |   |              |              |     |   |       |    |     |   |  |    |    |    |  |    |    
|Interest payable(xii)                                |                                              |                              | (16 | )                                 |               |   |  |                               |   |               | (16          | )   |              |               |     |       |              |  |           |               |   |              |              |     |   |       |    |     |   |  |    |    |    |  |    |    
|Premium on early settlement of debt(xiii)            |                                              |                              | (17 | )                                 |               |   |  |                               |   |               | (17          | )   |              |               | (136 | )     |              |  |           |               |   |              | (136          | )   |   |       |    |     |   |  |    |    |    |  |    |    
|Tax credit/(charge) on above items                   |                                              |                              | 6   |                                   |               |   |  |                               |   |               | 6            |     |              |               | 36   |       |              |  | 28         |               |   |              | 64            |     |   |       | (10 | )   |   |  | 1   |    |    |  | (9  | )  
|Exceptional tax credit(xiv)                          |                                              |                              | 161 |                                   |               |   |  |                               |   |               | 161          |     |              |               | 68   |       |              |  |           |               |   |              | 68            |     |   |       | 14  |     |   |  | 114 |    |    |  | 128 |    
|                                                     |                                              |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |    
|Total exceptional items after interest and taxation  |                                              |                              | 68  |                                   |               |   |  |                               |   |               | 68           |     |              |               | (253 | )     |              |  | (15        | )             |   |              | (268          | )   |   |       | (75 | )   |   |  | 170 |    |    |  | 95  |    
|                                                     |                                              |                              |     |                                   |               |   |   |                               |   |               |              |     |              |               |      |       |              |  |            |               |   |              |               |     |   |       |    

F-32



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|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)    |  | Continuing operations comprise InterContinental Hotels Group
    PLC. Discontinued operations relate to Mitchells &
    Butlers plc for 2003 and 2002 and in 2002 also included profits
    on disposal of Bass Brewers of £57 million, relating
    to the finalization of completion accounts and an exceptional
    tax credit representing the release of over provisions of tax in
    relation to Bass Brewers and other businesses.
|      
|(ii)   |  | Restated to show exceptional tax credits on a basis consistent
    with 2004, comprising prior year adjustments which are
    exceptional by reason of their size or incidence.                                                                                                                                                                                                                                                           
|      
|(iii)  |  | Tangible fixed assets were written down by £48 million
    (2003 £73 million, 2002 £113 million)
    following an impairment review of the hotel estate.
    £28 million (2003 £51 million, 2002
    £77 million) was charged above as an operating
    exceptional item and £20 million (2003
    £22 million, 2002 £36 million) reversed
    previous revaluation gains.                                                                
|      
|(iv)   |  | Administrative expenses include a charge of
    £11 million related to the delivery of the further
    restructuring of the Hotels business in conjunction with the
    asset disposal program.                                                                                                                                                                                                                                           
|      
|(v)    |  | Adjustment to market valuation of the Groups investment in
    FelCor Lodging Trust Inc.                                                                                                                                                                                                                                                                                                                                                 
|      
|(vi)   |  | Relates to a fundamental reorganization of the Hotels business.
    The cost includes redundancy entitlements, property exit costs
    and other implementation costs.                                                                                                                                                                                                                                                                    
|      
|(vii)  |  | Relates to costs incurred for the bid defense and Separation of
    Six Continents PLC.                                                                                                                                                                                                                                                                                                                                                   
|      
|(viii) |  | Provision for the loss on disposal of 13 hotels in the Americas
    and 73 hotels in the United Kingdom.                                                                                                                                                                                                                                                                                                                                  
|      
|(ix)   |  | Bass Brewers was disposed of in August 2000. The profit in 2002
    comprises £9 million received in respect of the
    finalization of completion account adjustments, together with
    the release of disposal provisions no longer required of
    £48 million.                                                                                                                                                                       
|      
|(x)    |  | Relates to a provision for the diminution in value of certain
    fixed asset investments and reflects the directors view of
    the fair value of the holdings.                                                                                                                                                                                                                                                                         
|      
|(xi)   |  | Mainly relates to interest received on exceptional tax refunds.                                                                                                                                                                                                                                                                                                                                                                           
|      
|(xii)  |  | Relates to costs of closing out swaps and costs related to
    refinancing the Groups debt.                                                                                                                                                                                                                                                                                                                                              
|      
|(xiii) |  | Relates to the premiums paid on the repurchase of the
    Groups public debt.                                                                                                                                                                                                                                                                                                                                                            
|      
|(xiv)  |  | Represents the release of provisions relating to tax matters
    which have been settled or in respect of which the relevant
    statutory limitation period has expired, principally relating to
    acquisitions (including provisions relating to pre-acquisition
    periods) and disposals, intra-group financing and, in 2004, the
    recognition of a deferred tax asset of £83 million in
    respect of capital losses.         

Note 6  Interest Payable and Similar
Charges


|                          |  |              |    |           |              |  |     |               |  |  |     | 
|------------------------- |  | ------------ | -- | --------- | ------------ |  | --- | ------------- |  |  | --- | 
|                          |  |              |    | 15 months |              |  |    
|                          |  | Year ended   |    |           | ended        |  |     | Year ended    | 
|                          |  | December 31, |    |           | December 31, |  |     | September 30, | 
|                          |  | 2004         |    |           | 2003         |  |     | 2002          | 
|                          |  |              |    |           |              |  |     |               | 
|                          |  | (£ million)  |   
|Bank loans and overdrafts |  |              | 16 |           |              |  | 38  |               |  |  | 21  | 
|Other                     |  |              | 70 |           |              |  | 113 |               |  |  | 155 | 
|                          |  |              |    |           |              |  |     |               | 
|                          |  |              | 86 |           |              |  | 151 |               |  |  | 176 | 
|                          |  |              |    |           |              |  |     |               | 

F-33



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##### Table of Contents



Note 7  Tax on Profit on Ordinary Activities


|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |    |     |     |   |   |     |      |   |    |  
|----------------------------------------------- | -------------------------------------------------------- | ------------------------------------- | ----------------------------------------- | --------------- | ----------------- | - | ----------- | ------------------ | -- | -- | ----- | ----------- | - | ----- | --- | --- | ----- | -- | --- | --- | - | - | --- | ---- | - | -- | -
|                                                |                                                          |                                       |                                           | 15 months ended |                   |   | Year ended  |                   
|                                                |                                                          | Year ended                            |                                           |                 | December 31, 2003 |   |             | September 30, 2002 |   
|                                                |                                                          | December 31, 2004                     |                                           |                 | restated(i)       |   |             | restated(i)        |   
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |   
|                                                |                                                          | Before                                |                                           |                 |                   |   | Before      |                    |    |    |       | Before      |   |       |    
|                                                |                                                          | exceptional                           |                                           |                 |                   |   | exceptional |                    |    |    |       | exceptional |   |       |    
|                                                |                                                          | items                                 |                                           |                 | Total             |   |             | items              |    |    | Total |             |   | items |     |     | Total |   
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|                                                |                                                          | (£ million)                           |                                          
|Tax charge                                      |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |    |     |     |   |   |     |     
|UK corporation tax at 30% (2003 30%, 2002 30%): |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |    |     |     |   |   |     |     
|                                                | Current year                                             |                                       |                                           | 32              |                   |   |             | 23                 |    |    |       | 42          |   |       |     | 4   |       |    |     | 94  |   |   |     | 106  |  
|                                                | Prior years                                              |                                       |                                           | (22             | )                 |   |             | (48                | )  |    |       | (12         | ) |       |     | (80 | )     |    |     | (1  | ) |   |     | (129 | )
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|                                                |                                                          |                                       | 10                                        |                 |                   |   | (25         | )                  |    |    | 30    |             |   |       | (76 | )   |       |    | 93  |     |   |   | (23 | )   
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|Foreign tax:                                    |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |    |     |     |   |   |     |     
|                                                | Current year                                             |                                       |                                           | 50              |                   |   |             | 51                 |    |    |       | 72          |   |       |     | 69  |       |    |     | 65  |   |   |     | 65   |  
|                                                | Prior years                                              |                                       |                                           | (29             | )                 |   |             | (81                | )  |    |       | (20         | ) |       |     | (20 | )     |    |     | (1  | ) |   |     | (1   | )
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|                                                |                                                          |                                       | 21                                        |                 |                   |   | (30         | )                  |    |    | 52    |             |   |       | 49  |     |       |    | 64  |     |   |   | 64  |     
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|Total current tax                               |                                                          |                                       | 31                                        |                 |                   |   | (55         | )                  |    |    | 82    |             |   |       | (27 | )   |       |    | 157 |     |   |   | 41  |     
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|Deferred tax:                                   |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |    |     |     |   |   |     |     
|                                                | Origination and reversal of timing differences           |                                       |                                           | 31              |                   |   |             | 33                 |    |    |       | 53          |   |       |     | 30  |       |    |     | 20  |   |   |     | 17   |  
|                                                | Adjustments to estimated recoverable deferred tax assets |                                       |                                           |                |                   |   |             |                   |    |    |       | (11         | ) |       |     | (11 | )     |    |     | 11  |   |   |     | 11   |  
|                                                | Prior years                                              |                                       |                                           | (12             | )                 |   |             | (95                | )  |    |       | (9          | ) |       |     | (9  | )     |    |     | (17 | ) |   |     | (17  | )
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|Total deferred tax                              |                                                          |                                       | 19                                        |                 |                   |   | (62         | )                  |    |    | 33    |             |   |       | 10  |     |       |    | 14  |     |   |   | 11  |     
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|Tax on profit on ordinary activities            |                                                          |                                       | 50                                        |                 |                   |   | (117        | )                  |    |    | 115   |             |   |       | (17 | )   |       |    | 171 |     |   |   | 52  |     
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|Further analyzed as tax relating to:            |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |    |     |     |   |   |     |     
|                                                | Profit before exceptional items                          |                                       |                                           | 50              |                   |   |             | 50                 |    |    |       | 115         |   |       |     | 115 |       |    |     | 171 |   |   |     | 171  |  
|                                                | Operating exceptional items:                             |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |    |     |     |   |   |     |      |  
|                                                |                                                          | Administrative expenses               |                                           |                 |                  |   |             |                    | (3 | )  |       |             |  |       |     |     |      |    |     |     |  |   |     |      |  |   
|                                                | Non-operating exceptional items  (Note 5):              |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |    |     |     |   |   |     |      |  
|                                                |                                                          | Continuing operations:                |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |    |     |     |   |   |     |      |   |   
|                                                |                                                          |                                       | Cost of fundamental reorganization        |                 |                   |  |             |                    |    | (5 | )     |             |   |      |     |     |       | (8 | )   |     |   |  |     |      |   |   |  
|                                                |                                                          |                                       | Profit on disposal of fixed assets        |                 |                   |  |             |                    |    | 5  |       |             |   |      |     |     |       |   |     |     |   |  |     |      |   | 11 |  
|                                                |                                                          |                                       | Separation costs                          |                 |                   |  |             |                    |    |   |       |             |   |      |     |     |       | (6 | )   |     |   |  |     |      |   | (1 | )
|                                                |                                                          |                                       | Provision against fixed asset investments |                 |                   |  |             |                    |    |   |       |             |   |      |     |     |       | (5 | )   |     |   |  |     |      |   |   |  
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|                                                |                                                          |                                       |                                          |                 |                   |   |            |                    |    |    |      |             |   |       | (19 | )   |       |    |    |     |   |   | 10  |     
|                                                |                                                          | Discontinued operations:              |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |    |     |     |   |   |     |      |   |   
|                                                |                                                          |                                       | Separation costs                          |                 |                   |  |             |                    |    |   |       |             |   |      |     |     |       | (4 | )   |     |   |  |     |      |   |   |  
|                                                |                                                          |                                       | Other                                     |                 |                   |  |             |                    |    |   |       |             |   |      |     |     |       |   |     |     |   |  |     |      |   | (1 | )
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|                                                |                                                          | Total non-operating exceptional items |                                           |                 |                  |   |             |                    |   |    |       |             |  |       |     |     | (23   | )  |     |     |  |   |     |      | 9 |   
|                                                | Interest                                                 |                                       |                                           |                |                   |   |             | 2                  |    |    |       |            |   |       |     |    |       |    |     |    |   |   |     |     |  
|                                                | Premium on early settlement of debt                      |                                       |                                           |                |                   |   |             | (5                 | )  |    |       |            |   |       |     | (41 | )     |    |     |    |   |   |     |     |  
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|                                                | Total exceptional items                                  |                                       |                                           |                |                   |   |             | (6                 | )  |    |       |            |   |       |     | (64 | )     |    |     |    |   |   |     | 9    |  
|                                                | Exceptional tax credit  (Note 5)                        |                                       |                                           |                |                   |   |             | (161               | )  |    |       |            |   |       |     | (68 | )     |    |     |    |   |   |     | (128 | )
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   
|Tax charge/ (credit)                            |                                                          |                                       | 50                                        |                 |                   |   | (117        | )                  |    |    | 115   |             |   |       | (17 | )   |       |    | 171 |     |   |   | 52  |     
|                                                |                                                          |                                       |                                           |                 |                   |   |             |                    |    |    |       |             |   |       |     |     |       |   






|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Restated to show exceptional tax credits on a basis consistent
    with 2004. This comprises prior year adjustments which are
    exceptional by reason of their size or incidence.

F-34



---



##### Table of Contents





| |                    
| | -------------------
| | Tax reconciliations



| |                                   
| | ----------------------------------
| | Reconciliation of current tax rate

|                                                            |  |              |       |           |              |  |            |               |  |  |       |  
|----------------------------------------------------------- |  | ------------ | ----- | --------- | ------------ |  | ---------- | ------------- |  |  | ----- | -
|                                                            |  |              |       | 15 months |              |  |           
|                                                            |  |              |       | ended     |              |  | Year ended |              
|                                                            |  | Year ended   |       |           | December 31, |  |            | September 30, | 
|                                                            |  | December 31, |       |           | 2003         |  |            | 2002          | 
|                                                            |  | 2004         |       |           | restated(i)  |  |            | restated(i)   | 
|                                                            |  |              |       |           |              |  |            |               | 
|                                                            |  | (%)          |      
|UK corporation tax standard rate                            |  |              | 30.0  |           |              |  | 30.0       |               |  |  | 30.0  |  
|Permanent differences                                       |  |              | (0.3  | )         |              |  | 20.7       |               |  |  | 1.3   |  
|Capital allowances in excess of depreciation                |  |              | (6.9  | )         |              |  | (12.6      | )             |  |  | (3.7  | )
|Other timing differences                                    |  |              | (7.4  | )         |              |  | (104.2     | )             |  |  | (1.3  | )
|Net effect of different rates of tax in overseas businesses |  |              | 9.2   |           |              |  | 46.1       |               |  |  | 3.1   |  
|Adjustment to tax charge in respect of prior years          |  |              | (24.1 | )         |              |  | (88.9      | )             |  |  | (0.2  | )
|Other                                                       |  |              | 0.2   |           |              |  | 2.0        |               |  |  |      |  
|Exceptional items                                           |  |              | (26.2 | )         |              |  | 32.2       |               |  |  | (21.5 | )
|                                                            |  |              |       |           |              |  |            |               | 
|Effective current tax rate                                  |  |              | (25.5 | )         |              |  | (74.7      | )             |  |  | 7.7   |  
|                                                            |  |              |       |           |              |  |            |               | 
|Effective current tax rate before exceptional items         |  |              | 10.1  |           |              |  | 18.8       |               |  |  | 28.8  |  
|                                                            |  |              |       |           |              |  |            |               | 






|    |                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Restated to show exceptional tax credits on a basis consistent
    with 2004, comprising prior year adjustments which are
    exceptional by reason of their size or incidence.



| |                                   
| | ----------------------------------
| | Reconciliation of overall tax rate

|                                                            |  |              |       |           |              |  |            |               |  |  |       |  
|----------------------------------------------------------- |  | ------------ | ----- | --------- | ------------ |  | ---------- | ------------- |  |  | ----- | -
|                                                            |  |              |       | 15 months |              |  |           
|                                                            |  |              |       | ended     |              |  | Year ended |              
|                                                            |  | Year ended   |       |           | December 31, |  |            | September 30, | 
|                                                            |  | December 31, |       |           | 2003         |  |            | 2002          | 
|                                                            |  | 2004         |       |           | restated(i)  |  |            | restated(i)   | 
|                                                            |  |              |       |           |              |  |            |               | 
|                                                            |  | (%)          |      
|UK corporation tax standard rate                            |  |              | 30.0  |           |              |  | 30.0       |               |  |  | 30.0  |  
|Permanent differences                                       |  |              | (0.4  | )         |              |  | 20.7       |               |  |  | 1.3   |  
|Net effect of different rates of tax in overseas businesses |  |              | 9.2   |           |              |  | 46.1       |               |  |  | 4.0   |  
|Adjustment to tax charge in respect of prior years          |  |              | (29.5 | )         |              |  | (115.0     | )             |  |  | (3.3  | )
|Capital gains                                               |  |              |      |           |              |  |           |               |  |  |      |  
|Other                                                       |  |              | 0.2   |           |              |  | 4.6        |               |  |  | (0.6  | )
|Exceptional items                                           |  |              | (65.0 | )         |              |  | (33.4      | )             |  |  | (21.7 | )
|                                                            |  |              |       |           |              |  |            |               | 
|Effective tax rate                                          |  |              | (55.5 | )         |              |  | (47.0      | )             |  |  | 9.7   |  
|                                                            |  |              |       |           |              |  |            |               | 






|    |                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Restated to show exceptional tax credits on a basis consistent
    with 2004, comprising prior year adjustments which are
    exceptional by reason of their size or incidence.

Factors which may affect future tax charges


F-35



---



##### Table of Contents



Note 8  Dividends


|                                                           |  |                   |       |           |              |  |       |               |  |  |              |  |  |              |     |  |               |  |     |  |  |  |     | 
|---------------------------------------------------------- |  | ----------------- | ----- | --------- | ------------ |  | ----- | ------------- |  |  | ------------ |  |  | ------------ | --- |  | ------------- |  | --- |  |  |  | --- | 
|                                                           |  |                   |       | 15 months |              |  |       |               |  |  | 15 months    |  |  |             
|                                                           |  | Year ended        |       |           | ended        |  |       | Year ended    |  |  | Year ended   |  |  | ended        |     |  | Year ended    | 
|                                                           |  | December 31,      |       |           | December 31, |  |       | September 30, |  |  | December 31, |  |  | December 31, |     |  | September 30, | 
|                                                           |  | 2004              |       |           | 2003         |  |       | 2002          |  |  | 2004         |  |  | 2003         |     |  | 2002          | 
|                                                           |  |                   |       |           |              |  |       |               |  |  |              |  |  |              |     |  |               | 
|                                                           |  | (pence per share) |       |           | (£ million)  | 
|Dividends on ordinary shares:                              |  |                   |       |           |              |  |       |               |  |  |              |  |  |              |     |  |               |  |     |  |  |  |     | 
|Interim Six Continents PLC                                 |  |                   |      |           |              |  | 7.65  |               |  |  | 12.58        |  |  |              |    |  |               |  | 56  |  |  |  | 92  | 
|Proposed final Six Continents PLC                          |  |                   |      |           |              |  |      |               |  |  | 29.14        |  |  |              |    |  |               |  |    |  |  |  | 213 | 
|Interim InterContinental Hotels Group PLC                  |  |                   | 4.30  |           |              |  | 4.05  |               |  |  |             |  |  |              | 29  |  |               |  | 30  |  |  |  |    | 
|Special Interim Dividend Intercontinental Hotels Group PLC |  |                   | 72.00 |           |              |  |      |               |  |  |             |  |  |              | 501 |  |               |  |    |  |  |  |    | 
|Proposed final InterContinental Hotels Group PLC           |  |                   | 10.00 |           |              |  | 9.45  |               |  |  |             |  |  |              | 62  |  |               |  | 70  |  |  |  |    | 
|                                                           |  |                   |       |           |              |  |       |               |  |  |              |  |  |              |     |  |               | 
|                                                           |  |                   | 86.30 |           |              |  | 21.15 |               |  |  | 41.72        |  |  |              | 592 |  |               |  | 156 |  |  |  | 305 | 
|                                                           |  |                   |       |           |              |  |       |               |  |  |              |  |  |              |     |  |               | 



Note 9  Earnings per ordinary share










|                                    |  |                            |       |           |              |  |            |               |  |  |       |  
|----------------------------------- |  | -------------------------- | ----- | --------- | ------------ |  | ---------- | ------------- |  |  | ----- | -
|                                    |  |                            |       | 15 months |              |  |           
|                                    |  |                            |       | ended     |              |  | Year ended |              
|                                    |  | Year ended                 |       |           | December 31, |  |            | September 30, | 
|                                    |  | December 31,               |       |           | 2003         |  |            | 2002          | 
|                                    |  | 2004                       |       |           | restated(i)  |  |            | restated(i)   | 
|                                    |  |                            |       |           |              |  |            |               | 
|                                    |  | (pence per ordinary share) |      
|Basic earnings                      |  |                            | 42.1  |           |              |  | 2.6        |               |  |  | 62.5  |  
|Exceptional items, less tax thereon |  |                            | 13.1  |           |              |  | 45.8       |               |  |  | 4.5   |  
|Exceptional tax credit              |  |                            | (22.7 | )         |              |  | (9.3       | )             |  |  | (17.5 | )
|                                    |  |                            |       |           |              |  |            |               | 
|Adjusted earnings                   |  |                            | 32.5  |           |              |  | 39.1       |               |  |  | 49.5  |  
|                                    |  |                            |       |           |              |  |            |               | 






|    |                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Restated to show exceptional tax credits on a basis consistent
    with 2004, comprising prior year adjustments which are
    exceptional by reason of their size or incidence.

F-36



---



##### Table of Contents





Note 10  Cash flow from operating activities


|                                                                                            |  |              |      |           |              |  |      |               |  |  |      |  
|------------------------------------------------------------------------------------------- |  | ------------ | ---- | --------- | ------------ |  | ---- | ------------- |  |  | ---- | -
|                                                                                            |  |              |      | 15 months |              |  |     
|                                                                                            |  | Year ended   |      |           | ended        |  |      | Year ended    | 
|                                                                                            |  | December 31, |      |           | December 31, |  |      | September 30, | 
|                                                                                            |  | 2004         |      |           | 2003         |  |      | 2002          | 
|                                                                                            |  |              |      |           |              |  |      |               | 
|                                                                                            |  | (£ million)  |     
|Operating profit before exceptional items                                                   |  |              | 331  |           |              |  | 483  |               |  |  | 618  |  
|Depreciation and amortization                                                               |  |              | 198  |           |              |  | 303  |               |  |  | 271  |  
|                                                                                            |  |              |      |           |              |  |      |               | 
|Earnings before interest, taxation, depreciation and
    amortization and exceptional items |  |              | 529  |           |              |  | 786  |               |  |  | 889  |  
|Other non-cash items                                                                        |  |              | 12   |           |              |  | (2   | )             |  |  | (4   | )
|Decrease/(increase) in stocks                                                               |  |              | 1    |           |              |  | (1   | )             |  |  | (1   | )
|Increase in debtors                                                                         |  |              | (11  | )         |              |  | (10  | )             |  |  | (92  | )
|Increase/(decrease) in creditors                                                            |  |              | 75   |           |              |  | 69   |               |  |  | (37  | )
|Special pension contributions                                                               |  |              | (71  | )         |              |  |     |               |  |  |     |  
|Provisions expended  (Note 23)                                                             |  |              | (3   | )         |              |  | (10  | )             |  |  | (18  | )
|                                                                                            |  |              |      |           |              |  |      |               | 
|Operating activities before expenditure relating to exceptional
    items                   |  |              | 532  |           |              |  | 832  |               |  |  | 737  |  
|Cost of fundamental reorganization  (Note 23)                                              |  |              | (17  | )         |              |  | (37  | )             |  |  |     |  
|Operating exceptional expenditure                                                           |  |              |     |           |              |  |     |               |  |  | (17  | )
|                                                                                            |  |              |      |           |              |  |      |               | 
|Operating activities                                                                        |  |              | 515  |           |              |  | 795  |               |  |  | 720  |  
|Net capital expenditure  (Note 12)                                                         |  |              | (151 | )         |              |  | (248 | )             |  |  | (513 | )
|                                                                                            |  |              |      |           |              |  |      |               | 
|Operating cash flow  (Note 13)                                                             |  |              | 364  |           |              |  | 547  |               |  |  | 207  |  
|                                                                                            |  |              |      |           |              |  |      |               | 

Note 11  Net debt


|                                             |  |                     |      |        |            |       |         |           |       |            |             |      |            |          |      |   |          |  |      |       |  |  |        |   |  |  |        |  
|-------------------------------------------- |  | ------------------- | ---- | ------ | ---------- | ----- | ------- | --------- | ----- | ---------- | ----------- | ---- | ---------- | -------- | ---- | - | -------- |  | ---- | ----- |  |  | ------ | - |  |  | ------ | -
|                                             |  |                     |      | Liquid |            |       |         |           |      
|                                             |  | Cash and overdrafts |      |        | resources  |       |         | Financing |       |            |            
|                                             |  |                     |      |        |            |       |         |           |       |            |            
|                                             |  |                     |      |        |            | Other |         |           | Other |            |             |     
|                                             |  | Cash at             |      |        |            |       | Current |           |       | borrowings |             |      | borrowings |          |      |  
|                                             |  | bank and            |      |        |            |       | asset   |           |       | due within |             |      | due after  |          |      |  
|                                             |  | in hand             |      |        | Overdrafts |       |         | Total     |       |            | investments |      |            | one year |      |   | one year |  |      | Total | 
|                                             |  |                     |      |        |            |       |         |           |       |            |             |      |            |          |      |   |          |  |      |       | 
|                                             |  | (£ million)         |     
|At October 1, 2001                           |  |                     | 67   |        |            |       | (37     | )         |       |            | 30          |      |            |          | 366  |   |          |  | (378 | )     |  |  | (1,019 | ) |  |  | (1,001 | )
|Net cash flow                                |  |                     | (276 | )      |            |       | (29     | )         |       |            | (305        | )(i) |            |          |     |   |          |  |     |       |  |  |       |   |  |  | (305   | )
|Management of liquid resources and financing |  |                     | 295  |        |            |       |        |           |       |            | 295         | (i)  |            |          | (232 | ) |          |  | (414 | )     |  |  | 354    |   |  |  | 3      |  
|Exchange adjustments                         |  |                     | (2   | )      |            |       |        |           |       |            | (2          | )    |            |          | 84   |   |          |  | 10   |       |  |  | 34     |   |  |  | 126    |  
|                                             |  |                     |      |        |            |       |         |           |       |            |             |      |            |          |      |   |          |  |      |       | 
|At September 30, 2002                        |  |                     | 84   |        |            |       | (66     | )         |       |            | 18          |      |            |          | 218  |   |          |  | (782 | )     |  |  | (631   | ) |  |  | (1,177 | )
|Net cash flow                                |  |                     | (86  | )      |            |       | 64      |           |       |            | (22         | )(i) |            |          |     |   |          |  |     |       |  |  |       |   |  |  | (22    | )
|Management of liquid resources and financing |  |                     | 77   |        |            |       |        |           |       |            | 77          | (i)  |            |          | 129  |   |          |  | 758  |       |  |  | (369   | ) |  |  | 595    |  
|Separation of MAB                            |  |                     | (7   | )      |            |       |        |           |       |            | (7          | )    |            |          | (7   | ) |          |  | 4    |       |  |  |       |   |  |  | (10    | )
|Exchange and other adjustments               |  |                     | (13  | )      |            |       | (3      | )         |       |            | (16         | )    |            |          | 37   |   |          |  | 12   |       |  |  | 12     |   |  |  | 45     |  
|                                             |  |                     |      |        |            |       |         |           |       |            |             |      |            |          |      |   |          |  |      |       | 
|At December 31, 2003                         |  |                     | 55   |        |            |       | (5      | )         |       |            | 50          |      |            |          | 377  |   |          |  | (8   | )     |  |  | (988   | ) |  |  | (569   | )
|Net cash flow                                |  |                     | (332 | )      |            |       | (6      | )         |       |            | (338        | )(i) |            |          |     |   |          |  |     |       |  |  |       |   |  |  | (338   | )
|Management of liquid resources and financing |  |                     | 320  |        |            |       |        |           |       |            | 320         | (i)  |            |          | (320 | ) |          |  | (22  | )     |  |  | (236   | ) |  |  | (258   | )
|Exchange and other adjustments               |  |                     |     |        |            |       |        |           |       |            |            |      |            |          | (17  | ) |          |  | (2   | )     |  |  | 68     |   |  |  | 49     |  
|                                             |  |                     |      |        |            |       |         |           |       |            |             |      |            |          |      |   |          |  |      |       | 
|At December 31, 2004                         |  |                     | 43   |        |            |       | (11     | )         |       |            | 32          |      |            |          | 40   |   |          |  | (32  | )     |  |  | (1,156 | ) |  |  | (1,116 | )
|                                             |  |                     |      |        |            |       |         |           |       |            |             |      |            |          |      |   |          |  |      |       | 






|    |                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Represents a movement in cash and overdrafts of
    £18 million outflow (2003 £55 million
    inflow, 2002 £10 million outflow) (see Consolidated
    Statement of Cash Flows).



F-37



---



##### Table of Contents



Note 12  Net capital expenditure


|                                     |              |              |      |           |              |  |      |               |  |  |      |     | 
|------------------------------------ | ------------ | ------------ | ---- | --------- | ------------ |  | ---- | ------------- |  |  | ---- | --- | 
|                                     |              |              |      | 15 months |              |  |     
|                                     |              | Year ended   |      |           | ended        |  |      | Year ended    | 
|                                     |              | December 31, |      |           | December 31, |  |      | September 30, | 
|                                     |              | 2004         |      |           | 2003         |  |      | 2002          | 
|                                     |              |              |      |           |              |  |      |               | 
|                                     |              | (£ million)  |     
|Hotels                               |              |              |      |           |              |  |      |               |  |  |      |    
|                                     | Americas     |              |      | 60        |              |  |      | 73            |  |  |      | 113 | 
|                                     | EMEA         |              |      | 95        |              |  |      | 237           |  |  |      | 209 | 
|                                     | Asia Pacific |              |      | 20        |              |  |      | 43            |  |  |      | 12  | 
|                                     | Central      |              |      | 12        |              |  |      | 24            |  |  |      | 35  | 
|                                     |              |              |      |           |              |  |      |               | 
|                                     |              |              | 187  |           |              |  | 377  |               |  |  | 369  |    
|Hotels disposal proceeds             |              |              | (106 | )         |              |  | (255 | )             |  |  | (113 | )  
|                                     |              |              |      |           |              |  |      |               | 
|Hotels net capital expenditure       |              |              | 81   |           |              |  | 122  |               |  |  | 256  |    
|Soft Drinks                          |              |              | 70   |           |              |  | 65   |               |  |  | 31   |    
|                                     |              |              |      |           |              |  |      |               | 
|InterContinental Hotels Group PLC(i) |              |              | 151  |           |              |  | 187  |               |  |  | 287  |    
|Discontinued operations(i)           |              |              |     |           |              |  | 61   |               |  |  | 226  |    
|                                     |              |              |      |           |              |  |      |               | 
|                                     |              |              | 151  |           |              |  | 248  |               |  |  | 513  |    
|                                     |              |              |      |           |              |  |      |               | 






|    |                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|(i) | InterContinental Hotels Group PLC relates to continuing
    operations. Discontinued operations relate to
    Mitchells & Butlers plc.

Note 13  Operating cash flow


|                                     |  |              |     |           |              |  |     |               |  |  |     |  
|------------------------------------ |  | ------------ | --- | --------- | ------------ |  | --- | ------------- |  |  | --- | -
|                                     |  |              |     | 15 months |              |  |    
|                                     |  | Year ended   |     |           | ended        |  |     | Year ended    | 
|                                     |  | December 31, |     |           | December 31, |  |     | September 30, | 
|                                     |  | 2004         |     |           | 2003         |  |     | 2002          | 
|                                     |  |              |     |           |              |  |     |               | 
|                                     |  | (£ million)  |    
|Hotels                               |  |              | 291 |           |              |  | 336 |               |  |  | (15 | )
|Soft Drinks                          |  |              | 73  |           |              |  | 59  |               |  |  | 77  |  
|                                     |  |              |     |           |              |  |     |               | 
|InterContinental Hotels Group PLC(i) |  |              | 364 |           |              |  | 395 |               |  |  | 62  |  
|Discontinued operations(i)           |  |              |    |           |              |  | 152 |               |  |  | 145 |  
|                                     |  |              |     |           |              |  |     |               | 
|                                     |  |              | 364 |           |              |  | 547 |               |  |  | 207 |  
|                                     |  |              |     |           |              |  |     |               | 






|    |                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|(i) | InterContinental Hotels Group PLC relates to continuing
    operations. Discontinued operations relate to
    Mitchells & Butlers plc.

F-38



---



##### Table of Contents



Note 14  Management of liquid resources and
financing


|                                                       |  |              |        |           |              |  |         |               |  |  |        |  
|------------------------------------------------------ |  | ------------ | ------ | --------- | ------------ |  | ------- | ------------- |  |  | ------ | -
|                                                       |  |              |        | 15 months |              |  |        
|                                                       |  | Year ended   |        |           | ended        |  |         | Year ended    | 
|                                                       |  | December 31, |        |           | December 31, |  |         | September 30, | 
|                                                       |  | 2004         |        |           | 2003         |  |         | 2002          | 
|                                                       |  |              |        |           |              |  |         |               | 
|                                                       |  | (£ million)  |       
|New borrowings(i)                                      |  |              | 9,666  |           |              |  | 18,672  |               |  |  | 8,260  |  
|Other borrowings repaid(i)                             |  |              | (9,408 | )         |              |  | (19,061 | )             |  |  | (8,200 | )
|                                                       |  |              |        |           |              |  |         |               | 
|                                                       |  |              | 258    |           |              |  | (389    | )             |  |  | 60     |  
|Debt assumed by MAB                                    |  |              |       |           |              |  | 577     |               |  |  |       |  
|Ordinary shares issued                                 |  |              | 16     |           |              |  | 18      |               |  |  | 3      |  
|Purchase of own shares                                 |  |              | (257   | )         |              |  |        |               |  |  |       |  
|Purchase of own shares by employee share trusts        |  |              | (33    | )         |              |  |        |               |  |  |       |  
|Proceeds on release of shares by employee share trusts |  |              | 16     |           |              |  |        |               |  |  |       |  
|                                                       |  |              |        |           |              |  |         |               | 
|Financing                                              |  |              |       |           |              |  | 206     |               |  |  | 63     |  
|Movement in liquid resources(ii)                       |  |              | 320    |           |              |  | (129    | )             |  |  | 232    |  
|                                                       |  |              |        |           |              |  |         |               | 
|                                                       |  |              | 320    |           |              |  | 77      |               |  |  | 295    |  
|                                                       |  |              |        |           |              |  |         |               | 






|     |  |                                                                                                                                            
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|(i)  |  | Includes amounts rolled over under bank loan facilities.                                                                                   
|    
|(ii) |  | Liquid resources primarily comprise short-term deposits of less
    than one year, short-term investments and, in 2003, currency
    swaps.

Note 15  Intangible fixed assets


|                                  |                                     |             |     |     |  
|--------------------------------- | ----------------------------------- | ----------- | --- | --- | -
|                                  |                                     | Goodwill    |    
|                                  |                                     |             |    
|                                  |                                     | (£ million) |    
|15 months ended December 31, 2003 |                                     |             |     |    
|Cost:                             |                                     |             |     |    
|At October 1, 2002                |                                     |             | 197 |    
|                                  | Acquisitions                        |             |     | 10  |  
|                                  | Separation of MAB                   |             |     | (15 | )
|                                  |                                     |             |    
|At December 31, 2003              |                                     |             | 192 |    
|                                  |                                     |             |    
|Amortization:                     |                                     |             |     |    
|At October 1, 2002                |                                     |             | 24  |    
|                                  | Provided                            |             |     | 13  |  
|                                  | Separation of MAB                   |             |     | (3  | )
|                                  |                                     |             |    
|At December 31, 2003              |                                     |             | 34  |    
|                                  |                                     |             |    
|                                  | Net book value at December 31, 2003 |             |     | 158 |  
|                                  |                                     |             |    
|Year ended December 31, 2004      |                                     |             |     |    
|Cost:                             |                                     |             |     |    
|At January 1, 2004                |                                     |             | 192 |    
|                                  | Exchange and other adjustments      |             |     | (8  | )
|                                  |                                     |             |    
|At December 31, 2004              |                                     |             | 184 |    
|                                  |                                     |             |    
|Amortization:                     |                                     |             |     |    
|At January 1, 2004                |                                     |             | 34  |    
|                                  | Provided                            |             |     | 10  |  
|                                  | Exchange adjustments                |             |     | (2  | )
|                                  |                                     |             |    
|At December 31, 2004              |                                     |             | 42  |    
|                                  |                                     |             |    
|                                  | Net book value at December 31, 2004 |             |     | 142 |  
|                                  |                                     |             |    

F-39



---



##### Table of Contents



Note 16  Tangible fixed assets




| |            
| | -----------
| | By activity

|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |       |        |   |  |       |        |  
|----------------------------------- | ------------------------------ | ----------- | ----- | ---- | ------ |  | --- | ----- | - |  | --------------- | ---- | - | ----------- | ----- | ------ | - |  | ----- | ------ | -
|                                    |                                |             |       | Soft |        |  |     |       |   |  |                
|                                    |                                | Hotels      |       |      | Drinks |  |     | Total |   |  | Discontinued(i) |      |   | Total Group |      
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      
|                                    |                                | (£ million) |      
|15 months ended December 31, 2003   |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |       |        |   |  |       |       
|Cost or valuation:                  |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |       |        |   |  |       |       
|At October 1, 2002                  |                                |             | 4,362 |      |        |  | 408 |       |   |  | 4,770           |      |   |             | 3,722 |        |   |  | 8,492 |       
|                                    | Exchange and other adjustments |             |       | 2    |        |  |     | 4     |   |  |                 | 6    |   |             |       | 1      |   |  |       | 7      |  
|                                    | Additions                      |             |       | 314  |        |  |     | 66    |   |  |                 | 380  |   |             |       | 81     |   |  |       | 461    |  
|                                    | Disposals                      |             |       | (281 | )      |  |     | (27   | ) |  |                 | (308 | ) |             |       | (64    | ) |  |       | (372   | )
|                                    | Separation of MAB              |             |       |     |        |  |     |      |   |  |                 |     |   |             |       | (3,740 | ) |  |       | (3,740 | )
|                                    | Impairment                     |             |       | (22  | )      |  |     |      |   |  |                 | (22  | ) |             |       |       |   |  |       | (22    | )
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      
|At December 31, 2003                |                                |             | 4,375 |      |        |  | 451 |       |   |  | 4,826           |      |   |             |      |        |   |  | 4,826 |       
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      
|Depreciation:                       |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |       |        |   |  |       |       
|At October 1, 2002                  |                                |             | 467   |      |        |  | 188 |       |   |  | 655             |      |   |             | 196   |        |   |  | 851   |       
|                                    | Exchange and other adjustments |             |       | (7   | )      |  |     | 1     |   |  |                 | (6   | ) |             |       |       |   |  |       | (6     | )
|                                    | Provided                       |             |       | 186  |        |  |     | 50    |   |  |                 | 236  |   |             |       | 54     |   |  |       | 290    |  
|                                    | On disposals                   |             |       | (37  | )      |  |     | (24   | ) |  |                 | (61  | ) |             |       | (40    | ) |  |       | (101   | )
|                                    | Separation of MAB              |             |       |     |        |  |     |      |   |  |                 |     |   |             |       | (210   | ) |  |       | (210   | )
|                                    | Impairment                     |             |       | 51   |        |  |     |      |   |  |                 | 51   |   |             |       |       |   |  |       | 51     |  
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      
|At December 31, 2003                |                                |             | 660   |      |        |  | 215 |       |   |  | 875             |      |   |             |      |        |   |  | 875   |       
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      
|Net book value at December 31, 2003 |                                |             | 3,715 |      |        |  | 236 |       |   |  | 3,951           |      |   |             |      |        |   |  | 3,951 |       
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      
|Year ended December 31, 2004        |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |       |        |   |  |       |       
|Cost or valuation:                  |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |       |        |   |  |       |       
|At January 1, 2004                  |                                |             | 4,375 |      |        |  | 451 |       |   |  | 4,826           |      |   |             |      |        |   |  | 4,826 |       
|                                    | Exchange and other adjustments |             |       | (95  | )      |  |     |      |   |  |                 | (95  | ) |             |       |       |   |  |       | (95    | )
|                                    | Additions                      |             |       | 177  |        |  |     | 72    |   |  |                 | 249  |   |             |       |       |   |  |       | 249    |  
|                                    | Disposals                      |             |       | (142 | )      |  |     | (40   | ) |  |                 | (182 | ) |             |       |       |   |  |       | (182   | )
|                                    | Impairment                     |             |       | (20  | )      |  |     |      |   |  |                 | (20  | ) |             |       |       |   |  |       | (20    | )
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      
|At December 31, 2004                |                                |             | 4,295 |      |        |  | 483 |       |   |  | 4,778           |      |   |             |      |        |   |  | 4,778 |       
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      
|Depreciation:                       |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |       |        |   |  |       |       
|At January 1, 2004                  |                                |             | 660   |      |        |  | 215 |       |   |  | 875             |      |   |             |      |        |   |  | 875   |       
|                                    | Exchange and other adjustments |             |       | (16  | )      |  |     |      |   |  |                 | (16  | ) |             |       |       |   |  |       | (16    | )
|                                    | Provided                       |             |       | 144  |        |  |     | 44    |   |  |                 | 188  |   |             |       |       |   |  |       | 188    |  
|                                    | On disposals                   |             |       | (35  | )      |  |     | (38   | ) |  |                 | (73  | ) |             |       |       |   |  |       | (73    | )
|                                    | Impairment                     |             |       | 28   |        |  |     |      |   |  |                 | 28   |   |             |       |       |   |  |       | 28     |  
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      
|At December 31, 2004                |                                |             | 781   |      |        |  | 221 |       |   |  | 1,002           |      |   |             |      |        |   |  | 1,002 |       
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      
|Net book value at December 31, 2004 |                                |             | 3,514 |      |        |  | 262 |       |   |  | 3,776           |      |   |             |      |        |   |  | 3,776 |       
|                                    |                                |             |       |      |        |  |     |       |   |  |                 |      |   |             |      






|    |                                                               
|--- | --------------------------------------------------------------
|(i) | Discontinued operations relate to Mitchells & Butlers
    plc.



F-40



---



##### Table of Contents





| |            
| | -----------
| | By category

|                                    |                                |             |       |           |           |  |       |           |   |  |       |     |   |  |       |        |  
|----------------------------------- | ------------------------------ | ----------- | ----- | --------- | --------- |  | ----- | --------- | - |  | ----- | --- | - |  | ----- | ------ | -
|                                    |                                |             |       | Fixtures, |           |  |       |           |  
|                                    |                                | Land        |       |           | fittings  |  |       |           |   | 
|                                    |                                | and         |       |           | and       |  |       | Plant and |   |  |      
|                                    |                                | buildings   |       |           | equipment |  |       | machinery |   |  | Total |    
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    
|                                    |                                | (£ million) |      
|15 months ended December 31, 2003   |                                |             |       |           |           |  |       |           |   |  |       |     |   |  |       |       
|Cost or valuation:                  |                                |             |       |           |           |  |       |           |   |  |       |     |   |  |       |       
|At October 1, 2002                  |                                |             | 5,906 |           |           |  | 2,450 |           |   |  | 136   |     |   |  | 8,492 |       
|                                    | Exchange and other adjustments |             |       | 11        |           |  |       | (8        | ) |  |       | 4   |   |  |       | 7      |  
|                                    | Additions                      |             |       | 139       |           |  |       | 291       |   |  |       | 31  |   |  |       | 461    |  
|                                    | Disposals                      |             |       | (221      | )         |  |       | (146      | ) |  |       | (5  | ) |  |       | (372   | )
|                                    | Separation of MAB              |             |       | (2,809    | )         |  |       | (930      | ) |  |       | (1  | ) |  |       | (3,740 | )
|                                    | Impairment                     |             |       | (22       | )         |  |       |          |   |  |       |    |   |  |       | (22    | )
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    
|At December 31, 2003                |                                |             | 3,004 |           |           |  | 1,657 |           |   |  | 165   |     |   |  | 4,826 |       
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    
|Depreciation:                       |                                |             |       |           |           |  |       |           |   |  |       |     |   |  |       |       
|At October 1, 2002                  |                                |             | 147   |           |           |  | 622   |           |   |  | 82    |     |   |  | 851   |       
|                                    | Exchange and other adjustments |             |       | 3         |           |  |       | (10       | ) |  |       | 1   |   |  |       | (6     | )
|                                    | Provided                       |             |       | 28        |           |  |       | 243       |   |  |       | 19  |   |  |       | 290    |  
|                                    | On disposals                   |             |       | (13       | )         |  |       | (83       | ) |  |       | (5  | ) |  |       | (101   | )
|                                    | Separation of MAB              |             |       | (48       | )         |  |       | (162      | ) |  |       |    |   |  |       | (210   | )
|                                    | Impairment                     |             |       | 51        |           |  |       |          |   |  |       |    |   |  |       | 51     |  
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    
|At December 31, 2003                |                                |             | 168   |           |           |  | 610   |           |   |  | 97    |     |   |  | 875   |       
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    
|Net book value at December 31, 2003 |                                |             | 2,836 |           |           |  | 1,047 |           |   |  | 68    |     |   |  | 3,951 |       
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    
|Year ended December 31, 2004        |                                |             |       |           |           |  |       |           |   |  |       |     |   |  |       |       
|Cost or valuation:                  |                                |             |       |           |           |  |       |           |   |  |       |     |   |  |       |       
|At January 1, 2004                  |                                |             | 3,004 |           |           |  | 1,657 |           |   |  | 165   |     |   |  | 4,826 |       
|                                    | Exchange and other adjustments |             |       | (59       | )         |  |       | (36       | ) |  |       |    |   |  |       | (95    | )
|                                    | Additions                      |             |       | 50        |           |  |       | 172       |   |  |       | 27  |   |  |       | 249    |  
|                                    | Disposals                      |             |       | (83       | )         |  |       | (89       | ) |  |       | (10 | ) |  |       | (182   | )
|                                    | Impairment                     |             |       | (20       | )         |  |       |          |   |  |       |    |   |  |       | (20    | )
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    
|At December 31, 2004                |                                |             | 2,892 |           |           |  | 1,704 |           |   |  | 182   |     |   |  | 4,778 |       
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    
|Depreciation:                       |                                |             |       |           |           |  |       |           |   |  |       |     |   |  |       |       
|At January 1, 2004                  |                                |             | 168   |           |           |  | 610   |           |   |  | 97    |     |   |  | 875   |       
|                                    | Exchange and other adjustments |             |       | (6        | )         |  |       | (10       | ) |  |       |    |   |  |       | (16    | )
|                                    | Provided                       |             |       | 14        |           |  |       | 156       |   |  |       | 18  |   |  |       | 188    |  
|                                    | On disposals                   |             |       | (11       | )         |  |       | (52       | ) |  |       | (10 | ) |  |       | (73    | )
|                                    | Impairment                     |             |       | 28        |           |  |       |          |   |  |       |    |   |  |       | 28     |  
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    
|At December 31, 2004                |                                |             | 193   |           |           |  | 704   |           |   |  | 105   |     |   |  | 1,002 |       
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    
|Net book value at December 31, 2004 |                                |             | 2,699 |           |           |  | 1,000 |           |   |  | 77    |     |   |  | 3,776 |       
|                                    |                                |             |       |           |           |  |       |           |   |  |       |    

F-41



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##### Table of Contents





| |                   
| | ------------------
| | Land and buildings

|                                                |                                    |                   |       |     |                   |  |          |       |   |         |           |     |  |              |          |    |       |  |      |     |   |  |       |    | 
|----------------------------------------------- | ---------------------------------- | ----------------- | ----- | --- | ----------------- |  | -------- | ----- | - | ------- | --------- | --- |  | ------------ | -------- | -- | ----- |  | ---- | --- | - |  | ----- | -- | 
|                                                |                                    | December 31, 2004 |       |     | December 31, 2003 | 
|                                                |                                    |                   |       |     |                   | 
|                                                |                                    | Cost or           |       |     |                   |  | Net book |       |   | Cost or |           |     |  |              | Net book |   
|                                                |                                    | valuation         |       |     | Depreciation      |  |          | value |   |         | valuation |     |  | Depreciation |          |    | value | 
|                                                |                                    |                   |       |     |                   |  |          |       |   |         |           |     |  |              |          |    |       | 
|                                                |                                    | (£ million)       |      
|Freehold                                        |                                    |                   | 2,036 |     |                   |  | (130     | )     |   |         | 1,906     |     |  |              | 2,109    |    |       |  | (107 | )   |   |  | 2,002 |   
|Leasehold: unexpired term of more than 50 years |                                    |                   | 636   |     |                   |  | (32      | )     |   |         | 604       |     |  |              | 825      |    |       |  | (25  | )   |   |  | 800   |   
|                                                | unexpired term of 50 years or less |                   |       | 220 |                   |  |          | (31   | ) |         |           | 189 |  |              |          | 70 |       |  |      | (36 | ) |  |       | 34 | 
|                                                |                                    |                   |       |     |                   |  |          |       |   |         |           |     |  |              |          |    |       | 
|                                                |                                    |                   | 2,892 |     |                   |  | (193     | )     |   |         | 2,699     |     |  |              | 3,004    |    |       |  | (168 | )   |   |  | 2,836 |   
|                                                |                                    |                   |       |     |                   |  |          |       |   |         |           |     |  |              |          |    |       | 



|               |  |              |       |  |              |  |       | 
|-------------- |  | ------------ | ----- |  | ------------ |  | ----- | 
|               |  | December 31, |       |  | December 31, | 
|               |  | 2004         |       |  | 2003         | 
|               |  |              |       |  |              | 
|               |  | (£ million)  |      
|1999 valuation |  |              | 1,517 |  |              |  | 1,567 | 
|1992 valuation |  |              | 22    |  |              |  | 17    | 
|Cost           |  |              | 1,353 |  |              |  | 1,420 | 
|               |  |              |       |  |              | 
|               |  |              | 2,892 |  |              |  | 3,004 | 
|               |  |              |       |  |              | 







| |                
| | ---------------
| | Historical cost



|               |  |              |       |   |              |  |       |  
|-------------- |  | ------------ | ----- | - | ------------ |  | ----- | -
|               |  | December 31, |       |   | December 31, | 
|               |  | 2004         |       |   | 2003         | 
|               |  |              |       |   |              | 
|               |  | (£ million)  |      
|Cost           |  |              | 2,667 |   |              |  | 2,771 |  
|Depreciation   |  |              | (205  | ) |              |  | (177  | )
|               |  |              |       |   |              | 
|Net book value |  |              | 2,462 |   |              |  | 2,594 |  
|               |  |              |       |   |              | 

F-42



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##### Table of Contents



Note 17  Fixed asset investments


|                                    |                                                   |             |     |      |  
|----------------------------------- | ------------------------------------------------- | ----------- | --- | ---- | -
|                                    |                                                   | Investments |    
|                                    |                                                   | and         |    
|                                    |                                                   | advances    |    
|                                    |                                                   |             |    
|                                    |                                                   | (£ million) |    
|15 months ended December 31, 2003   |                                                   |             |     |     
|Cost:                               |                                                   |             |     |     
|At October 1, 2002                  |                                                   |             | 339 |     
|                                    | Exchange adjustments                              |             |     | (34  | )
|                                    | Reclassifications                                 |             |     | 6    |  
|                                    | Additions                                         |             |     | 42   |  
|                                    | Disposals and repayments                          |             |     | (12  | )
|                                    |                                                   |             |    
|At December 31, 2003                |                                                   |             | 341 |     
|                                    |                                                   |             |    
|Provision for diminution in value:  |                                                   |             |     |     
|At October 1, 2002                  |                                                   |             | 121 |     
|                                    | Exchange adjustments                              |             |     | (20  | )
|                                    | Reclassifications                                 |             |     | 3    |  
|                                    | Provisions made(i)                                |             |     | 65   |  
|                                    |                                                   |             |    
|At December 31, 2003                |                                                   |             | 169 |     
|                                    |                                                   |             |    
|Net book value at December 31, 2003 |                                                   |             | 172 |     
|                                    |                                                   |             |    
|Year ended December 31, 2004        |                                                   |             |     |     
|Cost:                               |                                                   |             |     |     
|At January 1, 2004                  |                                                   |             | 341 |     
|                                    | Exchange and other adjustments                    |             |     | (13  | )
|                                    | Reclassification to current asset investments(ii) |             |     | (195 | )
|                                    | Additions                                         |             |     | 11   |  
|                                    | Disposals and repayments                          |             |     | (7   | )
|                                    |                                                   |             |    
|At December 31, 2004                |                                                   |             | 137 |     
|                                    |                                                   |             |    
|Provision for diminution in value:  |                                                   |             |     |     
|At January 1, 2004                  |                                                   |             | 169 |     
|                                    | Exchange adjustments                              |             |     | (5   | )
|                                    | Reclassification to current asset investments(ii) |             |     | (133 | )
|                                    | Provisions made                                   |             |     | 13   |  
|                                    | Provisions written back                           |             |     | (6   | )
|                                    |                                                   |             |    
|At December 31, 2004                |                                                   |             | 38  |     
|                                    |                                                   |             |    
|Net book value at December 31, 2004 |                                                   |             | 99  |     
|                                    |                                                   |             |    






|     |  |                                                                                                                                                 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|(i)  |  | Relates to a provision for diminution in value of the
    Groups investment in FelCor Lodging Trust Inc. and other
    fixed asset investments.
|    
|(ii) |  | Relates to the Groups investment in FelCor Lodging Trust
    Inc.                                                                              

F-43



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##### Table of Contents





| |                        
| | -----------------------
| | Analysis of investments

|                      |  |                   |    |  |                   |  |           |             |  |  |        |  |  |  |    | 
|--------------------- |  | ----------------- | -- |  | ----------------- |  | --------- | ----------- |  |  | ------ |  |  |  | -- | 
|                      |  | December 31, 2004 |    |  | December 31, 2003 | 
|                      |  |                   |    |  |                   | 
|                      |  | Cost less         |    |  |                   |  | Cost less |             |  | 
|                      |  | amount            |    |  | Market            |  |           | amount      |  |  | Market | 
|                      |  | written off       |    |  | value             |  |           | written off |  |  | value  | 
|                      |  |                   |    |  |                   |  |           |             |  |  |        | 
|                      |  | (£ million)       |   
|Listed investments(i) |  |                   | 1  |  |                   |  | 4         |             |  |  | 64     |  |  |  | 66 | 
|Unlisted investments  |  |                   | 98 |  |                   |  |           |             |  |  | 108    |  |  |  |    | 
|                      |  |                   |    |  |                   |  |           |             |  |  |        | 
|                      |  |                   | 99 |  |                   |  |           |             |  |  | 172    |  |  |  |    | 
|                      |  |                   |    |  |                   |  |           |             |  |  |        | 



Note 18  Stocks


|                  |  |              |    |  |              |  |    | 
|----------------- |  | ------------ | -- |  | ------------ |  | -- | 
|                  |  | December 31, |    |  | December 31, | 
|                  |  | 2004         |    |  | 2003         | 
|                  |  |              |    |  |              | 
|                  |  | (£ million)  |   
|Raw materials     |  |              | 9  |  |              |  | 9  | 
|Finished goods    |  |              | 23 |  |              |  | 21 | 
|Consumable stores |  |              | 10 |  |              |  | 14 | 
|                  |  |              |    |  |              | 
|                  |  |              | 42 |  |              |  | 44 | 
|                  |  |              |    |  |              | 

Note 19  Debtors


|                                                                                              |  |                   |     |       |                   |  |     |       |       |  |          |   |  |  |    | 
|--------------------------------------------------------------------------------------------- |  | ----------------- | --- | ----- | ----------------- |  | --- | ----- | ----- |  | -------- | - |  |  | -- | 
|                                                                                              |  | December 31, 2004 |     |       | December 31, 2003 | 
|                                                                                              |  |                   |     |       |                   | 
|                                                                                              |  |                   |     | After |                   |  |     |       | After | 
|                                                                                              |  | Total             |     |       | one year          |  |     | Total |       |  | one year |  
|                                                                                              |  |                   |     |       |                   |  |     |       |       |  |          |  
|                                                                                              |  | (£ million)       |    
|Trade debtors                                                                                 |  |                   | 322 |       |                   |  |    |       |       |  | 316      |   |  |  |   | 
|Less: Provision for bad and doubtful debts                                                    |  |                   | (37 | )     |                   |  |    |       |       |  | (39      | ) |  |  |   | 
|                                                                                              |  |                   |     |       |                   |  |     |       |       |  |          |  
|                                                                                              |  |                   | 285 |       |                   |  |    |       |       |  | 277      |   |  |  |   | 
|Other debtors (net of provisions for bad and doubtful debts
    £5 million (2003 £6 million)) |  |                   | 100 |       |                   |  | 25  |       |       |  | 104      |   |  |  | 17 | 
|Corporate taxation                                                                            |  |                   | 14  |       |                   |  |    |       |       |  | 37       |   |  |  | 7  | 
|Pension prepayment                                                                            |  |                   | 110 |       |                   |  | 110 |       |       |  | 47       |   |  |  | 47 | 
|Other prepayments                                                                             |  |                   | 47  |       |                   |  | 2   |       |       |  | 58       |   |  |  | 5  | 
|                                                                                              |  |                   |     |       |                   |  |     |       |       |  |          |  
|                                                                                              |  |                   | 556 |       |                   |  | 137 |       |       |  | 523      |   |  |  | 76 | 
|                                                                                              |  |                   |     |       |                   |  |     |       |       |  |          |  

Note 20  Current asset investments


|                   |  |              |     |  |              |  |     | 
|------------------ |  | ------------ | --- |  | ------------ |  | --- | 
|                   |  | December 31, |     |  | December 31, | 
|                   |  | 2004         |     |  | 2003         | 
|                   |  |              |     |  |              | 
|                   |  | (£ million)  |    
|Equity investments |  |              | 76  |  |              |  |    | 
|Other              |  |              | 40  |  |              |  | 377 | 
|                   |  |              |     |  |              | 
|                   |  |              | 116 |  |              |  | 377 | 
|                   |  |              |     |  |              | 

F-44



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##### Table of Contents



Note 21  Creditors: amounts falling due
within one year


|                                            |  |              |       |  |              |  |       | 
|------------------------------------------- |  | ------------ | ----- |  | ------------ |  | ----- | 
|                                            |  | December 31, |       |  | December 31, | 
|                                            |  | 2004         |       |  | 2003         | 
|                                            |  |              |       |  |              | 
|                                            |  | (£ million)  |      
|Borrowings  (Note 24)                      |  |              | 43    |  |              |  | 13    | 
|Trade creditors                             |  |              | 159   |  |              |  | 133   | 
|Corporate taxation                          |  |              | 261   |  |              |  | 389   | 
|Other taxation and social security          |  |              | 50    |  |              |  | 46    | 
|Accrued charges                             |  |              | 232   |  |              |  | 235   | 
|Proposed dividend of parent company         |  |              | 62    |  |              |  | 70    | 
|Proposed dividend for minority shareholders |  |              | 19    |  |              |  | 16    | 
|Other creditors                             |  |              | 187   |  |              |  | 183   | 
|                                            |  |              |       |  |              | 
|                                            |  |              | 1,013 |  |              |  | 1,085 | 
|                                            |  |              |       |  |              | 

Note 22  Creditors: amounts falling due after
one year


|                                    |  |              |       |  |              |  |       | 
|----------------------------------- |  | ------------ | ----- |  | ------------ |  | ----- | 
|                                    |  | December 31, |       |  | December 31, | 
|                                    |  | 2004         |       |  | 2003         | 
|                                    |  |              |       |  |              | 
|                                    |  | (£ million)  |      
|Borrowings  (Note 24)              |  |              | 1,156 |  |              |  | 988   | 
|Other creditors and deferred income |  |              | 96    |  |              |  | 97    | 
|                                    |  |              |       |  |              | 
|                                    |  |              | 1,252 |  |              |  | 1,085 | 
|                                    |  |              |       |  |              | 

Note 23  Deferred taxation and other
provisions for liabilities and charges


|                               |  |             |      |                                              |              |  |        |                    |  |     |                |   |         |                |    |   |              |  |    |          |  |  |       |   |  |  |    |   |  |  |     |  
|------------------------------ |  | ----------- | ---- | -------------------------------------------- | ------------ |  | ------ | ------------------ |  | --- | -------------- | - | ------- | -------------- | -- | - | ------------ |  | -- | -------- |  |  | ----- | - |  |  | -- | - |  |  | --- | -
|                               |  |             |      | Other provisions for liabilities and charges |             
|                               |  |             |      |                                              |             
|                               |  | Deferred    |      |                                              |              |  | Hotels |                    |  | MAB |                |   | Onerous |                |    |  
|                               |  | taxation    |      |                                              | Disposals(i) |  |        | reorganization(ii) |  |     | reorganization |   |         | contracts(iii) |    |   | Pensions(iv) |  |    | Other(v) |  |  | Total |  
|                               |  |             |      |                                              |              |  |        |                    |  |     |                |   |         |                |    |   |              |  |    |          |  |  |       |  
|                               |  | (£ million) |     
|At October 1, 2002             |  |             | 495  |                                              |              |  |       |                    |  |     |               |   |         |                | 11 |   |              |  | 12 |          |  |  | 39    |   |  |  | 9  |   |  |  | 71  |  
|Profit and loss account        |  |             | 10   |                                              |              |  |       |                    |  |     | 67             |   |         |                |   |   |              |  | (6 | )        |  |  | 6     |   |  |  | (1 | ) |  |  | 66  |  
|Expenditure                    |  |             |     |                                              |              |  |       |                    |  |     | (37            | ) |         |                | (2 | ) |              |  | (4 | )        |  |  |      |   |  |  | (4 | ) |  |  | (47 | )
|Exchange and other adjustments |  |             | (2   | )                                            |              |  |       |                    |  |     | (3             | ) |         |                | (6 | ) |              |  | 3  |          |  |  | 1     |   |  |  |   |   |  |  | (5  | )
|Separation of MAB              |  |             | (189 | )                                            |              |  |       |                    |  |     |               |   |         |                | (3 | ) |              |  |   |          |  |  |      |   |  |  | (3 | ) |  |  | (6  | )
|                               |  |             |      |                                              |              |  |        |                    |  |     |                |   |         |                |    |   |              |  |    |          |  |  |       |  
|At December 31, 2003           |  |             | 314  |                                              |              |  |       |                    |  |     | 27             |   |         |                |   |   |              |  | 5  |          |  |  | 46    |   |  |  | 1  |   |  |  | 79  |  
|Profit and loss account        |  |             | (62  | )                                            |              |  | 74     |                    |  |     |               |   |         |                |   |   |              |  | (1 | )        |  |  | 8     |   |  |  | (1 | ) |  |  | 80  |  
|Expenditure                    |  |             |     |                                              |              |  |       |                    |  |     | (17            | ) |         |                |   |   |              |  | (1 | )        |  |  | (2    | ) |  |  |   |   |  |  | (20 | )
|Exchange and other adjustments |  |             | (4   | )                                            |              |  |       |                    |  |     | (2             | ) |         |                |   |   |              |  |   |          |  |  | (3    | ) |  |  |   |   |  |  | (5  | )
|                               |  |             |      |                                              |              |  |        |                    |  |     |                |   |         |                |    |   |              |  |    |          |  |  |       |  
|At December 31, 2004           |  |             | 248  |                                              |              |  | 74     |                    |  |     | 8              |   |         |                |   |   |              |  | 3  |          |  |  | 49    |   |  |  |   |   |  |  | 134 |  
|                               |  |             |      |                                              |              |  |        |                    |  |     |                |   |         |                |    |   |              |  |    |          |  |  |       |  






|      |  |                                                                                                                                                                          
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)   |  | Relates to the disposal of 13 hotels in the Americas and 73
    hotels in the United Kingdom.                                                                            
|     
|(ii)  |  | Relates to the Hotels reorganization charged as a non-operating
    exceptional item in 2003 and is expected to be largely utilized
    in the year to December 31, 2005.
|     
|(iii) |  | Primarily relates to onerous fixed lease contracts acquired with
    the InterContinental hotels business and having expiry dates to
    2008.                           
|     
|(iv)  |  | Relates to unfunded postretirement benefit plans (see
    Note 4).                                                                                                       
|     
|(v)   |  | Represents liabilities with varying expected utilization dates.                                                                                                          

F-45



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##### Table of Contents





| |                  
| | -----------------
| | Deferred taxation

|                                                  |  |              |      |   |              |  |     |  
|------------------------------------------------- |  | ------------ | ---- | - | ------------ |  | --- | -
|                                                  |  | December 31, |      |   | December 31, | 
|                                                  |  | 2004         |      |   | 2003         | 
|                                                  |  |              |      |   |              | 
|                                                  |  | (£ million)  |     
|Analyzed as tax on timing differences related to: |  |              |      |   |              |  |     |  
|Fixed assets                                      |  |              | 252  |   |              |  | 252 |  
|Deferred gains on loan notes                      |  |              | 122  |   |              |  | 123 |  
|Losses                                            |  |              | (113 | ) |              |  | (37 | )
|Pension prepayment                                |  |              | 23   |   |              |  | 14  |  
|Other                                             |  |              | (36  | ) |              |  | (38 | )
|                                                  |  |              |      |   |              | 
|                                                  |  |              | 248  |   |              |  | 314 |  
|                                                  |  |              |      |   |              | 







Note 24  Borrowings




| |                       
| | ----------------------
| | Analysis of borrowings

|                                     |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       |  |     |     |  |  |       |     | 
|------------------------------------ | ---------------------------------------------- | ----------------- | -- | -- | ----------------- |  | ----- | ----- |  | ------ | -------- | ----- | --------- | ---- | -- | - | ----- |  | --- | --- |  |  | ----- | --- | 
|                                     |                                                | December 31, 2004 |    |    | December 31, 2003 | 
|                                     |                                                |                   |    |    |                   | 
|                                     |                                                | Within            |    |    | After one         |  |       |       |  | Within |          |       | After one |      |    |  
|                                     |                                                | one year          |    |    | year              |  |       | Total |  |        | one year |       |           | year |    |   | Total | 
|                                     |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       | 
|                                     |                                                | (£ million)       |   
|Secured bank loans and overdrafts:   |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       |  |     |     |  |  |       |    
|                                     | Bank loans(i)                                  |                   |    | 2  |                   |  |       | 49    |  |        |          | 51    |           |      |    | 3 |       |  |     | 57  |  |  |       | 60  | 
|Unsecured bank loans and overdrafts: |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       |  |     |     |  |  |       |    
|                                     | Bank loans                                     |                   |    | 12 |                   |  |       | 1,104 |  |        |          | 1,116 |           |      |    | 5 |       |  |     | 489 |  |  |       | 494 | 
|                                     | Overdrafts                                     |                   |    | 11 |                   |  |       |      |  |        |          | 11    |           |      |    | 5 |       |  |     |    |  |  |       | 5   | 
|                                     |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       | 
|Total bank loans and overdrafts      |                                                |                   | 25 |    |                   |  | 1,153 |       |  |        | 1,178    |       |           |      | 13 |   |       |  | 546 |     |  |  | 559   |    
|                                     |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       | 
|Secured  other borrowings:          |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       |  |     |     |  |  |       |    
|                                     | Other loan stock (ii)                          |                   |    |   |                   |  |       |      |  |        |          |      |           |      |    |  |       |  |     | 1   |  |  |       | 1   | 
|Unsecured  other borrowings:        |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       |  |     |     |  |  |       |    
|                                     | 2007 Guaranteed Notes 5.75% (£250 million)     |                   |    |   |                   |  |       |      |  |        |          |      |           |      |    |  |       |  |     | 18  |  |  |       | 18  | 
|                                     | 2010 Guaranteed Notes 4.75%
    (600 million) |                   |    | 18 |                   |  |       |      |  |        |          | 18    |           |      |    |  |       |  |     | 420 |  |  |       | 420 | 
|                                     | Other loan stock                               |                   |    |   |                   |  |       | 3     |  |        |          | 3     |           |      |    |  |       |  |     | 3   |  |  |       | 3   | 
|                                     |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       | 
|Total other borrowings               |                                                |                   | 18 |    |                   |  | 3     |       |  |        | 21       |       |           |      |   |   |       |  | 442 |     |  |  | 442   |    
|                                     |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       | 
|Total borrowings                     |                                                |                   | 43 |    |                   |  | 1,156 |       |  |        | 1,199    |       |           |      | 13 |   |       |  | 988 |     |  |  | 1,001 |    
|                                     |                                                |                   |    |    |                   |  |       |       |  |        |          |       |           |      |    |   |       | 






|     |  |                                                                                                                                                   
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|(i)  |  | Secured by way of mortgage over individual hotel properties. The
    terms, rates of interest and currencies of these bank loans vary.            
|    
|(ii) |  | Secured on the individual assets purchased by using such
    borrowings. The terms, rates of interest and currencies of these
    borrowings vary.

F-46



---



##### Table of Contents







| |                              
| | -----------------------------
| | Analysis by year of repayment

|                                                                               |                           |                   |       |   |                   |  |      |       |  |           |            |   |       |            |     |   |       |  |     |     |  |  |       |     | 
|------------------------------------------------------------------------------ | ------------------------- | ----------------- | ----- | - | ----------------- |  | ---- | ----- |  | --------- | ---------- | - | ----- | ---------- | --- | - | ----- |  | --- | --- |  |  | ----- | --- | 
|                                                                               |                           | December 31, 2004 |       |   | December 31, 2003 | 
|                                                                               |                           |                   |       |   |                   | 
|                                                                               |                           | Bank              |       |   |                   |  | Bank |       |  |          
|                                                                               |                           | loans and         |       |   | Other             |  |      |       |  | loans and |            |   | Other |            |     |  
|                                                                               |                           | overdrafts        |       |   | borrowings        |  |      | Total |  |           | overdrafts |   |       | borrowings |     |   | Total | 
|                                                                               |                           |                   |       |   |                   |  |      |       |  |           |            |   |       |            |     |   |       | 
|                                                                               |                           | (£ million)       |      
|Due:                                                                           |                           |                   |       |   |                   |  |      |       |  |           |            |   |       |            |     |   |       |  |     |     |  |  |       |    
|Within one year  (Note 21)                                                    |                           |                   | 25    |   |                   |  | 18   |       |  |           | 43         |   |       |            | 13  |   |       |  |    |     |  |  | 13    |    
|                                                                               |                           |                   |       |   |                   |  |      |       |  |           |            |   |       |            |     |   |       | 
|Between one and two years                                                      |                           |                   | 2     |   |                   |  |     |       |  |           | 2          |   |       |            | 42  |   |       |  |    |     |  |  | 42    |    
|Between two and three years                                                    |                           |                   | 39    |   |                   |  |     |       |  |           | 39         |   |       |            | 452 |   |       |  |    |     |  |  | 452   |    
|Between three and four years                                                   |                           |                   | 11    |   |                   |  |     |       |  |           | 11         |   |       |            | 33  |   |       |  | 18  |     |  |  | 51    |    
|Between four and five years                                                    |                           |                   | 1,100 |   |                   |  |     |       |  |           | 1,100      |   |       |            | 11  |   |       |  |    |     |  |  | 11    |    
|Thereafter                                                                     |                           |                   |       |   |                   |  |      |       |  |           |            |   |       |            |     |   |       |  |     |     |  |  |       |    
|                                                                               | By installment            |                   |       |  |                   |  |      |      |  |           |            |  |       |            |     | 3 |       |  |     |    |  |  |       | 3   | 
|                                                                               | Other than by installment |                   |       | 1 |                   |  |      | 3     |  |           |            | 4 |       |            |     | 5 |       |  |     | 424 |  |  |       | 429 | 
|                                                                               |                           |                   |       |   |                   |  |      |       |  |           |            |   |       |            |     |   |       | 
|Due after more than one year  (Note 22)                                       |                           |                   | 1,153 |   |                   |  | 3    |       |  |           | 1,156      |   |       |            | 546 |   |       |  | 442 |     |  |  | 988   |    
|                                                                               |                           |                   |       |   |                   |  |      |       |  |           |            |   |       |            |     |   |       | 
|Total borrowings                                                               |                           |                   | 1,178 |   |                   |  | 21   |       |  |           | 1,199      |   |       |            | 559 |   |       |  | 442 |     |  |  | 1,001 |    
|                                                                               |                           |                   |       |   |                   |  |      |       |  |           |            |   |       |            |     |   |       | 
|Amounts repayable by installments, some of which fall due after
    five years |                           |                   | 19    |   |                   |  |     |       |  |           | 19         |   |       |            | 22  |   |       |  |    |     |  |  | 22    |    
|                                                                               |                           |                   |       |   |                   |  |      |       |  |           |            |   |       |            |     |   |       | 



| |                              
| | -----------------------------
| | Facilities committed by banks

|                                    |  |              |       |  |              |  |     | 
|----------------------------------- |  | ------------ | ----- |  | ------------ |  | --- | 
|                                    |  | December 31, |       |  | December 31, | 
|                                    |  | 2004         |       |  | 2003         | 
|                                    |  |              |       |  |              | 
|                                    |  | (£ million)  |      
|Utilized                            |  |              | 1,155 |  |              |  | 554 | 
|Unutilized                          |  |              | 542   |  |              |  | 408 | 
|                                    |  |              |       |  |              | 
|                                    |  |              | 1,697 |  |              |  | 962 | 
|                                    |  |              |       |  |              | 
|Unutilized facilities expire:       |  |              |       |  |              |  |     | 
|Within one year                     |  |              | 40    |  |              |  |    | 
|After one year but before two years |  |              | 500   |  |              |  | 36  | 
|After two years                     |  |              | 2     |  |              |  | 372 | 
|                                    |  |              |       |  |              | 
|                                    |  |              | 542   |  |              |  | 408 | 
|                                    |  |              |       |  |              | 

F-47



---



##### Table of Contents



Note 25  Financial Instruments






| |                   
| | ------------------
| | Interest rate risk





| |                                                
| | -----------------------------------------------
| | Interest rate swaps and forward rate agreements

|                     |                          |                                        |         |     |      |  |       |      |   |  |      |   |  |      |   |   |            |  |   |       |  |  |               |   |  |  |         |     |   |  |         |  | 
|-------------------- | ------------------------ | -------------------------------------- | ------- | --- | ---- |  | ----- | ---- | - |  | ---- | - |  | ---- | - | - | ---------- |  | - | ----- |  |  | ------------- | - |  |  | ------- | --- | - |  | ------- |  | 
|                     |                          | Expected to mature before December 31, |         |     |      |  |       |      |  
|                     |                          |                                        |         |     |      |  |       |      |  
|                     |                          | 2005                                   |         |     | 2006 |  |       | 2007 |   |  | 2008 |   |  | 2009 |   |   | Thereafter |  |   | Total |  |  | Fair value(i) |  
|                     |                          |                                        |         |     |      |  |       |      |   |  |      |   |  |      |   |   |            |  |   |       |  |  |               |  
|At December 31, 2004 |                          |                                        |         |     |      |  |       |      |   |  |      |   |  |      |   |   |            |  |   |       |  |  |               |   |  |  |         |     |   |  |         | 
|Principal            |                          |                                        |        |     |      |  | $200m |      |   |  |     |   |  |      |  |   |            |  |  |       |  |  |              |   |  |  | $200m   |     |   |  | $(4)m   | 
|                     | Fixed rate payable       |                                        |         |    |      |  |       | 4.5  | % |  |      |  |  |      |   |  |            |  |   |      |  |  |               |  |  |  |         | 4.5 | % |  |         |  | 
|                     | Variable rate receivable |                                        |         |    |      |  |       | 2.2  | % |  |      |  |  |      |   |  |            |  |   |      |  |  |               |  |  |  |         | 2.2 | % |  |         |  | 
|Principal            |                          |                                        | 215m   |     |      |  |      |      |   |  |     |   |  |      |  |   |            |  |  |       |  |  |              |   |  |  | 215m   |     |   |  | (1)m   | 
|                     | Fixed rate payable       |                                        |         | 2.9 | %    |  |       |     |   |  |      |  |  |      |   |  |            |  |   |      |  |  |               |  |  |  |         | 2.9 | % |  |         |  | 
|                     | Variable rate receivable |                                        |         | 2.2 | %    |  |       |     |   |  |      |  |  |      |   |  |            |  |   |      |  |  |               |  |  |  |         | 2.2 | % |  |         |  | 
|Principal            |                          |                                        | A$60m   |     |      |  |      |      |   |  |     |   |  |      |  |   |            |  |  |       |  |  |              |   |  |  | A$60m   |     |   |  |        | 
|                     | Fixed rate payable       |                                        |         | 5.4 | %    |  |       |     |   |  |      |  |  |      |   |  |            |  |   |      |  |  |               |  |  |  |         | 5.4 | % |  |         |  | 
|                     | Variable rate receivable |                                        |         | 5.4 | %    |  |       |     |   |  |      |  |  |      |   |  |            |  |   |      |  |  |               |  |  |  |         | 5.4 | % |  |         |  | 
|Principal            |                          |                                        | HK$300m |     |      |  |      |      |   |  |     |   |  |      |  |   |            |  |  |       |  |  |              |   |  |  | HK$300m |     |   |  | HK$(1)m | 
|                     | Fixed rate payable       |                                        |         | 1.5 | %    |  |       |     |   |  |      |  |  |      |   |  |            |  |   |      |  |  |               |  |  |  |         | 1.5 | % |  |         |  | 
|                     | Variable rate receivable |                                        |         | 1.0 | %    |  |       |     |   |  |      |  |  |      |   |  |            |  |   |      |  |  |               |  |  |  |         | 1.0 | % |  |         |  | 






|    |                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------
|(i) | Represents the net present value of the expected cash flows
    discounted at current market rates of interest.



|                     |                          |                                        |         |     |      |  |       |      |   |  |       |     |   |      |   |   |            |  |   |       |  |  |               |     |   |  |         |     |   |  |          |  | 
|-------------------- | ------------------------ | -------------------------------------- | ------- | --- | ---- |  | ----- | ---- | - |  | ----- | --- | - | ---- | - | - | ---------- |  | - | ----- |  |  | ------------- | --- | - |  | ------- | --- | - |  | -------- |  | 
|                     |                          | Expected to mature before December 31, |         |     |      |  |       |      |  
|                     |                          |                                        |         |     |      |  |       |      |  
|                     |                          | 2004                                   |         |     | 2005 |  |       | 2006 |   |  | 2007  |     |   | 2008 |   |   | Thereafter |  |   | Total |  |  | Fair value(i) |    
|                     |                          |                                        |         |     |      |  |       |      |   |  |       |     |   |      |   |   |            |  |   |       |  |  |               |    
|At December 31, 2003 |                          |                                        |         |     |      |  |       |      |   |  |       |     |   |      |   |   |            |  |   |       |  |  |               |     |   |  |         |     |   |  |          | 
|Principal            |                          |                                        | $250m   |     |      |  | $600m |      |   |  | $300m |     |   |      |  |   |            |  |  |       |  |  |              |     |   |  | $1,150m |     |   |  | $(44)m   | 
|                     | Fixed rate payable       |                                        |         | 5.7 | %    |  |       | 4.4  | % |  |       | 4.4 | % |      |   |  |            |  |   |      |  |  |               |    |   |  |         | 4.7 | % |  |          |  | 
|                     | Variable rate receivable |                                        |         | 1.2 | %    |  |       | 1.2  | % |  |       | 1.2 | % |      |   |  |            |  |   |      |  |  |               |    |   |  |         | 1.2 | % |  |          |  | 
|Principal            |                          |                                        | 100m   |     |      |  | 65m  |      |   |  |      |     |   |      |  |   |            |  |  |       |  |  |              |     |   |  | 165m   |     |   |  | (4)m    | 
|                     | Fixed rate payable       |                                        |         | 4.0 | %    |  |       | 4.2  | % |  |       |    |   |      |   |  |            |  |   |      |  |  |               |    |   |  |         | 4.1 | % |  |          |  | 
|                     | Variable rate receivable |                                        |         | 2.2 | %    |  |       | 2.2  | % |  |       |    |   |      |   |  |            |  |   |      |  |  |               |    |   |  |         | 2.2 | % |  |          |  | 
|Principal            |                          |                                        |        |     |      |  |      |      |   |  |      |     |   |      |  |   |            |  |  |       |  |  | 300m         |     |   |  | 300m   |     |   |  |         | 
|                     | Variable rate payable    |                                        |         |    |      |  |       |     |   |  |       |    |   |      |   |  |            |  |   |      |  |  |               | 3.0 | % |  |         | 3.0 | % |  |          |  | 
|                     | Fixed rate receivable    |                                        |         |    |      |  |       |     |   |  |       |    |   |      |   |  |            |  |   |      |  |  |               | 4.8 | % |  |         | 4.8 | % |  |          |  | 
|Principal            |                          |                                        | A$50    |     |      |  |      |      |   |  |      |     |   |      |  |   |            |  |  |       |  |  |              |     |   |  | A$50m   |     |   |  |         | 
|                     | Fixed rate payable       |                                        |         | 4.7 | %    |  |       |     |   |  |       |    |   |      |   |  |            |  |   |      |  |  |               |    |   |  |         | 4.7 | % |  |          |  | 
|                     | Variable rate receivable |                                        |         | 5.5 | %    |  |       |     |   |  |       |    |   |      |   |  |            |  |   |      |  |  |               |    |   |  |         | 5.5 | % |  |          |  | 
|Principal            |                          |                                        | HK$370m |     |      |  |      |      |   |  |      |     |   |      |  |   |            |  |  |       |  |  |              |     |   |  | HK$370m |     |   |  | HK$(17)m | 
|                     | Fixed rate payable       |                                        |         | 5.2 | %    |  |       |     |   |  |       |    |   |      |   |  |            |  |   |      |  |  |               |    |   |  |         | 5.2 | % |  |          |  | 
|                     | Variable rate receivable |                                        |         | 0.4 | %    |  |       |     |   |  |       |    |   |      |   |  |            |  |   |      |  |  |               |    |   |  |         | 0.4 | % |  |          |  | 






|    |                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------
|(i) | Represents the net present value of the expected cash flows
    discounted at current market rates of interest.

F-48



---



##### Table of Contents







| |                                
| | -------------------------------
| | Interest rate option agreements





|                                                        |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |   |  |     |     |  |  |     |     | 
|------------------------------------------------------- | ---------------- | ----------- | ------ | ---- | ---------- |  | - | -------- | ----------- | ------- | ---------- | ---------------------- | - | ---- | ------- | ----- | ---- | ---------- | ------ | -------- | - |  | --- | --- |  |  | --- | --- | 
|                                                        |                  |             |        |      |            |  |   |          |             |         |            | Interest at fixed rate |  
|                                                        |                  |             |        |      |            |  |   |          |             |         |            |                        |  
|                                                        |                  |             |        |      |            |  |   | Weighted |            
|                                                        |                  | Currency    |        |      | Principal  |  |   |          |             | average |           
|                                                        |                  |             |        |      |            |  |   | Weighted |             |         | period for |                       
|                                                        |                  |             |        | Swap |            |  |   |          | At variable |         |            | At fixed               |   |      | average |       |      | which rate |       
|                                                        |                  | Net debt    |        |      | agreements |  |   | Total    |             |         | rate(i)    |                        |   | rate |         |       | rate |            |        | is fixed |  
|                                                        |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |  
|                                                        |                  | (£ million) |        |      | (%)        |  |   | (years)  |            
|At December 31, 2004                                    |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |   |  |     |     |  |  |     |    
|Current asset investments and cash at bank and in hand: |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |   |  |     |     |  |  |     |    
|                                                        | Sterling         |             |        | 26   |            |  |   | 339      |             |         |            | 365                    |   |      |         | 365   |      |            |        |         |   |  |     |    |  |  |     |    | 
|                                                        | US dollar        |             |        | 29   |            |  |   |         |             |         |            | 29                     |   |      |         | 29    |      |            |        |         |   |  |     |    |  |  |     |    | 
|                                                        | Other            |             |        | 28   |            |  |   |         |             |         |            | 28                     |   |      |         | 28    |      |            |        |         |   |  |     |    |  |  |     |    | 
|Borrowings:                                             |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |   |  |     |     |  |  |     |    
|                                                        | Sterling         |             |        | (247 | )          |  |   |         |             |         |            | (247                   | ) |      |         | (244  | )    |            |        | (3       | ) |  |     |    |  |  |     | 5.0 | 
|                                                        | US dollar        |             |        | (283 | )          |  |   | (52      | )           |         |            | (335                   | ) |      |         | (231  | )    |            |        | (104     | ) |  |     | 4.6 |  |  |     | 1.7 | 
|                                                        | Euro             |             |        | (560 | )          |  |   | (239     | )           |         |            | (799                   | ) |      |         | (596  | )    |            |        | (203     | ) |  |     | 3.6 |  |  |     | 1.0 | 
|                                                        | Hong Kong dollar |             |        | (69  | )          |  |   |         |             |         |            | (69                    | ) |      |         | (49   | )    |            |        | (20      | ) |  |     | 1.5 |  |  |     | 0.8 | 
|                                                        | Other            |             |        | (40  | )          |  |   | (48      | )           |         |            | (88                    | ) |      |         | (64   | )    |            |        | (24      | ) |  |     | 5.4 |  |  |     | 0.7 | 
|                                                        |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |  
|                                                        |                  |             | (1,116 | )    |            |  |  |          |             |         | (1,116     | )                      |   |      | (762    | )     |      |            | (354   | )        |   |  | 3.9 |     |  |  | 1.2 |    
|                                                        |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |  
|At December 31, 2003                                    |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |   |  |     |     |  |  |     |    
|Current asset investments and cash at bank and in hand: |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |   |  |     |     |  |  |     |    
|                                                        | Sterling         |             |        | 377  |            |  |   | 934      |             |         |            | 1,311                  |   |      |         | 1,311 |      |            |        |         |   |  |     |    |  |  |     |    | 
|                                                        | US dollar        |             |        | 9    |            |  |   |         |             |         |            | 9                      |   |      |         | 9     |      |            |        |         |   |  |     |    |  |  |     |    | 
|                                                        | Other            |             |        | 46   |            |  |   |         |             |         |            | 46                     |   |      |         | 46    |      |            |        |         |   |  |     |    |  |  |     |    | 
|Borrowings:                                             |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |   |  |     |     |  |  |     |    
|                                                        | Sterling         |             |        | (24  | )          |  |   |         |             |         |            | (24                    | ) |      |         | (3    | )    |            |        | (21      | ) |  |     | 5.0 |  |  |     | 4.1 | 
|                                                        | US dollar        |             |        | (337 | )          |  |   | (615     | )           |         |            | (952                   | ) |      |         | (301  | )    |            |        | (651     | ) |  |     | 4.7 |  |  |     | 1.5 | 
|                                                        | Euro             |             |        | (514 | )          |  |   | (258     | )           |         |            | (772                   | ) |      |         | (403  | )    |            |        | (369     | ) |  |     | 4.8 |  |  |     | 4.7 | 
|                                                        | Hong Kong dollar |             |        | (84  | )          |  |   |         |             |         |            | (84                    | ) |      |         | (57   | )    |            |        | (27      | ) |  |     | 5.2 |  |  |     | 0.8 | 
|                                                        | Other            |             |        | (42  | )          |  |   | (61      | )           |         |            | (103                   | ) |      |         | (82   | )    |            |        | (21      | ) |  |     | 4.7 |  |  |     | 0.7 | 
|                                                        |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |  
|                                                        |                  |             | (569   | )    |            |  |  |          |             |         | (569       | )                      |   |      | 520     |       |      |            | (1,089 | )        |   |  | 4.8 |     |  |  | 2.6 |    
|                                                        |                  |             |        |      |            |  |   |          |             |         |            |                        |   |      |         |       |      |            |        |          |  






|    |                                                 
|--- | ------------------------------------------------
|(i) | Primarily based on the relevant inter-bank rate.



F-49



---



##### Table of Contents







| |              
| | -------------
| | Currency risk







| |                         
| | ------------------------
| | Currency swap agreements



|                               |  |           |       |  |          |  |       |      |  |  |        |  |  |  |         | 
|------------------------------ |  | --------- | ----- |  | -------- |  | ----- | ---- |  |  | ------ |  |  |  | ------- | 
|                               |  | Deposited |       |  | Borrowed | 
|                               |  |           |       |  |          | 
|                               |  | 2004      |       |  | 2003     |  |       | 2004 |  |  | 2003   | 
|                               |  |           |       |  |          |  |       |      |  |  |        | 
|Sterling to US dollar          |  |           | £52m  |  |          |  | £639m |      |  |  | $100m  |  |  |  | $1,097m | 
|Sterling to euro               |  |           | £239m |  |          |  | £250m |      |  |  | 350m  |  |  |  | 364m   | 
|Sterling to Australian dollar  |  |           | £48m  |  |          |  | £42m  |      |  |  | A$120m |  |  |  | A$100m  | 
|Sterling to New Zealand dollar |  |           |      |  |          |  | £19m  |      |  |  |       |  |  |  | NZ$51m  | 



| |               
| | --------------
| | Liquidity risk





|                            |                            |              |     |              |             |  |     |    | 
|--------------------------- | -------------------------- | ------------ | --- | ------------ | ----------- |  | --- | -- | 
|                            |                            |              |     | December 31, |            
|                            |                            | December 31, |     |              | 2003        | 
|                            |                            | 2004         |     |              | restated(i) | 
|                            |                            |              |     |              |             | 
|                            |                            | (£ million)  |    
|Other financial liabilities |                            |              |     |              |             |  |     |   
|Due:                        |                            |              |     |              |             |  |     |   
|                            | between one and two years  |              |     | 26           |             |  |     | 36 | 
|                            | between two and five years |              |     | 33           |             |  |     | 40 | 
|                            | after five years           |              |     | 89           |             |  |     | 72 | 
|                            |                            |              |     |              |             | 
|                            |                            |              | 148 |              |             |  | 148 |   
|                            |                            |              |     |              |             | 






|    |                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------
|(i) | Restated to include certain provisions for liabilities and
    charges on a basis consistent with 2004.

F-50



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##### Table of Contents





| |            
| | -----------
| | Fair values



|                                 |                           |                   |        |                   |             |  |        |          |   |  |       |      |   |  |      |        |  
|-------------------------------- | ------------------------- | ----------------- | ------ | ----------------- | ----------- |  | ------ | -------- | - |  | ----- | ---- | - |  | ---- | ------ | -
|                                 |                           |                   |        | December 31, 2003 |            
|                                 |                           | December 31, 2004 |        |                   | restated(i) | 
|                                 |                           |                   |        |                   |             | 
|                                 |                           | Net book          |        |                   | Fair        |  |        | Net book |   |  | Fair  |     
|                                 |                           | value             |        |                   | value       |  |        | value    |   |  | value |     
|                                 |                           |                   |        |                   |             |  |        |          |   |  |       |     
|                                 |                           | (£ million)       |       
|Fixed asset investments          |                           |                   | 99     |                   |             |  | 102    |          |   |  | 172   |      |   |  | 174  |       
|Current asset equity investments |                           |                   | 76     |                   |             |  | 76     |          |   |  |      |      |   |  |     |       
|Net debt:                        |                           |                   |        |                   |             |  |        |          |   |  |       |      |   |  |      |       
|                                 | Cash and overdrafts       |                   |        | 32                |             |  |        | 32       |   |  |       | 50   |   |  |      | 50     |  
|                                 | Current asset investments |                   |        | 40                |             |  |        | 40       |   |  |       | 361  |   |  |      | 361    |  
|                                 | Currency swap agreements  |                   |        | (9                | )           |  |        | (9       | ) |  |       | 16   |   |  |      | 20     |  
|                                 | Other borrowings          |                   |        | (1,179            | )           |  |        | (1,179   | ) |  |       | (996 | ) |  |      | (1,000 | )
|                                 |                           |                   |        |                   |             |  |        |          |   |  |       |     
|Net debt                         |                           |                   | (1,116 | )                 |             |  | (1,116 | )        |   |  | (569  | )    |   |  | (569 | )     
|Other financial liabilities      |                           |                   | (148   | )                 |             |  | (148   | )        |   |  | (148  | )    |   |  | (148 | )     
|Interest rate swap agreements    |                           |                   |       |                   |             |  | (3     | )        |   |  |      |      |   |  | (29  | )     
|Forward exchange contracts       |                           |                   |       |                   |             |  | 9      |          |   |  |      |      |   |  | (1   | )     
|                                 |                           |                   |        |                   |             |  |        |          |   |  |       |     
|                                 |                           |                   | (1,089 | )                 |             |  | (1,080 | )        |   |  | (545  | )    |   |  | (573 | )     
|                                 |                           |                   |        |                   |             |  |        |          |   |  |       |     






|    |                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------
|(i) | Restated to include certain provisions for liabilities and
    charges on a basis consistent with 2004.





| |       
| | ------
| | Hedges



|                                                                   |  |             |     |   |        |  |     |       |  |  |     |  
|------------------------------------------------------------------ |  | ----------- | --- | - | ------ |  | --- | ----- |  |  | --- | -
|                                                                   |  | Gains       |     |   | Losses |  |     | Total | 
|                                                                   |  |             |     |   |        |  |     |       | 
|                                                                   |  | (£ million) |    
|Unrecognized at October 1, 2002                                    |  |             | 24  |   |        |  | (45 | )     |  |  | (21 | )
|Recognized in the period                                           |  |             | (2  | ) |        |  | 31  |       |  |  | 29  |  
|Arising in the period but not recognized                           |  |             | (18 | ) |        |  | (16 | )     |  |  | (34 | )
|                                                                   |  |             |     |   |        |  |     |       | 
|Unrecognized at December 31, 2003                                  |  |             | 4   |   |        |  | (30 | )     |  |  | (26 | )
|Recognized in the year                                             |  |             | (1  | ) |        |  | 21  |       |  |  | 20  |  
|Arising in the year but not recognized                             |  |             | 6   |   |        |  | 6   |       |  |  | 12  |  
|                                                                   |  |             |     |   |        |  |     |       | 
|Unrecognized at December 31, 2004                                  |  |             | 9   |   |        |  | (3  | )     |  |  | 6   |  
|                                                                   |  |             |     |   |        |  |     |       | 
|Expected to be recognized in the year ending December 31,
    2005 |  |             | 9   |   |        |  | (1  | )     |  |  | 8   |  
|Expected to be recognized thereafter                               |  |             |    |   |        |  | (2  | )     |  |  | (2  | )



| |                  
| | -----------------
| | Counterparty risk



F-51



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##### Table of Contents



Note 26  Goodwill eliminated




|                                |                      |             |       |     |             |  |      |       |   |  |       |      |  
|------------------------------- | -------------------- | ----------- | ----- | --- | ----------- |  | ---- | ----- | - |  | ----- | ---- | -
|                                |                      | Cost of     |       |     |             |  |     
|                                |                      | goodwill    |       |     | Exchange    |  |      |      
|                                |                      | eliminated  |       |     | adjustments |  |      | Total |  
|                                |                      |             |       |     |             |  |      |       |  
|                                |                      | (£ million) |      
|Eliminated to October 1, 2002   |                      |             | 2,403 |     |             |  | 122  |       |   |  | 2,525 |     
|                                | Separation of MAB    |             |       | (50 | )           |  |      |      |   |  |       | (50  | )
|                                | Exchange adjustments |             |       |    |             |  |      | (139  | ) |  |       | (139 | )
|                                |                      |             |       |     |             |  |      |       |  
|Eliminated to December 31, 2003 |                      |             | 2,353 |     |             |  | (17  | )     |   |  | 2,336 |     
|                                | Exchange adjustments |             |       |    |             |  |      | (110  | ) |  |       | (110 | )
|                                |                      |             |       |     |             |  |      |       |  
|Eliminated to December 31, 2004 |                      |             | 2,353 |     |             |  | (127 | )     |   |  | 2,226 |     
|                                |                      |             |       |     |             |  |      |       |  

Note 27  Major Acquisitions and Disposals




| |                              
| | -----------------------------
| | Year ended September 30, 2002





| |                                  
| | ---------------------------------
| | 15 months ended December 31, 2003



| |                  
| | -----------------
| | Separation of MAB

|                                                |  |           |       |  
|----------------------------------------------- |  | --------- | ----- | -
|                                                |  | £ million |      
|Net assets disposed                             |  |           |       |  
|Intangible assets                               |  |           | 12    |  
|Tangible assets                                 |  |           | 3,530 |  
|Stocks                                          |  |           | 47    |  
|Debtors                                         |  |           | 140   |  
|Current asset investments                       |  |           | 7     |  
|Cash at bank and in hand                        |  |           | 7     |  
|Creditors: amounts falling due within one year  |  |           | (244  | )
|Provisions for liabilities and charges          |  |           | (195  | )
|Debt assumed by MAB                             |  |           | (577  | )
|                                                |  |           |      
|                                                |  |           | 2,727 |  
|Goodwill previously eliminated against reserves |  |           | 50    |  
|                                                |  |           |      
|                                                |  |           | 2,777 |  
|                                                |  |           |      





| |                             
| | ----------------------------
| | Year ended December 31, 2004



Note 28  Share Options




| |                                    
| | -----------------------------------
| | Former Six Continents Share Schemes



F-52



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##### Table of Contents











| |                                          
| | -----------------------------------------
| | New Share Plans established on Separation



| |                                   
| | ----------------------------------
| | Short Term Deferred Incentive Plan





| |                                  
| | ---------------------------------
| | Performance Restricted Share Plan





| |                            
| | ---------------------------
| | Executive Share Option Plan





F-53



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##### Table of Contents





| |               
| | --------------
| | Sharesave Plan





| |                                
| | -------------------------------
| | US Employee Stock Purchase Plan







|                         |  |            |         |  |                  |  |           |                 |  |  |                |  |  |  |     | 
|------------------------ |  | ---------- | ------- |  | ---------------- |  | --------- | --------------- |  |  | -------------- |  |  |  | --- | 
|                         |  | Short Term |         |  |                  |  |           |                 | 
|                         |  | Deferred   |         |  | Performance      |  |           |                 |  | 
|                         |  | Incentive  |         |  | Restricted Share |  |           | Executive Share |  |  |               
|                         |  | Plan       |         |  | Plan             |  |           | Option Plan     |  |  | Sharesave Plan | 
|                         |  |            |         |  |                  |  |           |                 |  |  |                | 
|Number of shares awarded |  |            | 227,150 |  |                  |  | 2,683,260 |                 |  |  | 6,951,420      |  |  |  | N/A | 

F-54



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##### Table of Contents





|                             |  |            |          |   |                  |                                     |       |                 |          |  |       |  
|---------------------------- |  | ---------- | -------- | - | ---------------- | ----------------------------------- | ----- | --------------- | -------- |  | ----- | -
|                             |  | Short Term |          |   |                  |                                     |      
|                             |  | Deferred   |          |   | Performance      |                                     |       |                
|                             |  | Incentive  |          |   | Restricted Share |                                     |       | Executive Share |         
|                             |  | Plan       |          |   | Plan             |                                     |       | Option Plan     |         
|                             |  |            |          |   |                  |                                     |       |                 |         
|                             |  | 2004       |          |   | 2004             |                                     |       | 2004            |         
|                             |  |            |          |   |                  |                                     |       |                 |         
|Valuation model              |  |            | Binomial |   |                  | Monte Carlo Simulation and Binomial |       |                 | Binomial | 
|Weighted average share price |  |            | 498.0    | p |                  |                                     | 550.0 | p               |          |  | 494.0 | p
|Exercise price               |  |            |         |   |                  |                                     |      |                 |          |  | 494.0 | p
|Expected dividend yield      |  |            | 3.74     | % |                  |                                     | 3.49  | %               |          |  | 3.81  | %
|Risk free rate               |  |            |         |   |                  |                                     |      |                 |          |  | 4.73  | %
|Volatility                   |  |            |         |   |                  |                                     |      |                 |          |  | 31.33 | %
|Term (years)(a)              |  |            | 2.8      |   |                  |                                     | 3     |                 |          |  | 6.5   |  
|Fair value per share         |  |            | 448.3    | p |                  |                                     | 125.1 | p               |          |  | 136.0 | p






|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|(a) | The expected term of the options is taken to the mid point
    between vesting and lapse.



|                                 |  |                     |         |   |                        |  |           | 
|-------------------------------- |  | ------------------- | ------- | - | ---------------------- |  | --------- | 
|                                 |  | Short Term Deferred |         |   | Performance Restricted | 
|                                 |  | Incentive Plan      |         |   | Share Plan             | 
|                                 |  |                     |         |   |                        | 
|                                 |  | Number of Shares    |         |   | Number of Shares       | 
|                                 |  |                     |         |   |                        | 
|Outstanding at October 1, 2002   |  |                     |        |   |                        |  |          | 
|Awarded                          |  |                     | 107,222 |   |                        |  | 5,445,310 | 
|Vested                           |  |                     |        |   |                        |  |          | 
|Lapsed or canceled               |  |                     |        |   |                        |  |          | 
|                                 |  |                     |         |   |                        | 
|Outstanding at December 31, 2003 |  |                     | 107,222 |   |                        |  | 5,445,310 | 
|Granted                          |  |                     | 230,700 |   |                        |  | 2,665,390 | 
|Vested                           |  |                     | (46,816 | ) |                        |  |          | 
|Lapsed or canceled               |  |                     | (50,000 | ) |                        |  | 375,252   | 
|                                 |  |                     |         |   |                        | 
|Outstanding at December 31, 2004 |  |                     | 241,106 |   |                        |  | 7,735,448 | 
|                                 |  |                     |         |   |                        | 

F-55



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##### Table of Contents



|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |   |  |  |               | 
|------------------------------------------------------- |  | ----------------------- | ------ | - | ------------------------------ |  | ----------- | ---------- |  |  | ------------- | - |  |  | ------------- | 
|                                                        |  | InterContinental Hotels |        |   |                               
|                                                        |  | Group employee savings  |        |   | InterContinental Hotels Group  | 
|                                                        |  | share schemes           |        |   | executive share option schemes | 
|                                                        |  |                         |        |   |                                | 
|                                                        |  | No. of                  |        |   | Range of                       |  |             | No. of     |  |  | Range of      |  
|                                                        |  | shares                  |        |   | option prices                  |  |             | shares     |  |  | option prices |  
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  
|                                                        |  | (thousand)              |        |   | (p)                            |  |             | (thousand) |  |  | (p)           |  
|Options outstanding at October 1, 2001                  |  |                         | 4,073  |   |                                |  | 400.0-886.0 |            |  |  | 20,646        |   |  |  | 469.4-1,014.5 | 
|Granted                                                 |  |                         | 1,883  |   |                                |  | 600.0-600.0 |            |  |  | 5,308         |   |  |  | 700.0-700.4   | 
|Exercised                                               |  |                         | (285   | ) |                                |  | 400.0-734.0 |            |  |  | (198          | ) |  |  | 505.0-746.0   | 
|Lapsed or canceled                                      |  |                         | (876   | ) |                                |  | 400.0-886.0 |            |  |  | (3,109        | ) |  |  | 469.4-1,014.5 | 
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  
|Options outstanding at September 30, 2002               |  |                         | 4,795  |   |                                |  | 470.0-886.0 |            |  |  | 22,647        |   |  |  | 505.0-1,014.5 | 
|Granted                                                 |  |                         |       |   |                                |  |             |            |  |  | 658           |   |  |  | 527.5         | 
|Exercised                                               |  |                         | (31    | ) |                                |  | 470.0-654.0 |            |  |  | (24           | ) |  |  | 505.0-527.5   | 
|Lapsed or canceled                                      |  |                         | (969   | ) |                                |  | 470.0-886.0 |            |  |  | (163          | ) |  |  | 584.0-1,014.5 | 
|Transferred to MAB                                      |  |                         |       |   |                                |  |            |            |  |  | (9,523        | ) |  |  | 505.0-1,014.5 | 
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  
|Closing Six Continents PLC share options                |  |                         | 3,795  |   |                                |  | 470.0-886.0 |            |  |  | 13,595        |   |  |  | 505.0-1,014.5 | 
|Rolled over share options                               |  |                         | 2,694  |   |                                |  |             |            |  |  | 9,651         |   |  |  |               | 
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  
|Opening InterContinental Hotels Group PLC share options |  |                         | 6,489  |   |                                |  | 374.5-518.1 |            |  |  | 23,246        |   |  |  | 295.3-593.3   | 
|Granted                                                 |  |                         | 1,375  |   |                                |  | 420.5       |            |  |  | 7,375         |   |  |  | 438.0-491.7   | 
|Exercised                                               |  |                         | (1,661 | ) |                                |  | 374.5-518.1 |            |  |  | (3,242        | ) |  |  | 295.3-466.7   | 
|Lapsed or canceled                                      |  |                         | (4,830 | ) |                                |  | 374.5-518.1 |            |  |  | (159          | ) |  |  | 438.0         | 
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  
|Options outstanding at December 31, 2003                |  |                         | 1,373  |   |                                |  | 420.5       |            |  |  | 27,220        |   |  |  | 295.3-593.3   | 
|Granted                                                 |  |                         |       |   |                                |  |            |            |  |  | 6,951         |   |  |  | 494.2         | 
|Exercised                                               |  |                         |       |   |                                |  |            |            |  |  | (7,430        | ) |  |  | 295.3-593.3   | 
|Lapsed or canceled                                      |  |                         | (111   | ) |                                |  | 420.5       |            |  |  |              |   |  |  |              | 
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  
|Options outstanding at December 31, 2004                |  |                         | 1,262  |   |                                |  | 420.5       |            |  |  | 26,741        |   |  |  | 308.5-593.3   | 
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  
|Options exercisable:                                    |  |                         |        |   |                                |  |             |            |  |  |               |   |  |  |               | 
|At December 31, 2004                                    |  |                         |       |   |                                |  |            |            |  |  | 12,569        |   |  |  | 308.5-593.3   | 
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  
|At December 31, 2003                                    |  |                         |       |   |                                |  |            |            |  |  | 19,998        |   |  |  | 295.3-593.3   | 
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  
|At September 30, 2002                                   |  |                         | 384    |   |                                |  | 470.0-734.0 |            |  |  | 4,052         |   |  |  | 505.0-1,014.5 | 
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  
|Fair value of options granted during the period ended:  |  |                         |        |   |                                |  |             |            |  |  |               |   |  |  |               | 
|December 31, 2003                                       |  |                         |        |   |                                |  | 176.2       |            |  |  |               |   |  |  | 99.3          | 
|September 30, 2002                                      |  |                         |        |   |                                |  | 122.6       |            |  |  |               |   |  |  | 160.7         | 
|                                                        |  |                         |        |   |                                |  |             |            |  |  |               |  



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##### Table of Contents





|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |   |  |  |       | 
|------------------------------------------------------------------- |  | ----------------------- | ------ | -------- | ----------------------- |  | ----- | ------ | -------- |  | ------------ | - |  |  | ----- | 
|                                                                    |  | InterContinental Hotels |        |          | InterContinental Hotels | 
|                                                                    |  | Group employee savings  |        |          | Group executive share   | 
|                                                                    |  | share schemes           |        |          | option schemes          | 
|                                                                    |  |                         |        |          |                         | 
|                                                                    |  |                         |        | Weighted |                         |  |       |        | Weighted | 
|                                                                    |  | No. of                  |        |          | average                 |  |       | No. of |          |  | average      |  
|                                                                    |  | shares                  |        |          | option price            |  |       | shares |          |  | option price |  
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  
|                                                                    |  | (000)                   |        |          | (Pence)                 |  |       | (000)  |          |  | (Pence)      |  
|Options outstanding at October 1, 2001                              |  |                         | 4,073  |          |                         |  | 641.9 |        |          |  | 20,646       |   |  |  | 715.4 | 
|Granted                                                             |  |                         | 1,883  |          |                         |  | 600.0 |        |          |  | 5,308        |   |  |  | 700.4 | 
|Exercised                                                           |  |                         | (285   | )        |                         |  | 474.7 |        |          |  | (198         | ) |  |  | 600.3 | 
|Lapsed or canceled                                                  |  |                         | (876   | )        |                         |  | 673.9 |        |          |  | (3,109       | ) |  |  | 720.5 | 
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  
|Options outstanding at September 30, 2002                           |  |                         | 4,795  |          |                         |  | 629.5 |        |          |  | 22,647       |   |  |  | 707.7 | 
|Granted                                                             |  |                         |       |          |                         |  |       |        |          |  | 658          |   |  |  | 527.5 | 
|Exercised                                                           |  |                         | (31    | )        |                         |  | 493.7 |        |          |  | (24          | ) |  |  | 519.0 | 
|Lapsed or canceled                                                  |  |                         | (969   | )        |                         |  | 641.0 |        |          |  | (163         | ) |  |  | 695.5 | 
|Transferred to MAB                                                  |  |                         |       |          |                         |  |      |        |          |  | (9,523       | ) |  |  | 712.9 | 
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  
|Closing Six Continents PLC                                          |  |                         | 3,795  |          |                         |  | 627.7 |        |          |  | 13,595       |   |  |  | 695.8 | 
|Conversion into InterContinental Hotels Group PLC
    share options |  |                         | 2,694  |          |                         |  |      |        |          |  | 9,651        |   |  |  |      | 
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  
|Rolled over InterContinental Hotels Group PLC share options         |  |                         | 6,489  |          |                         |  | 367.2 |        |          |  | 23,246       |   |  |  | 413.5 | 
|Granted                                                             |  |                         | 1,375  |          |                         |  | 420.5 |        |          |  | 7,375        |   |  |  | 439.6 | 
|Exercised                                                           |  |                         | (1,661 | )        |                         |  | 364.8 |        |          |  | (3,242       | ) |  |  | 375.7 | 
|Lapsed or canceled                                                  |  |                         | (4,830 | )        |                         |  | 368.0 |        |          |  | (159         | ) |  |  | 433.5 | 
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  
|Options outstanding at December 31, 2003                            |  |                         | 1,373  |          |                         |  | 420.5 |        |          |  | 27,220       |   |  |  | 424.9 | 
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  
|Granted                                                             |  |                         |       |          |                         |  |      |        |          |  | 6,951        |   |  |  | 494.2 | 
|Exercised                                                           |  |                         |       |          |                         |  |      |        |          |  | (7,430       | ) |  |  | 408.2 | 
|Lapsed or canceled                                                  |  |                         | (111   | )        |                         |  | 420.5 |        |          |  |             |   |  |  |      | 
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  
|Options outstanding at December 31, 2004                            |  |                         | 1,262  |          |                         |  | 420.5 |        |          |  | 26,741       |   |  |  | 447.6 | 
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  
|Options exercisable:                                                |  |                         |        |          |                         |  |       |        |          |  |              |   |  |  |       | 
|At December 31, 2004                                                |  |                         |       |          |                         |  |      |        |          |  | 12,569       |   |  |  | 426.4 | 
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  
|At December 31, 2003                                                |  |                         |       |          |                         |  |      |        |          |  | 19,998       |   |  |  | 419.6 | 
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  
|At September 30, 2002                                               |  |                         | 384    |          |                         |  | 665.9 |        |          |  | 4,052        |   |  |  | 848.7 | 
|                                                                    |  |                         |        |          |                         |  |       |        |          |  |              |  

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##### Table of Contents





|                                                                 |  |                     |        |          |                     |  |          |              |  |  |             |          |  |              |        |  |  |  |       | 
|---------------------------------------------------------------- |  | ------------------- | ------ | -------- | ------------------- |  | -------- | ------------ |  |  | ----------- | -------- |  | ------------ | ------ |  |  |  | ----- | 
|                                                                 |  | Options outstanding |        |          |                    
|                                                                 |  |                     |        |          | Options exercisable | 
|                                                                 |  |                     |        | Weighted |                     |  |          |              |  | 
|                                                                 |  |                     |        | average  |                     |  | Weighted |              |  |  |             | Weighted | 
|                                                                 |  | Number              |        |          | remaining           |  |          | average      |  |  | Number      |          |  | average      |       
|Range of exercise prices (pence)                                 |  | outstanding         |        |          | contract life       |  |          | option price |  |  | exercisable |          |  | option price |       
|                                                                 |  |                     |        |          |                     |  |          |              |  |  |             |          |  |              |       
|                                                                 |  | (000)               |        |          | (Years)             |  |          | (Pence)      |  |  | (000)       |          |  | (Pence)      |       
|InterContinental Hotels Group employee savings share
    schemes |  |                     |        |          |                     |  |          |              |  |  |             |          |  |              |        |  |  |  |       | 
|420.5                                                            |  |                     | 1,262  |          |                     |  | 2.8      |              |  |  | 420.5       |          |  |              |       |  |  |  |      | 
|                                                                 |  |                     |        |          |                     |  |          |              |  |  |             |          |  |              |       
|InterContinental Hotels Group executive share option
    schemes |  |                     |        |          |                     |  |          |              |  |  |             |          |  |              |        |  |  |  |       | 
|308.5 to 353.8                                                   |  |                     | 2,801  |          |                     |  | 5.3      |              |  |  | 343.3       |          |  |              | 2,801  |  |  |  | 343.3 | 
|353.9 to 498.0                                                   |  |                     | 23,333 |          |                     |  | 9.8      |              |  |  | 440.3       |          |  |              | 9,161  |  |  |  | 440.9 | 
|498.1 to 593.3                                                   |  |                     | 607    |          |                     |  | 3.3      |              |  |  | 593.3       |          |  |              | 607    |  |  |  | 593.3 | 
|                                                                 |  |                     |        |          |                     |  |          |              |  |  |             |          |  |              |       
|                                                                 |  |                     | 26,741 |          |                     |  | 7.3      |              |  |  | 319.1       |          |  |              | 12,569 |  |  |  | 426.4 | 
|                                                                 |  |                     |        |          |                     |  |          |              |  |  |             |          |  |              |       

Note 29  Financial commitments




|                           |  |                   |    |  |                   |  |   |            |  |  |       |  |  |  |   | 
|-------------------------- |  | ----------------- | -- |  | ----------------- |  | - | ---------- |  |  | ----- |  |  |  | - | 
|                           |  | December 31, 2004 |    |  | December 31, 2003 | 
|                           |  |                   |    |  |                   | 
|                           |  | Properties        |    |  | Other             |  |   | Properties |  |  | Other | 
|                           |  |                   |    |  |                   |  |   |            |  |  |       | 
|                           |  | (£ million)       |   
|Within one year            |  |                   | 1  |  |                   |  | 2 |            |  |  | 1     |  |  |  | 2 | 
|Between one and five years |  |                   | 11 |  |                   |  | 5 |            |  |  | 10    |  |  |  | 5 | 
|After five years           |  |                   | 35 |  |                   |  | 1 |            |  |  | 32    |  |  |  |  | 
|                           |  |                   |    |  |                   |  |   |            |  |  |       | 
|                           |  |                   | 47 |  |                   |  | 8 |            |  |  | 43    |  |  |  | 7 | 
|                           |  |                   |    |  |                   |  |   |            |  |  |       | 



|                    |  |                   |       | 
|------------------- |  | ----------------- | ----- | 
|                    |  | December 31, 2004 |      
|                    |  |                   |      
|                    |  | (£ million)       |      
|Due within one year |  |                   | 55    | 
|One to two years    |  |                   | 51    | 
|Two to three years  |  |                   | 47    | 
|Three to four years |  |                   | 38    | 
|Four to five years  |  |                   | 31    | 
|Thereafter          |  |                   | 884   | 
|                    |  |                   |      
|                    |  |                   | 1,106 | 
|                    |  |                   |      



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Note 30  Contracts for expenditure on fixed
assets


|                                                                                                  |  |              |    |  |              |  |    | 
|------------------------------------------------------------------------------------------------- |  | ------------ | -- |  | ------------ |  | -- | 
|                                                                                                  |  | December 31, |    |  | December 31, | 
|                                                                                                  |  | 2004         |    |  | 2003         | 
|                                                                                                  |  |              |    |  |              | 
|                                                                                                  |  | (£ million)  |   
|Contracts placed for expenditure on fixed assets not provided
    for in the financial statements |  |              | 53 |  |              |  | 63 | 
|                                                                                                  |  |              |    |  |              | 

Note 31  Contingencies




|           |  |              |   |  |              |  |    | 
|---------- |  | ------------ | - |  | ------------ |  | -- | 
|           |  | December 31, |   |  | December 31, | 
|           |  | 2004         |   |  | 2003         | 
|           |  |              |   |  |              | 
|           |  | (£ million)  |  
|Guarantees |  |              | 9 |  |              |  | 11 | 
|           |  |              |   |  |              | 









Note 32  Companies Act 1985




Note 33  Post balance sheet events






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Note 34  Fifteen months ended
December 31, 2003




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|    |                                     
|--- | ------------------------------------
|(a) | Consolidated profit and loss account

|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |        |      |   |  |      |       |    |  |        |     |  
|----------------------------------------------------- | ----------------------------------------- | ---------------------------------------------- | ---- | --- | ------------------------- |  | ------ | -------------------- | -- | ----------- | ----- | ------ | ----------- | ----- | ------ | ---- | ----- | ----------- | ---- | ----- | ----------- |  | ------ | ---- | -- | ----- | ------ | ---- | - |  | ---- | ----- | -- |  | ------ | --- | -
|                                                      |                                           | Unaudited three months ended                   |      |     | Unaudited 12 months ended |  |        | 15 months ended      |   
|                                                      |                                           | December 31, 2002(i)                           |      |     | December 31, 2003(i)      |  |        | December 31, 2003(i) |   
|                                                      |                                           |                                                |      |     |                           |  |        |                      |   
|                                                      |                                           | Before                                         |      |     |                           |  | Before |                      |    |             |       | Before |             |       |       
|                                                      |                                           | exceptional                                    |      |     | Exceptional               |  |        |                      |    | exceptional |       |        | Exceptional |       |        |      |       | exceptional |      |       | Exceptional |  |        |     
|                                                      |                                           | items                                          |      |     | items                     |  |        | Total                |    |             | items |        |             | items |        |      | Total |             |      | items |             |  | items  |      |    | Total |       
|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |       
|                                                      |                                           | (£ million, except per ordinary share amounts) |     
|Turnover                                              |                                           |                                                | 871  |     |                           |  |       |                      |    |             | 871   |        |             |       | 2,612  |      |       |             |     |       |             |  | 2,612  |      |    |       | 3,483  |      |   |  |     |       |    |  | 3,483  |    
|Analyzed as:                                          |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |        |      |   |  |      |       |    |  |        |    
|Continuing operations                                 |                                           |                                                | 529  |     |                           |  |       |                      |    |             | 529   |        |             |       | 2,161  |      |       |             |     |       |             |  | 2,161  |      |    |       | 2,690  |      |   |  |     |       |    |  | 2,690  |    
|Discontinued operations                               |                                           |                                                | 342  |     |                           |  |       |                      |    |             | 342   |        |             |       | 451    |      |       |             |     |       |             |  | 451    |      |    |       | 793    |      |   |  |     |       |    |  | 793    |    
|Cost of sales                                         |                                           |                                                | (692 | )   |                           |  |       |                      |    |             | (692  | )      |             |       | (2,025 | )    |       |             | (51  | )     |             |  | (2,076 | )    |    |       | (2,717 | )    |   |  | (51  | )     |    |  | (2,768 | )  
|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |       
|Gross operating profit                                |                                           |                                                | 179  |     |                           |  |       |                      |    |             | 179   |        |             |       | 587    |      |       |             | (51  | )     |             |  | 536    |      |    |       | 766    |      |   |  | (51  | )     |    |  | 715    |    
|Administrative expenses                               |                                           |                                                | (67  | )   |                           |  |       |                      |    |             | (67   | )      |             |       | (216   | )    |       |             |     |       |             |  | (216   | )    |    |       | (283   | )    |   |  |     |       |    |  | (283   | )  
|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |       
|Operating profit                                      |                                           |                                                | 112  |     |                           |  |       |                      |    |             | 112   |        |             |       | 371    |      |       |             | (51  | )     |             |  | 320    |      |    |       | 483    |      |   |  | (51  | )     |    |  | 432    |    
|Analyzed as:                                          |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |        |      |   |  |      |       |    |  |        |    
|Continuing operations                                 |                                           |                                                | 60   |     |                           |  |       |                      |    |             | 60    |        |             |       | 286    |      |       |             | (51  | )     |             |  | 235    |      |    |       | 346    |      |   |  | (51  | )     |    |  | 295    |    
|Discontinued operations                               |                                           |                                                | 52   |     |                           |  |       |                      |    |             | 52    |        |             |       | 85     |      |       |             |     |       |             |  | 85     |      |    |       | 137    |      |   |  |     |       |    |  | 137    |    
|Non-operating exceptional items                       |                                           |                                                |     |     |                           |  | (3     | )                    |    |             | (3    | )      |             |       |       |      |       |             | (210 | )     |             |  | (210   | )    |    |       |       |      |   |  | (213 | )     |    |  | (213   | )  
|Analyzed as:                                          |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |        |      |   |  |      |       |    |  |        |    
|Continuing operations:                                |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |        |      |   |  |      |       |    |  |        |    
|                                                      | Cost of fundamental reorganization        |                                                |      |    |                           |  |        |                     |    |             |       |       |             |       |        |     |       |             |      | (67   | )           |  |        | (67  | )  |       |        |     |   |  |      | (67   | )  |  |        | (67 | )
|                                                      | Separation costs                          |                                                |      |    |                           |  |        | (3                   | )  |             |       | (3     | )           |       |        |     |       |             |      | (48   | )           |  |        | (48  | )  |       |        |     |   |  |      | (51   | )  |  |        | (51 | )
|                                                      | Profit on disposal of fixed assets        |                                                |      |    |                           |  |        |                     |    |             |       |       |             |       |        |     |       |             |      | 4     |             |  |        | 4    |    |       |        |     |   |  |      | 4     |    |  |        | 4   |  
|                                                      | Provision against fixed asset investments |                                                |      |    |                           |  |        |                     |    |             |       |       |             |       |        |     |       |             |      | (56   | )           |  |        | (56  | )  |       |        |     |   |  |      | (56   | )  |  |        | (56 | )
|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |       
|                                                      |                                           |                                                |     |     |                           |  | (3     | )                    |    |             | (3    | )      |             |       |       |      |       |             | (167 | )     |             |  | (167   | )    |    |       |       |      |   |  | (170 | )     |    |  | (170   | )  
|Discontinued operations:                              |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |        |      |   |  |      |       |    |  |        |    
|                                                      | Separation costs                          |                                                |      |    |                           |  |        |                     |    |             |       |       |             |       |        |     |       |             |      | (41   | )           |  |        | (41  | )  |       |        |     |   |  |      | (41   | )  |  |        | (41 | )
|                                                      | Loss on disposal of fixed assets          |                                                |      |    |                           |  |        |                     |    |             |       |       |             |       |        |     |       |             |      | (2    | )           |  |        | (2   | )  |       |        |     |   |  |      | (2    | )  |  |        | (2  | )
|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |       
|                                                      |                                           |                                                |     |     |                           |  |       |                      |    |             |      |        |             |       |       |      |       |             | (43  | )     |             |  | (43    | )    |    |       |       |      |   |  | (43  | )     |    |  | (43    | )  
|Profit on ordinary activities before interest         |                                           |                                                | 112  |     |                           |  | (3     | )                    |    |             | 109   |        |             |       | 371    |      |       |             | (261 | )     |             |  | 110    |      |    |       | 483    |      |   |  | (264 | )     |    |  | 219    |    
|Interest receivable                                   |                                           |                                                | 27   |     |                           |  |       |                      |    |             | 27    |        |             |       | 77     |      |       |             |     |       |             |  | 77     |      |    |       | 104    |      |   |  |     |       |    |  | 104    |    
|Interest payable and similar charges                  |                                           |                                                | (39  | )   |                           |  |       |                      |    |             | (39   | )      |             |       | (112   | )    |       |             |     |       |             |  | (112   | )    |    |       | (151   | )    |   |  |     |       |    |  | (151   | )  
|Premium on early settlement of debt                   |                                           |                                                |     |     |                           |  |       |                      |    |             |      |        |             |       |       |      |       |             | (136 | )     |             |  | (136   | )    |    |       |       |      |   |  | (136 | )     |    |  | (136   | )  
|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |       
|Profit/ (loss) on ordinary activities before taxation |                                           |                                                | 100  |     |                           |  | (3     | )                    |    |             | 97    |        |             |       | 336    |      |       |             | (397 | )     |             |  | (61    | )    |    |       | 436    |      |   |  | (400 | )     |    |  | 36     |    
|Tax on profit/ (loss) on ordinary activities          |                                           |                                                | (29  | )   |                           |  |       |                      |    |             | (29   | )      |             |       | (86    | )    |       |             | 132  |       |             |  | 46     |      |    |       | (115   | )    |   |  | 132  |       |    |  | 17     |    
|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |       
|Profit/ (loss) on ordinary activities after taxation  |                                           |                                                | 71   |     |                           |  | (3     | )                    |    |             | 68    |        |             |       | 250    |      |       |             | (265 | )     |             |  | (15    | )    |    |       | 321    |      |   |  | (268 | )     |    |  | 53     |    
|Minority equity interests                             |                                           |                                                | (4   | )   |                           |  |       |                      |    |             | (4    | )      |             |       | (30    | )    |       |             |     |       |             |  | (30    | )    |    |       | (34    | )    |   |  |     |       |    |  | (34    | )  
|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |       
|Earnings available for shareholders                   |                                           |                                                | 67   |     |                           |  | (3     | )                    |    |             | 64    |        |             |       | 220    |      |       |             | (265 | )     |             |  | (45    | )    |    |       | 287    |      |   |  | (268 | )     |    |  | 19     |    
|Dividends on equity shares                            |                                           |                                                |     |     |                           |  |       |                      |    |             |      |        |             |       | (156   | )    |       |             |     |       |             |  | (156   | )    |    |       | (156   | )    |   |  |     |       |    |  | (156   | )  
|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |       
|Retained for reinvestment in the business             |                                           |                                                | 67   |     |                           |  | (3     | )                    |    |             | 64    |        |             |       | 64     |      |       |             | (265 | )     |             |  | (201   | )    |    |       | 131    |      |   |  | (268 | )     |    |  | (137   | )  
|                                                      |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |       
|Earnings per ordinary share                           |                                           |                                                |      |     |                           |  |        |                      |    |             |       |        |             |       |        |      |       |             |      |       |             |  |        |      |    |       |        |      |   |  |      |       |    |  |        |    
|                                                      | Basic                                     |                                                |      | 9.1 | p                         |  |        | (0.4                 | )p |             |       | 8.7    | p           |       |        | 30.0 | p     |             |      | (36.1 | )p          |  |        | (6.1 | )p |       |        | 39.1 | p |  |      | (36.5 | )p |  |        | 2.6 | p
|                                                      | Diluted                                   |                                                |      |    |                           |  |        |                     |    |             |       | 8.7    | p           |       |        |     |       |             |      |      |             |  |        | (6.1 | )p |       |        |     |   |  |      |      |    |  |        | 2.6 | p






|    |  |                                                                                                                                                                                                                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) |  | Restated to show exceptional tax credits on a basis consistent
    with 2004. This comprises prior year items which are exceptional
    by their size or incidence. Also restated to present the period
    ended December 31, 2003 on a consistent basis to the year
    ended December 31, 2004.

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|    |                                                                
|--- | ---------------------------------------------------------------
|(b) | Consolidated statement of total recognized gains and
    losses

|                                                         |                              |              |    |   |              |  |      |              |   |  |     |      |  
|-------------------------------------------------------- | ---------------------------- | ------------ | -- | - | ------------ |  | ---- | ------------ | - |  | --- | ---- | -
|                                                         |                              | Unaudited    |    |   | Unaudited    |  |      |             
|                                                         |                              | three months |    |   | 12 months    |  |      | 15 months    |  
|                                                         |                              | ended        |    |   | ended        |  |      | ended        |  
|                                                         |                              | December 31, |    |   | December 31, |  |      | December 31, |  
|                                                         |                              | 2002         |    |   | 2003         |  |      | 2003         |  
|                                                         |                              |              |    |   |              |  |      |              |  
|                                                         |                              | (£ million)  |   
|Earnings available for shareholders                      |                              |              | 64 |   |              |  | (45  | )            |   |  | 19  |     
|                                                         |                              |              |    |   |              |  |      |              |  
|Reversal of previous revaluation gains due to impairment |                              |              |   |   |              |  | (22  | )            |   |  | (22 | )   
|Exchange differences                                     |                              |              |    |   |              |  |      |              |   |  |     |     
|                                                         | Goodwill eliminated          |              |    |  |              |  |      | (139         | ) |  |     | (139 | )
|                                                         | Other assets and liabilities |              |    | 9 |              |  |      | 70           |   |  |     | 79   |  
|                                                         |                              |              |    |   |              |  |      |              |  
|Other recognized gains and losses                        |                              |              | 9  |   |              |  | (91  | )            |   |  | (82 | )   
|                                                         |                              |              |    |   |              |  |      |              |  
|Total recognized gains and losses for the period         |                              |              | 73 |   |              |  | (136 | )            |   |  | (63 | )   
|                                                         |                              |              |    |   |              |  |      |              |  



| |                                                         
| | --------------------------------------------------------
| | (c) Note of historical cost Group profits and
    losses

|                                                                                                    |  |              |    |  |              |  |      |              |  |  |      |  
|--------------------------------------------------------------------------------------------------- |  | ------------ | -- |  | ------------ |  | ---- | ------------ |  |  | ---- | -
|                                                                                                    |  | Unaudited    |    |  | Unaudited    |  |      |             
|                                                                                                    |  | three months |    |  | 12 months    |  |      | 15 months    | 
|                                                                                                    |  | ended        |    |  | ended        |  |      | ended        | 
|                                                                                                    |  | December 31, |    |  | December 31, |  |      | December 31, | 
|                                                                                                    |  | 2002         |    |  | 2003         |  |      | 2003         | 
|                                                                                                    |  |              |    |  |              |  |      |              | 
|                                                                                                    |  | (£ million)  |   
|Reported profit/ (loss) on ordinary activities before taxation                                      |  |              | 97 |  |              |  | (61  | )            |  |  | 36   |  
|Realization of revaluation gains of previous periods                                                |  |              | 2  |  |              |  | 14   |              |  |  | 16   |  
|                                                                                                    |  |              |    |  |              |  |      |              | 
|Historical cost profit/ (loss) on ordinary activities before
    taxation                           |  |              | 99 |  |              |  | (47  | )            |  |  | 52   |  
|                                                                                                    |  |              |    |  |              |  |      |              | 
|Historical cost profit/ (loss) retained after taxation, minority
    equity interests and dividends |  |              | 66 |  |              |  | (187 | )            |  |  | (121 | )
|                                                                                                    |  |              |    |  |              |  |      |              | 

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|    |                                     
|--- | ------------------------------------
|(d) | Consolidated statement of cash flows

|                                                |                         |              |      |      |              |  |      |              |   |  |      |      |  
|----------------------------------------------- | ----------------------- | ------------ | ---- | ---- | ------------ |  | ---- | ------------ | - |  | ---- | ---- | -
|                                                |                         | Unaudited    |      |      | Unaudited    |  |      |             
|                                                |                         | three months |      |      | 12 months    |  |      | 15 months    |  
|                                                |                         | ended        |      |      | ended        |  |      | ended        |  
|                                                |                         | December 31, |      |      | December 31, |  |      | December 31, |  
|                                                |                         | 2002         |      |      | 2003         |  |      | 2003         |  
|                                                |                         |              |      |      |              |  |      |              |  
|                                                |                         | (£ million)  |     
|Operating activities                            |                         |              | 164  |      |              |  | 631  |              |   |  | 795  |     
|                                                |                         |              |      |      |              |  |      |              |  
|Interest paid                                   |                         |              | (39  | )    |              |  | (102 | )            |   |  | (141 | )   
|Costs associated with new facilities            |                         |              |     |      |              |  | (20  | )            |   |  | (20  | )   
|Premium on early settlement of debt             |                         |              |     |      |              |  | (136 | )            |   |  | (136 | )   
|Dividends paid to minority shareholders         |                         |              |     |      |              |  | (22  | )            |   |  | (22  | )   
|Interest received                               |                         |              | 35   |      |              |  | 76   |              |   |  | 111  |     
|                                                |                         |              |      |      |              |  |      |              |  
|Returns on investments and servicing of finance |                         |              | (4   | )    |              |  | (204 | )            |   |  | (208 | )   
|                                                |                         |              |      |      |              |  |      |              |  
|UK corporation tax (paid)/ received             |                         |              | (14  | )    |              |  | 39   |              |   |  | 25   |     
|Overseas corporate tax paid                     |                         |              | (14  | )    |              |  | (7   | )            |   |  | (21  | )   
|                                                |                         |              |      |      |              |  |      |              |  
|Taxation                                        |                         |              | (28  | )    |              |  | 32   |              |   |  | 4    |     
|                                                |                         |              |      |      |              |  |      |              |  
|Paid:                                           |                         |              |      |      |              |  |      |              |   |  |      |     
|                                                | Intangible fixed assets |              |      |     |              |  |      | (10          | ) |  |      | (10  | )
|                                                | Tangible fixed assets   |              |      | (127 | )            |  |      | (348         | ) |  |      | (475 | )
|                                                | Fixed asset investments |              |      | (1   | )            |  |      | (36          | ) |  |      | (37  | )
|Received:                                       |                         |              |      |      |              |  |      |              |   |  |      |     
|                                                | Tangible fixed assets   |              |      | 6    |              |  |      | 259          |   |  |      | 265  |  
|                                                | Fixed asset investments |              |      | 2    |              |  |      | 7            |   |  |      | 9    |  
|                                                |                         |              |      |      |              |  |      |              |  
|Capital expenditure and financial investment    |                         |              | (120 | )    |              |  | (128 | )            |   |  | (248 | )   
|                                                |                         |              |      |      |              |  |      |              |  
|Separation costs                                |                         |              | (7   | )    |              |  | (59  | )            |   |  | (66  | )   
|                                                |                         |              |      |      |              |  |      |              |  
|Acquisitions and disposals                      |                         |              | (7   | )    |              |  | (59  | )            |   |  | (66  | )   
|                                                |                         |              |      |      |              |  |      |              |  
|Equity dividends                                |                         |              |     |      |              |  | (299 | )            |   |  | (299 | )   
|                                                |                         |              |      |      |              |  |      |              |  
|Net cash flow                                   |                         |              | 5    |      |              |  | (27  | )            |   |  | (22  | )   
|Management of liquid resources                  |                         |              | 43   |      |              |  | (172 | )            |   |  | (129 | )   
|Financing                                       |                         |              | 15   |      |              |  | 191  |              |   |  | 206  |     
|                                                |                         |              |      |      |              |  |      |              |  
|Movement in cash and overdrafts                 |                         |              | 63   |      |              |  | (8   | )            |   |  | 55   |     
|                                                |                         |              |      |      |              |  |      |              |  



|    |                   
|--- | ------------------
|(e) | Segmental Analysis

|                                                   |                  |                                                  |     |       |      |  |     |              |       |  |         |   |  |        |     |    |             |  |     |       |   |  |              |   |  |       |     |    |   |  |     |   |  |  |     |    |  
|-------------------------------------------------- | ---------------- | ------------------------------------------------ | --- | ----- | ---- |  | --- | ------------ | ----- |  | ------- | - |  | ------ | --- | -- | ----------- |  | --- | ----- | - |  | ------------ | - |  | ----- | --- | -- | - |  | --- | - |  |  | --- | -- | -
|                                                   |                  | Three months ended December 31, 2002 (unaudited) |    
|                                                   |                  |                                                  |    
|                                                   |                  |                                                  |     | Total |      |  |     |              | Total | 
|                                                   |                  | Americas                                         |     |       | EMEA |  |     | Asia Pacific |       |  | Central |   |  | Hotels |     |    | Soft Drinks |  |     | Total |   |  | Discontinued |   |  | Group |    
|                                                   |                  |                                                  |     |       |      |  |     |              |       |  |         |   |  |        |     |    |             |  |     |       |   |  |              |   |  |       |    
|                                                   |                  | (£ million)                                      |    
|Turnover                                           |                  |                                                  | 136 |       |      |  | 203 |              |       |  | 34      |   |  |        | 10  |    |             |  | 383 |       |   |  | 146          |   |  |       | 529 |    |   |  | 342 |   |  |  | 871 |   
|                                                   |                  |                                                  |     |       |      |  |     |              |       |  |         |   |  |        |     |    |             |  |     |       |   |  |              |   |  |       |    
|Operating profit after operating exceptional items |                  |                                                  | 34  |       |      |  | 22  |              |       |  | 10      |   |  |        | (18 | )  |             |  | 48  |       |   |  | 12           |   |  |       | 60  |    |   |  | 52  |   |  |  | 112 |   
|Non-operating exceptional items:                   |                  |                                                  |     |       |      |  |     |              |       |  |         |   |  |        |     |    |             |  |     |       |   |  |              |   |  |       |     |    |   |  |     |   |  |  |     |   
|                                                   | Separation costs |                                                  |     |      |      |  |     |             |       |  |         |  |  |        |     | (3 | )           |  |     | (3    | ) |  |              |  |  |       |     | (3 | ) |  |     |  |  |  |     | (3 | )
|                                                   |                  |                                                  |     |       |      |  |     |              |       |  |         |   |  |        |     |    |             |  |     |       |   |  |              |   |  |       |    
|Profit on ordinary activities before interest      |                  |                                                  | 34  |       |      |  | 22  |              |       |  | 10      |   |  |        | (21 | )  |             |  | 45  |       |   |  | 12           |   |  |       | 57  |    |   |  | 52  |   |  |  | 109 |   
|                                                   |                  |                                                  |     |       |      |  |     |              |       |  |         |   |  |        |     |    |             |  |     |       |   |  |              |   |  |       |    

F-63



---



##### Table of Contents



|                                                      |                                           |                                               |     |       |      |  |     |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |       |     |   |  |     |     |   |  |       |     |  
|----------------------------------------------------- | ----------------------------------------- | --------------------------------------------- | --- | ----- | ---- |  | --- | ------------ | ----- |  | ------- | -- | - | ------ | ---- | --- | ----------- |  | ----- | ----- | - |  | ------------ | - |  | ----- | ----- | --- | - |  | --- | --- | - |  | ----- | --- | -
|                                                      |                                           | 12 months ended December 31, 2003 (unaudited) |    
|                                                      |                                           |                                               |    
|                                                      |                                           |                                               |     | Total |      |  |     |              | Total | 
|                                                      |                                           | Americas                                      |     |       | EMEA |  |     | Asia Pacific |       |  | Central |    |   | Hotels |      |     | Soft Drinks |  |       | Total |   |  | Discontinued |   |  | Group |      
|                                                      |                                           |                                               |     |       |      |  |     |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |      
|                                                      |                                           | (£ million)                                   |    
|Turnover                                              |                                           |                                               | 525 |       |      |  | 807 |              |       |  | 114     |    |   |        | 41   |     |             |  | 1,487 |       |   |  | 674          |   |  |       | 2,161 |     |   |  | 451 |     |   |  | 2,612 |    
|                                                      |                                           |                                               |     |       |      |  |     |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |      
|Operating profit before exceptional items             |                                           |                                               | 161 |       |      |  | 92  |              |       |  | 12      |    |   |        | (62  | )   |             |  | 203   |       |   |  | 83           |   |  |       | 286   |     |   |  | 85  |     |   |  | 371   |    
|Operating exceptional items                           |                                           |                                               | (9  | )     |      |  | (41 | )            |       |  | (1      | )  |   |        |     |     |             |  | (51   | )     |   |  |             |   |  |       | (51   | )   |   |  |    |     |   |  | (51   | )  
|                                                      |                                           |                                               |     |       |      |  |     |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |      
|Operating profit after operating exceptional items    |                                           |                                               | 152 |       |      |  | 51  |              |       |  | 11      |    |   |        | (62  | )   |             |  | 152   |       |   |  | 83           |   |  |       | 235   |     |   |  | 85  |     |   |  | 320   |    
|Non-operating exceptional items:                      |                                           |                                               |     |       |      |  |     |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |       |     |   |  |     |     |   |  |       |    
|                                                      | Cost of fundamental reorganization        |                                               |     | (11   | )    |  |     | (17          | )     |  |         | (2 | ) |        |      | (37 | )           |  |       | (67   | ) |  |              |  |  |       |       | (67 | ) |  |     |    |   |  |       | (67 | )
|                                                      | Separation costs                          |                                               |     |      |      |  |     |             |       |  |         |   |   |        |      | (48 | )           |  |       | (48   | ) |  |              |  |  |       |       | (48 | ) |  |     | (41 | ) |  |       | (89 | )
|                                                      | Profit/(loss) on disposal of fixed assets |                                               |     | 10    |      |  |     | (6           | )     |  |         |   |   |        |      |    |             |  |       | 4     |   |  |              |  |  |       |       | 4   |   |  |     | (2  | ) |  |       | 2   |  
|                                                      | Provision against fixed asset investment  |                                               |     | (9    | )    |  |     |             |       |  |         |   |   |        |      | (47 | )           |  |       | (56   | ) |  |              |  |  |       |       | (56 | ) |  |     |    |   |  |       | (56 | )
|                                                      |                                           |                                               |     |       |      |  |     |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |      
|Profit/ (loss) on ordinary activities before interest |                                           |                                               | 142 |       |      |  | 28  |              |       |  | 9       |    |   |        | (194 | )   |             |  | (15   | )     |   |  | 83           |   |  |       | 68    |     |   |  | 42  |     |   |  | 110   |    
|                                                      |                                           |                                               |     |       |      |  |     |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |      

|                                                     |                                           |                                   |     |       |      |  |       |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |       |     |   |  |     |     |   |  |       |     |  
|---------------------------------------------------- | ----------------------------------------- | --------------------------------- | --- | ----- | ---- |  | ----- | ------------ | ----- |  | ------- | -- | - | ------ | ---- | --- | ----------- |  | ----- | ----- | - |  | ------------ | - |  | ----- | ----- | --- | - |  | --- | --- | - |  | ----- | --- | -
|                                                     |                                           | 15 months ended December 31, 2003 |    
|                                                     |                                           |                                   |    
|                                                     |                                           |                                   |     | Total |      |  |       |              | Total | 
|                                                     |                                           | Americas                          |     |       | EMEA |  |       | Asia Pacific |       |  | Central |    |   | Hotels |      |     | Soft Drinks |  |       | Total |   |  | Discontinued |   |  | Group |      
|                                                     |                                           |                                   |     |       |      |  |       |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |      
|                                                     |                                           | (£ million)                       |    
|Turnover                                             |                                           |                                   | 661 |       |      |  | 1,010 |              |       |  | 148     |    |   |        | 51   |     |             |  | 1,870 |       |   |  | 820          |   |  |       | 2,690 |     |   |  | 793 |     |   |  | 3,483 |    
|                                                     |                                           |                                   |     |       |      |  |       |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |      
|Operating profit before exceptional items            |                                           |                                   | 195 |       |      |  | 114   |              |       |  | 22      |    |   |        | (80  | )   |             |  | 251   |       |   |  | 95           |   |  |       | 346   |     |   |  | 137 |     |   |  | 483   |    
|Operating exceptional items                          |                                           |                                   | (9  | )     |      |  | (41   | )            |       |  | (1      | )  |   |        |     |     |             |  | (51   | )     |   |  |             |   |  |       | (51   | )   |   |  |    |     |   |  | (51   | )  
|                                                     |                                           |                                   |     |       |      |  |       |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |      
|Operating profit after operating exceptional items   |                                           |                                   | 186 |       |      |  | 73    |              |       |  | 21      |    |   |        | (80  | )   |             |  | 200   |       |   |  | 95           |   |  |       | 295   |     |   |  | 137 |     |   |  | 432   |    
|Non-operating exceptional items:                     |                                           |                                   |     |       |      |  |       |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |       |     |   |  |     |     |   |  |       |    
|                                                     | Cost of fundamental reorganization        |                                   |     | (11   | )    |  |       | (17          | )     |  |         | (2 | ) |        |      | (37 | )           |  |       | (67   | ) |  |              |  |  |       |       | (67 | ) |  |     |    |   |  |       | (67 | )
|                                                     | Separation costs                          |                                   |     |      |      |  |       |             |       |  |         |   |   |        |      | (51 | )           |  |       | (51   | ) |  |              |  |  |       |       | (51 | ) |  |     | (41 | ) |  |       | (92 | )
|                                                     | Profit/(loss) on disposal of fixed assets |                                   |     | 10    |      |  |       | (6           | )     |  |         |   |   |        |      |    |             |  |       | 4     |   |  |              |  |  |       |       | 4   |   |  |     | (2  | ) |  |       | 2   |  
|                                                     | Provision against fixed asset investments |                                   |     | (9    | )    |  |       |             |       |  |         |   |   |        |      | (47 | )           |  |       | (56   | ) |  |              |  |  |       |       | (56 | ) |  |     |    |   |  |       | (56 | )
|                                                     |                                           |                                   |     |       |      |  |       |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |      
|Profit/(loss) on ordinary activities before interest |                                           |                                   | 176 |       |      |  | 50    |              |       |  | 19      |    |   |        | (215 | )   |             |  | 30    |       |   |  | 95           |   |  |       | 125   |     |   |  | 94  |     |   |  | 219   |    
|                                                     |                                           |                                   |     |       |      |  |       |              |       |  |         |    |   |        |      |     |             |  |       |       |   |  |              |   |  |       |      



| |                              
| | -----------------------------
| | Turnover by geographic region

|                                           |  |                    |     |  |                   |  |     |                   |  |  |             |  |  |        |       |  |             |  |       |  |  |  |       | 
|------------------------------------------ |  | ------------------ | --- |  | ----------------- |  | --- | ----------------- |  |  | ----------- |  |  | ------ | ----- |  | ----------- |  | ----- |  |  |  | ----- | 
|                                           |  | Unaudited          |     |  | Unaudited         |  |     |                  
|                                           |  | three months ended |     |  | 12 months ended   |  |     | 15 months ended   | 
|                                           |  | December 31, 2002  |     |  | December 31, 2003 |  |     | December 31, 2003 | 
|                                           |  |                    |     |  |                   |  |     |                   | 
|                                           |  | By                 |     |  | By                |  |     | By                |  |  | By          |  |  | By     |       |  | By          | 
|                                           |  | origin             |     |  | destination       |  |     | origin            |  |  | destination |  |  | origin |       |  | destination | 
|                                           |  |                    |     |  |                   |  |     |                   |  |  |             |  |  |        |       |  |             | 
|                                           |  | (£ million)        |    
|United Kingdom                             |  |                    | 598 |  |                   |  | 598 |                   |  |  | 1,533       |  |  |        | 1,526 |  |             |  | 2,131 |  |  |  | 2,124 | 
|Rest of Europe, the Middle East and Africa |  |                    | 95  |  |                   |  | 95  |                   |  |  | 411         |  |  |        | 418   |  |             |  | 506   |  |  |  | 513   | 
|United States of America                   |  |                    | 117 |  |                   |  | 117 |                   |  |  | 454         |  |  |        | 454   |  |             |  | 571   |  |  |  | 571   | 
|Rest of Americas                           |  |                    | 27  |  |                   |  | 27  |                   |  |  | 100         |  |  |        | 100   |  |             |  | 127   |  |  |  | 127   | 
|Asia Pacific                               |  |                    | 34  |  |                   |  | 34  |                   |  |  | 114         |  |  |        | 114   |  |             |  | 148   |  |  |  | 148   | 
|                                           |  |                    |     |  |                   |  |     |                   |  |  |             |  |  |        |       |  |             | 
|                                           |  |                    | 871 |  |                   |  | 871 |                   |  |  | 2,612       |  |  |        | 2,612 |  |             |  | 3,483 |  |  |  | 3,483 | 
|                                           |  |                    |     |  |                   |  |     |                   |  |  |             |  |  |        |       |  |             | 

F-64



---



##### Table of Contents





| |                                                                       
| | ----------------------------------------------------------------------
| | Profit on ordinary activities before interest by geographic
    region

|                                           |  |              |     |  |              |  |     |              |  |  |     |  
|------------------------------------------ |  | ------------ | --- |  | ------------ |  | --- | ------------ |  |  | --- | -
|                                           |  | Unaudited    |     |  | Unaudited    |  |     |             
|                                           |  | three months |     |  | 12 months    |  |     | 15 months    | 
|                                           |  | ended        |     |  | ended        |  |     | ended        | 
|                                           |  | December 31, |     |  | December 31, |  |     | December 31, | 
|                                           |  | 2002         |     |  | 2003         |  |     | 2003         | 
|                                           |  |              |     |  |              |  |     |              | 
|                                           |  | (£ million)  |    
|United Kingdom                             |  |              | 67  |  |              |  | 50  |              |  |  | 117 |  
|Rest of Europe, the Middle East and Africa |  |              | 8   |  |              |  | (15 | )            |  |  | (7  | )
|United States of America                   |  |              | 17  |  |              |  | 46  |              |  |  | 63  |  
|Rest of Americas                           |  |              | 7   |  |              |  | 21  |              |  |  | 28  |  
|Asia Pacific                               |  |              | 10  |  |              |  | 8   |              |  |  | 18  |  
|                                           |  |              |     |  |              |  |     |              | 
|                                           |  |              | 109 |  |              |  | 110 |              |  |  | 219 |  
|                                           |  |              |     |  |              |  |     |              | 

(f) Operating
profit


|                                           |  |                    |     |   |                   |  |    |                   |  |  |              |   |  |            |     |   |              |  |     |   |  |  |     | 
|------------------------------------------ |  | ------------------ | --- | - | ----------------- |  | -- | ----------------- |  |  | ------------ | - |  | ---------- | --- | - | ------------ |  | --- | - |  |  | --- | 
|                                           |  | Unaudited          |     |   | Unaudited         |  |    |                  
|                                           |  | three months ended |     |   | 12 months ended   |  |    | 15 months ended   | 
|                                           |  | December 31, 2002  |     |   | December 31, 2003 |  |    | December 31, 2003 | 
|                                           |  |                    |     |   |                   |  |    |                   | 
|                                           |  | Continuing         |     |   | Discontinued      |  |    | Continuing        |  |  | Discontinued |   |  | Continuing |     |   | Discontinued | 
|                                           |  |                    |     |   |                   |  |    |                   |  |  |              |   |  |            |     |   |              | 
|                                           |  | (£ million)        |    
|Operating profit is stated after charging: |  |                    |     |   |                   |  |    |                   |  |  |              |   |  |            |     |   |              |  |     |   |  |  |     | 
|Staff costs (see note (g))                 |  |                    | 173 |   |                   |  | 89 |                   |  |  | 642          |   |  |            | 109 |   |              |  | 815 |   |  |  | 198 | 
|Depreciation of tangible fixed assets      |  |                    | 49  |   |                   |  | 22 |                   |  |  | 187          |   |  |            | 32  |   |              |  | 236 |   |  |  | 54  | 
|Impairment of tangible fixed assets        |  |                    |    |   |                   |  |   |                   |  |  | 51           |   |  |            |    |   |              |  | 51  |   |  |  |    | 
|Amortization of goodwill                   |  |                    | 2   |   |                   |  | 1  |                   |  |  | 11           |   |  |            | (1  | ) |              |  | 13  |   |  |  |    | 
|Hire of plant and machinery                |  |                    | 4   |   |                   |  | 8  |                   |  |  | 14           |   |  |            | 9   |   |              |  | 18  |   |  |  | 17  | 
|Property rentals                           |  |                    | 14  |   |                   |  | 10 |                   |  |  | 51           |   |  |            | 14  |   |              |  | 65  |   |  |  | 24  | 
|Income from fixed asset investments        |  |                    | (1  | ) |                   |  |   |                   |  |  | (2           | ) |  |            |    |   |              |  | (3  | ) |  |  |    | 



| |                                                     
| | ----------------------------------------------------
| | Auditors remuneration paid to Ernst & Young
    LLP

|                   |  |              |     |  |              |  |     |              |  |  |      | 
|------------------ |  | ------------ | --- |  | ------------ |  | --- | ------------ |  |  | ---- | 
|                   |  | Unaudited    |     |  | Unaudited    |  |     |             
|                   |  | three months |     |  | 12 months    |  |     | 15 months    | 
|                   |  | ended        |     |  | ended        |  |     | ended        | 
|                   |  | December 31, |     |  | December 31, |  |     | December 31, | 
|                   |  | 2002         |     |  | 2003         |  |     | 2003         | 
|                   |  |              |     |  |              |  |     |              | 
|                   |  | (£ million)  |    
|Audit fees         |  |              | 0.5 |  |              |  | 2.3 |              |  |  | 2.8  | 
|Audit related fees |  |              | 3.4 |  |              |  | 3.8 |              |  |  | 7.2  | 
|Tax fees           |  |              | 0.3 |  |              |  | 0.9 |              |  |  | 1.2  | 
|                   |  |              |     |  |              |  |     |              | 
|                   |  |              | 4.2 |  |              |  | 7.0 |              |  |  | 11.2 | 
|                   |  |              |     |  |              |  |     |              | 

F-65



---



##### Table of Contents





|    |      
|--- | -----
|(g) | Staff



| |      
| | -----
| | Costs

|                      |  |              |     |  |              |  |     |              |  |  |       | 
|--------------------- |  | ------------ | --- |  | ------------ |  | --- | ------------ |  |  | ----- | 
|                      |  | Unaudited    |     |  | Unaudited    |  |     |             
|                      |  | three months |     |  | 12 months    |  |     | 15 months    | 
|                      |  | ended        |     |  | ended        |  |     | ended        | 
|                      |  | December 31, |     |  | December 31, |  |     | December 31, | 
|                      |  | 2002         |     |  | 2003         |  |     | 2003         | 
|                      |  |              |     |  |              |  |     |              | 
|                      |  | (£ million)  |    
|Wages and salaries    |  |              | 231 |  |              |  | 653 |              |  |  | 884   | 
|Social security costs |  |              | 22  |  |              |  | 74  |              |  |  | 96    | 
|Pensions              |  |              | 9   |  |              |  | 24  |              |  |  | 33    | 
|                      |  |              |     |  |              |  |     |              | 
|                      |  |              | 262 |  |              |  | 751 |              |  |  | 1,013 | 
|                      |  |              |     |  |              |  |     |              | 



| |         
| | --------
| | Pensions

|                                               |  |              |    |   |              |  |    |              |  |  |    |  
|---------------------------------------------- |  | ------------ | -- | - | ------------ |  | -- | ------------ |  |  | -- | -
|                                               |  | Unaudited    |    |   | Unaudited    |  |    |             
|                                               |  | three months |    |   | 12 months    |  |    | 15 months    | 
|                                               |  | ended        |    |   | ended        |  |    | ended        | 
|                                               |  | December 31, |    |   | December 31, |  |    | December 31, | 
|                                               |  | 2002         |    |   | 2003         |  |    | 2003         | 
|                                               |  |              |    |   |              |  |    |              | 
|                                               |  | (£ million)  |   
|Regular cost                                   |  |              | 9  |   |              |  | 24 |              |  |  | 33 |  
|Variations from regular cost                   |  |              | (2 | ) |              |  | (5 | )            |  |  | (7 | )
|Notional interest on prepayment                |  |              | (1 | ) |              |  | (3 | )            |  |  | (4 | )
|                                               |  |              |    |   |              |  |    |              | 
|Pension cost in respect of the principal plans |  |              | 6  |   |              |  | 16 |              |  |  | 22 |  
|Other plans                                    |  |              | 3  |   |              |  | 8  |              |  |  | 11 |  
|                                               |  |              |    |   |              |  |    |              | 
|                                               |  |              | 9  |   |              |  | 24 |              |  |  | 33 |  
|                                               |  |              |    |   |              |  |    |              | 

F-66



---



##### Table of Contents



(h) Exceptional
items


|                                                     |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            |      |     |       |            |     |            |              |  |            |     |   |       |      |     |   |  |     |     |   |  |      |     |  
|---------------------------------------------------- | ----------------------------------------- | ---------------------------- | -- | -- | ------------------------- |  | - | ----------------- |  | ---------- | ---------- | -- | ------------ | ---------- | ---- | --- | ----- | ---------- | --- | ---------- | ------------ |  | ---------- | --- | - | ----- | ---- | --- | - |  | --- | --- | - |  | ---- | --- | -
|                                                     |                                           | Unaudited three months ended |    |    | Unaudited 12 months ended |  |   | 15 months ended   | 
|                                                     |                                           | December 31, 2002            |    |    | December 31, 2003         |  |   | December 31, 2003 | 
|                                                     |                                           |                              |    |    |                           |  |   |                   | 
|                                                     |                                           | Continuing                   |    |    | Discontinued              |  |   |                   |  | Continuing |            |    | Discontinued |            |      |     |       | Continuing |     |            | Discontinued |  |            |    
|                                                     |                                           | operations                   |    |    | operations                |  |   | Total             |  |            | operations |    |              | operations |      |     | Total |            |     | operations |              |  | operations |     |   | Total |     
|                                                     |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            |      |     |       |            |     |            |              |  |            |     |   |       |     
|                                                     |                                           | (£ million)                  |   
|Operating exceptional items:                         |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            |      |     |       |            |     |            |              |  |            |     |   |       |      |     |   |  |     |     |   |  |      |    
|Hotels impairment charge                             |                                           |                              |   |    |                           |  |  |                   |  |            |           |    |              |            | (51  | )   |       |            |    |            |              |  | (51        | )   |   |       | (51  | )   |   |  |    |     |   |  | (51  | )  
|                                                     |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            |      |     |       |            |     |            |              |  |            |     |   |       |     
|Total operating exceptional items                    |                                           |                              |   |    |                           |  |  |                   |  |            |           |    |              |            | (51  | )   |       |            |    |            |              |  | (51        | )   |   |       | (51  | )   |   |  |    |     |   |  | (51  | )  
|                                                     |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            |      |     |       |            |     |            |              |  |            |     |   |       |     
|Non-operating exceptional items:                     |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            |      |     |       |            |     |            |              |  |            |     |   |       |      |     |   |  |     |     |   |  |      |    
|                                                     | Cost of fundamental reorganization        |                              |    |   |                           |  |   |                  |  |            |            |   |              |            |      | (67 | )     |            |     |           |              |  |            | (67 | ) |       |      | (67 | ) |  |     |    |   |  |      | (67 | )
|                                                     | Separation costs                          |                              |    | (3 | )                         |  |   |                  |  |            |            | (3 | )            |            |      | (48 | )     |            |     | (41        | )            |  |            | (89 | ) |       |      | (51 | ) |  |     | (41 | ) |  |      | (92 | )
|                                                     | Profit/(loss) on disposal of fixed assets |                              |    |   |                           |  |   |                  |  |            |            |   |              |            |      | 4   |       |            |     | (2         | )            |  |            | 2   |   |       |      | 4   |   |  |     | (2  | ) |  |      | 2   |  
|                                                     | Provision against fixed asset investments |                              |    |   |                           |  |   |                  |  |            |            |   |              |            |      | (56 | )     |            |     |           |              |  |            | (56 | ) |       |      | (56 | ) |  |     |    |   |  |      | (56 | )
|                                                     |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            |      |     |       |            |     |            |              |  |            |     |   |       |     
|                                                     |                                           |                              | (3 | )  |                           |  |  |                   |  |            | (3         | )  |              |            | (167 | )   |       |            | (43 | )          |              |  | (210       | )   |   |       | (170 | )   |   |  | (43 | )   |   |  | (213 | )  
|                                                     |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            |      |     |       |            |     |            |              |  |            |     |   |       |     
|Total exceptional items before interest and taxation |                                           |                              | (3 | )  |                           |  |  |                   |  |            | (3         | )  |              |            | (218 | )   |       |            | (43 | )          |              |  | (261       | )   |   |       | (221 | )   |   |  | (43 | )   |   |  | (264 | )  
|Premium on early settlement of debt                  |                                           |                              |   |    |                           |  |  |                   |  |            |           |    |              |            | (136 | )   |       |            |    |            |              |  | (136       | )   |   |       | (136 | )   |   |  |    |     |   |  | (136 | )  
|Tax credit on above items                            |                                           |                              |   |    |                           |  |  |                   |  |            |           |    |              |            | 36   |     |       |            | 28  |            |              |  | 64         |     |   |       | 36   |     |   |  | 28  |     |   |  | 64   |    
|Exceptional tax credit                               |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            | 68   |     |       |            |    |            |              |  | 68         |     |   |       | 68   |     |   |  |    |     |   |  | 68   |    
|                                                     |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            |      |     |       |            |     |            |              |  |            |     |   |       |     
|Total exceptional items after interest and taxation  |                                           |                              | (3 | )  |                           |  |  |                   |  |            | (3         | )  |              |            | (250 | )   |       |            | (15 | )          |              |  | (265       | )   |   |       | (253 | )   |   |  | (15 | )   |   |  | (268 | )  
|                                                     |                                           |                              |    |    |                           |  |   |                   |  |            |            |    |              |            |      |     |       |            |     |            |              |  |            |     |   |       |     



| |             
| | ------------
| | (i) Interest

|                                      |                           |              |    |    |              |  |     |              |  |  |     |     | 
|------------------------------------- | ------------------------- | ------------ | -- | -- | ------------ |  | --- | ------------ |  |  | --- | --- | 
|                                      |                           | Unaudited    |    |    | Unaudited    |  |     |             
|                                      |                           | three months |    |    | 12 months    |  |     | 15 months    | 
|                                      |                           | ended        |    |    | ended        |  |     | ended        | 
|                                      |                           | December 31, |    |    | December 31, |  |     | December 31, | 
|                                      |                           | 2002         |    |    | 2003         |  |     | 2003         | 
|                                      |                           |              |    |    |              |  |     |              | 
|                                      |                           | (£ million)  |   
|Interest payable and similar charges: |                           |              |    |    |              |  |     |              |  |  |     |    
|                                      | Bank loans and overdrafts |              |    | 9  |              |  |     | 29           |  |  |     | 38  | 
|                                      | Other                     |              |    | 30 |              |  |     | 83           |  |  |     | 113 | 
|                                      |                           |              |    |    |              |  |     |              | 
|                                      |                           |              | 39 |    |              |  | 112 |              |  |  | 151 |    
|                                      |                           |              |    |    |              |  |     |              | 
|Interest receivable                   |                           |              | 27 |    |              |  | 77  |              |  |  | 104 |    
|                                      |                           |              |    |    |              |  |     |              | 

F-67



---



##### Table of Contents



(j) Tax on profit on
ordinary activities


|                                     |                                                          |                        |    |    |              |  |     |              |     |   |     |     |     |  
|------------------------------------ | -------------------------------------------------------- | ---------------------- | -- | -- | ------------ |  | --- | ------------ | --- | - | --- | --- | --- | -
|                                     |                                                          | Unaudited              |    |    | Unaudited    |  |     |             
|                                     |                                                          | three months           |    |    | 12 months    |  |     | 15 months    |    
|                                     |                                                          | ended                  |    |    | ended        |  |     | ended        |    
|                                     |                                                          | December 31,           |    |    | December 31, |  |     | December 31, |    
|Tax charge                           |                                                          | 2002(i)                |    |    | 2003(i)      |  |     | 2003(i)      |    
|                                     |                                                          |                        |    |    |              |  |     |              |    
|                                     |                                                          | (£ million)            |   
|UK corporation tax at 30%:           |                                                          |                        |    |    |              |  |     |              |     |   |     |    
|                                     | Current year                                             |                        |    | 18 |              |  |     | (14          | )   |   |     | 4   |    
|                                     | Prior years                                              |                        |    | (4 | )            |  |     | (76          | )   |   |     | (80 | )  
|                                     |                                                          |                        |    |    |              |  |     |              |    
|                                     |                                                          |                        | 14 |    |              |  | (90 | )            |     |   | (76 | )  
|                                     |                                                          |                        |    |    |              |  |     |              |    
|Foreign tax:                         |                                                          |                        |    |    |              |  |     |              |     |   |     |    
|                                     | Current year                                             |                        |    | 9  |              |  |     | 60           |     |   |     | 69  |    
|                                     | Prior years                                              |                        |    | (5 | )            |  |     | (15          | )   |   |     | (20 | )  
|                                     |                                                          |                        |    |    |              |  |     |              |    
|                                     |                                                          |                        | 4  |    |              |  | 45  |              |     |   | 49  |    
|                                     |                                                          |                        |    |    |              |  |     |              |    
|Total current tax                    |                                                          |                        | 18 |    |              |  | (45 | )            |     |   | (27 | )  
|                                     |                                                          |                        |    |    |              |  |     |              |    
|Deferred tax:                        |                                                          |                        |    |    |              |  |     |              |     |   |     |    
|                                     | Origination and reversal of timing differences           |                        |    | 11 |              |  |     | 19           |     |   |     | 30  |    
|                                     | Adjustments to estimated recoverable deferred tax assets |                        |    |   |              |  |     | (11          | )   |   |     | (11 | )  
|                                     | Prior years                                              |                        |    |   |              |  |     | (9           | )   |   |     | (9  | )  
|                                     |                                                          |                        |    |    |              |  |     |              |    
|Total deferred tax                   |                                                          |                        | 11 |    |              |  | (1  | )            |     |   | 10  |    
|                                     |                                                          |                        |    |    |              |  |     |              |    
|Tax on profit on ordinary activities |                                                          |                        | 29 |    |              |  | (46 | )            |     |   | (17 | )  
|                                     |                                                          |                        |    |    |              |  |     |              |    
|Further analyzed as tax relating to: |                                                          |                        |    |    |              |  |     |              |     |   |     |    
|                                     | Profit before exceptional items                          |                        |    | 29 |              |  |     | 86           |     |   |     | 115 |    
|                                     | Exceptional items (see note (h)):                        |                        |    |    |              |  |     |              |     |   |     |     |    
|                                     |                                                          | Non-operating          |    |    |             |  |     |              | (64 | ) |     |     | (64 | )
|                                     |                                                          | Exceptional tax credit |    |    |             |  |     |              | (68 | ) |     |     | (68 | )
|                                     |                                                          |                        |    |    |              |  |     |              |    
|                                     |                                                          |                        | 29 |    |              |  | (46 | )            |     |   | (17 | )  
|                                     |                                                          |                        |    |    |              |  |     |              |    

Footnotes on page F-69.


F-68



---



##### Table of Contents



Tax reconciliations


|                                                            |  |              |      |   |              |  |       |              |  |  |        |  
|----------------------------------------------------------- |  | ------------ | ---- | - | ------------ |  | ----- | ------------ |  |  | ------ | -
|                                                            |  | Unaudited    |      |   | Unaudited    |  |       |             
|                                                            |  | three months |      |   | 12 months    |  |       | 15 months    | 
|                                                            |  | ended        |      |   | ended        |  |       | ended        | 
|                                                            |  | December 31, |      |   | December 31, |  |       | December 31, | 
|                                                            |  | 2002(i)      |      |   | 2003(i)      |  |       | 2003(i)      | 
|                                                            |  |              |      |   |              |  |       |              | 
|                                                            |  | (%)          |     
|Reconciliation of current tax rate                          |  |              |      |   |              |  |       |              |  |  |        |  
|UK corporation tax standard rate                            |  |              | 30.0 |   |              |  | 30.0  |              |  |  | 30.0   |  
|Permanent differences                                       |  |              | 1.8  |   |              |  | (9.5  | )            |  |  | 20.7   |  
|Capital allowances in excess of depreciation                |  |              | (3.5 | ) |              |  | 1.9   |              |  |  | (12.6  | )
|Other timing differences                                    |  |              | (4.2 | ) |              |  | 55.3  |              |  |  | (104.2 | )
|Net effect of different rates of tax in overseas businesses |  |              | 2.6  |   |              |  | (23.4 | )            |  |  | 46.1   |  
|Adjustment to tax charge in respect of prior years          |  |              | (9.8 | ) |              |  | 37.3  |              |  |  | (88.9  | )
|Other                                                       |  |              | 0.8  |   |              |  |      |              |  |  | 2.0    |  
|Exceptional items                                           |  |              | 1.0  |   |              |  | (17.3 | )            |  |  | 32.2   |  
|                                                            |  |              |      |   |              |  |       |              | 
|Effective current tax rate                                  |  |              | 18.7 |   |              |  | 74.3  |              |  |  | (74.7  | )
|                                                            |  |              |      |   |              |  |       |              | 
|Reconciliation of overall tax rate                          |  |              |      |   |              |  |       |              |  |  |        |  
|UK corporation tax standard rate                            |  |              | 30.0 |   |              |  | 30.0  |              |  |  | 30.0   |  
|Permanent differences                                       |  |              | 1.8  |   |              |  | (9.5  | )            |  |  | 20.7   |  
|Net effect of different rates of tax in overseas businesses |  |              | 2.6  |   |              |  | (23.4 | )            |  |  | 46.1   |  
|Adjustment to tax charge in respect of prior years          |  |              | (6.1 | ) |              |  | 58.7  |              |  |  | (115.0 | )
|Other                                                       |  |              | 0.8  |   |              |  | (1.3  | )            |  |  | 4.6    |  
|Exceptional items                                           |  |              | 1.0  |   |              |  | 21.6  |              |  |  | (33.4  | )
|                                                            |  |              |      |   |              |  |       |              | 
|Effective tax rate                                          |  |              | 30.1 |   |              |  | 76.1  |              |  |  | (47.0  | )
|                                                            |  |              |      |   |              |  |       |              | 






|    |  |                                                                                                                                                                    
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) |  | Restated to show exceptional tax credits on a basis consistent
    with 2004. This comprises prior year items which are exceptional
    by their size or incidence.

Analysis of tax charge/(credit)
on continuing operations in accordance with US GAAP


|               |  |              |    |  |              |  |     |              |  |  |     |  
|-------------- |  | ------------ | -- |  | ------------ |  | --- | ------------ |  |  | --- | -
|               |  | Unaudited    |    |  | Unaudited    |  |     |             
|               |  | three months |    |  | 12 months    |  |     | 15 months    | 
|               |  | ended        |    |  | ended        |  |     | ended        | 
|               |  | December 31, |    |  | December 31, |  |     | December 31, | 
|               |  | 2002         |    |  | 2003         |  |     | 2003         | 
|               |  |              |    |  |              |  |     |              | 
|               |  | (£ million)  |   
|Current taxes  |  |              | 6  |  |              |  | (54 | )            |  |  | (48 | )
|Deferred taxes |  |              | 8  |  |              |  | (6  | )            |  |  | 2   |  
|               |  |              |    |  |              |  |     |              | 
|               |  |              | 14 |  |              |  | (60 | )            |  |  | (46 | )
|               |  |              |    |  |              |  |     |              | 

F-69



---



##### Table of Contents



Reconciliation of UK statutory
tax rate to US GAAP tax charge on income from continuing
operations


|                                                            |  |              |       |   |              |  |       |              |  |  |        |  
|----------------------------------------------------------- |  | ------------ | ----- | - | ------------ |  | ----- | ------------ |  |  | ------ | -
|                                                            |  | Unaudited    |       |   | Unaudited    |  |       |             
|                                                            |  | three months |       |   | 12 months    |  |       | 15 months    | 
|                                                            |  | ended        |       |   | ended        |  |       | ended        | 
|                                                            |  | December 31, |       |   | December 31, |  |       | December 31, | 
|                                                            |  | 2002         |       |   | 2003         |  |       | 2003         | 
|                                                            |  |              |       |   |              |  |       |              | 
|                                                            |  | (%)          |      
|UK corporate tax standard rate                              |  |              | 30.0  |   |              |  | 30.0  |              |  |  | 30.0   |  
|Permanent differences                                       |  |              | 3.0   |   |              |  | 8.0   |              |  |  | (17.8  | )
|Net effect of different rates of tax in overseas businesses |  |              | 5.2   |   |              |  | (37.1 | )            |  |  | 178.5  |  
|Adjustment to tax charge in respect of prior periods        |  |              | (12.5 | ) |              |  | 124.6 |              |  |  | (574.2 | )
|Other                                                       |  |              | 2.0   |   |              |  | (1.5  | )            |  |  | 0.6    |  
|Exceptional items                                           |  |              | 2.1   |   |              |  | 33.9  |              |  |  | (128.2 | )
|                                                            |  |              |       |   |              |  |       |              | 
|Effective current tax rate on continuing operations         |  |              | 29.8  |   |              |  | 157.9 |              |  |  | (511.1 | )
|                                                            |  |              |       |   |              |  |       |              | 



| |                                        
| | ---------------------------------------
| | (k) Cash flow from operating activities

|                                                                                            |  |              |      |   |              |  |      |              |  |  |      |  
|------------------------------------------------------------------------------------------- |  | ------------ | ---- | - | ------------ |  | ---- | ------------ |  |  | ---- | -
|                                                                                            |  | Unaudited    |      |   | Unaudited    |  |      |             
|                                                                                            |  | three months |      |   | 12 months    |  |      | 15 months    | 
|                                                                                            |  | ended        |      |   | ended        |  |      | ended        | 
|                                                                                            |  | December 31, |      |   | December 31, |  |      | December 31, | 
|                                                                                            |  | 2002         |      |   | 2003         |  |      | 2003         | 
|                                                                                            |  |              |      |   |              |  |      |              | 
|                                                                                            |  | (£ million)  |     
|Operating profit before exceptional items                                                   |  |              | 112  |   |              |  | 371  |              |  |  | 483  |  
|Depreciation and amortization                                                               |  |              | 74   |   |              |  | 229  |              |  |  | 303  |  
|                                                                                            |  |              |      |   |              |  |      |              | 
|Earnings before interest, taxation, depreciation and
    amortization and exceptional items |  |              | 186  |   |              |  | 600  |              |  |  | 786  |  
|Other non-cash items                                                                        |  |              | 1    |   |              |  | (3   | )            |  |  | (2   | )
|(Increase)/decrease in stocks                                                               |  |              | (13  | ) |              |  | 12   |              |  |  | (1   | )
|(Increase)/decrease in debtors                                                              |  |              | (18  | ) |              |  | 8    |              |  |  | (10  | )
|Increase in creditors                                                                       |  |              | 10   |   |              |  | 59   |              |  |  | 69   |  
|Provisions expended                                                                         |  |              | (2   | ) |              |  | (8   | )            |  |  | (10  | )
|                                                                                            |  |              |      |   |              |  |      |              | 
|Operating activities before expenditure relating to exceptional
    items                   |  |              | 164  |   |              |  | 668  |              |  |  | 832  |  
|Cost of fundamental reorganization                                                          |  |              |     |   |              |  | (37  | )            |  |  | (37  | )
|                                                                                            |  |              |      |   |              |  |      |              | 
|Operating activities                                                                        |  |              | 164  |   |              |  | 631  |              |  |  | 795  |  
|Net capital expenditure                                                                     |  |              | (120 | ) |              |  | (128 | )            |  |  | (248 | )
|                                                                                            |  |              |      |   |              |  |      |              | 
|Operating cash flow                                                                         |  |              | 44   |   |              |  | 503  |              |  |  | 547  |  
|                                                                                            |  |              |      |   |              |  |      |              | 

F-70



---



##### Table of Contents





| |             
| | ------------
| | (l) Net debt

|                                             |  |             |     |         |             |  |     |            |  |  |        |   |  |  |        |  
|-------------------------------------------- |  | ----------- | --- | ------- | ----------- |  | --- | ---------- |  |  | ------ | - |  |  | ------ | -
|                                             |  | Unaudited   |    
|                                             |  |             |    
|                                             |  |             |     | Current |             |  |    
|                                             |  | Cash and    |     |         | asset       |  |     |           
|                                             |  | overdrafts  |     |         | investments |  |     | Borrowings |  |  | Total  |  
|                                             |  |             |     |         |             |  |     |            |  |  |        |  
|                                             |  | (£ million) |    
|At October 1, 2002                           |  |             | 18  |         |             |  | 218 |            |  |  | (1,413 | ) |  |  | (1,177 | )
|Net cash flow                                |  |             | 5   |         |             |  |    |            |  |  |       |   |  |  | 5      |  
|Management of liquid resources and financing |  |             | 58  |         |             |  | (43 | )          |  |  | (15    | ) |  |  |       |  
|Exchange and other adjustments               |  |             |    |         |             |  | 20  |            |  |  | 10     |   |  |  | 30     |  
|                                             |  |             |     |         |             |  |     |            |  |  |        |  
|At December 31, 2002                         |  |             | 81  |         |             |  | 195 |            |  |  | (1,418 | ) |  |  | (1,142 | )
|Net cash flow                                |  |             | (27 | )       |             |  |    |            |  |  |       |   |  |  | (27    | )
|Management of liquid resources and financing |  |             | 19  |         |             |  | 172 |            |  |  | 404    |   |  |  | 595    |  
|Separation of MAB                            |  |             | (7  | )       |             |  | (7  | )          |  |  | 4      |   |  |  | (10    | )
|Exchange and other adjustments               |  |             | (16 | )       |             |  | 17  |            |  |  | 14     |   |  |  | 15     |  
|                                             |  |             |     |         |             |  |     |            |  |  |        |  
|At December 31, 2003                         |  |             | 50  |         |             |  | 377 |            |  |  | (996   | ) |  |  | (569   | )
|                                             |  |             |     |         |             |  |     |            |  |  |        |  

(m) Management of
liquid resources and financing


|                                                            |  |              |        |   |              |  |         |              |  |  |         |  
|----------------------------------------------------------- |  | ------------ | ------ | - | ------------ |  | ------- | ------------ |  |  | ------- | -
|                                                            |  | Unaudited    |        |   | Unaudited    |  |         |             
|                                                            |  | three months |        |   | 12 months    |  |         | 15 months    | 
|                                                            |  | ended        |        |   | ended        |  |         | ended        | 
|                                                            |  | December 31, |        |   | December 31, |  |         | December 31, | 
|                                                            |  | 2002         |        |   | 2003         |  |         | 2003         | 
|                                                            |  |              |        |   |              |  |         |              | 
|                                                            |  | (£ million)  |       
|New borrowings                                              |  |              | 1,598  |   |              |  | 17,074  |              |  |  | 18,672  |  
|Other borrowings repaid                                     |  |              | (1,583 | ) |              |  | (17,478 | )            |  |  | (19,061 | )
|                                                            |  |              |        |   |              |  |         |              | 
|                                                            |  |              | 15     |   |              |  | (404    | )            |  |  | (389    | )
|Debt assumed by MAB                                         |  |              |       |   |              |  | 577     |              |  |  | 577     |  
|Ordinary shares issued by InterContinental Hotels Group PLC |  |              |       |   |              |  | 18      |              |  |  | 18      |  
|                                                            |  |              |        |   |              |  |         |              | 
|Financing                                                   |  |              | 15     |   |              |  | 191     |              |  |  | 206     |  
|Movement in liquid resources                                |  |              | 43     |   |              |  | (172    | )            |  |  | (129    | )
|                                                            |  |              |        |   |              |  |         |              | 
|                                                            |  |              | 58     |   |              |  | 19      |              |  |  | 77      |  
|                                                            |  |              |        |   |              |  |         |              | 

F-71



---



##### Table of Contents





| |                            
| | ---------------------------
| | (n) Net capital expenditure

|                                  |              |              |     |    |              |  |      |              |  |  |      |     | 
|--------------------------------- | ------------ | ------------ | --- | -- | ------------ |  | ---- | ------------ |  |  | ---- | --- | 
|                                  |              | Unaudited    |     |    | Unaudited    |  |      |             
|                                  |              | three months |     |    | 12 months    |  |      | 15 months    | 
|                                  |              | ended        |     |    | ended        |  |      | ended        | 
|                                  |              | December 31, |     |    | December 31, |  |      | December 31, | 
|                                  |              | 2002         |     |    | 2003         |  |      | 2003         | 
|                                  |              |              |     |    |              |  |      |              | 
|                                  |              | (£ million)  |    
|Hotels                            |              |              |     |    |              |  |      |              |  |  |      |    
|                                  | Americas     |              |     | 14 |              |  |      | 59           |  |  |      | 73  | 
|                                  | EMEA         |              |     | 54 |              |  |      | 183          |  |  |      | 237 | 
|                                  | Asia Pacific |              |     | 4  |              |  |      | 39           |  |  |      | 43  | 
|                                  | Central      |              |     | 7  |              |  |      | 17           |  |  |      | 24  | 
|                                  |              |              |     |    |              |  |      |              | 
|                                  |              |              | 79  |    |              |  | 298  |              |  |  | 377  |    
|Hotels disposal proceeds          |              |              | (2  | )  |              |  | (253 | )            |  |  | (255 | )  
|                                  |              |              |     |    |              |  |      |              | 
|Hotels net capital expenditure    |              |              | 77  |    |              |  | 45   |              |  |  | 122  |    
|Soft Drinks                       |              |              | 10  |    |              |  | 55   |              |  |  | 65   |    
|                                  |              |              |     |    |              |  |      |              | 
|InterContinental Hotels Group PLC |              |              | 87  |    |              |  | 100  |              |  |  | 187  |    
|Discontinued operations           |              |              | 33  |    |              |  | 28   |              |  |  | 61   |    
|                                  |              |              |     |    |              |  |      |              | 
|                                  |              |              | 120 |    |              |  | 128  |              |  |  | 248  |    
|                                  |              |              |     |    |              |  |      |              | 



| |                        
| | -----------------------
| | (o) Operating cash flow

|                                  |  |              |     |   |              |  |     |              |  |  |     | 
|--------------------------------- |  | ------------ | --- | - | ------------ |  | --- | ------------ |  |  | --- | 
|                                  |  | Unaudited    |     |   | Unaudited    |  |     |             
|                                  |  | three months |     |   | 12 months    |  |     | 15 months    | 
|                                  |  | ended        |     |   | ended        |  |     | ended        | 
|                                  |  | December 31, |     |   | December 31, |  |     | December 31, | 
|                                  |  | 2002         |     |   | 2003         |  |     | 2003         | 
|                                  |  |              |     |   |              |  |     |              | 
|                                  |  | (£ million)  |    
|Hotels                            |  |              | 28  |   |              |  | 308 |              |  |  | 336 | 
|Soft Drinks                       |  |              | (12 | ) |              |  | 71  |              |  |  | 59  | 
|                                  |  |              |     |   |              |  |     |              | 
|InterContinental Hotels Group PLC |  |              | 16  |   |              |  | 379 |              |  |  | 395 | 
|Discontinued operations           |  |              | 28  |   |              |  | 124 |              |  |  | 152 | 
|                                  |  |              |     |   |              |  |     |              | 
|                                  |  |              | 44  |   |              |  | 503 |              |  |  | 547 | 
|                                  |  |              |     |   |              |  |     |              | 



| |                       
| | ----------------------
| | (p) Earnings per share





F-72



---



##### Table of Contents





| |             
| | ------------
| | (q) Pensions

|                                        |  |                     |     |   |              |  |     |              |  |  |     |  
|--------------------------------------- |  | ------------------- | --- | - | ------------ |  | --- | ------------ |  |  | --- | -
|                                        |  | UK pension benefits |    
|                                        |  |                     |    
|                                        |  | Unaudited           |     |   | Unaudited    |  |     |             
|                                        |  | three months        |     |   | 12 months    |  |     | 15 months    | 
|                                        |  | ended               |     |   | ended        |  |     | ended        | 
|                                        |  | December 31,        |     |   | December 31, |  |     | December 31, | 
|                                        |  | 2002                |     |   | 2003         |  |     | 2003         | 
|                                        |  |                     |     |   |              |  |     |              | 
|                                        |  | (£ million)         |    
|Service cost                            |  |                     | 8   |   |              |  | 24  |              |  |  | 32  |  
|Interest cost                           |  |                     | 18  |   |              |  | 35  |              |  |  | 53  |  
|Expected return on plan assets          |  |                     | (17 | ) |              |  | (32 | )            |  |  | (49 | )
|Net amortization and deferral           |  |                     | 5   |   |              |  | 9   |              |  |  | 14  |  
|Cost of contractual benefits recognized |  |                     |    |   |              |  | 2   |              |  |  | 2   |  
|                                        |  |                     |     |   |              |  |     |              | 
|Net periodic pension cost               |  |                     | 14  |   |              |  | 38  |              |  |  | 52  |  
|                                        |  |                     |     |   |              |  |     |              | 

|                               |  |                     |    |   |              |  |    |              |  |  |    |  
|------------------------------ |  | ------------------- | -- | - | ------------ |  | -- | ------------ |  |  | -- | -
|                               |  | US pension benefits |   
|                               |  |                     |   
|                               |  | Unaudited           |    |   | Unaudited    |  |    |             
|                               |  | three months        |    |   | 12 months    |  |    | 15 months    | 
|                               |  | ended               |    |   | ended        |  |    | ended        | 
|                               |  | December 31,        |    |   | December 31, |  |    | December 31, | 
|                               |  | 2002                |    |   | 2003         |  |    | 2003         | 
|                               |  |                     |    |   |              |  |    |              | 
|                               |  | (£ million)         |   
|Interest cost                  |  |                     | 2  |   |              |  | 5  |              |  |  | 7  |  
|Expected return on plan assets |  |                     | (1 | ) |              |  | (4 | )            |  |  | (5 | )
|Recognized net actuarial gain  |  |                     |   |   |              |  | 2  |              |  |  | 2  |  
|                               |  |                     |    |   |              |  |    |              | 
|Net periodic pension cost      |  |                     | 1  |   |              |  | 3  |              |  |  | 4  |  
|                               |  |                     |    |   |              |  |    |              | 

|                          |  |                     |   |  |              |  |   |              |  |  |   | 
|------------------------- |  | ------------------- | - |  | ------------ |  | - | ------------ |  |  | - | 
|                          |  | US pension benefits |  
|                          |  |                     |  
|                          |  | Unaudited           |   |  | Unaudited    |  |   |             
|                          |  | three months        |   |  | 12 months    |  |   | 15 months    | 
|                          |  | ended               |   |  | ended        |  |   | ended        | 
|                          |  | December 31,        |   |  | December 31, |  |   | December 31, | 
|                          |  | 2002                |   |  | 2003         |  |   | 2003         | 
|                          |  |                     |   |  |              |  |   |              | 
|                          |  | (£ million)         |  
|Interest cost             |  |                     |  |  |              |  | 1 |              |  |  | 1 | 
|                          |  |                     |   |  |              |  |   |              | 
|Net periodic pension cost |  |                     |  |  |              |  | 1 |              |  |  | 1 | 
|                          |  |                     |   |  |              |  |   |              | 



|          |                                                                                                  
|--------- | -------------------------------------------------------------------------------------------------
|Note 35  | Differences between United Kingdom and United States
    Generally Accepted Accounting Principles







F-73



---



##### Table of Contents





| |                  
| | -----------------
| | Intangible assets











| |                       
| | ----------------------
| | Impairment of goodwill





| |                      
| | ---------------------
| | Tangible fixed assets









F-74



---



##### Table of Contents





| |                     
| | --------------------
| | Assets held for sale





| |                        
| | -----------------------
| | Fixed asset investments





| |              
| | -------------
| | Pension costs







| |            
| | -----------
| | Staff costs





F-75



---



##### Table of Contents





| |                                   
| | ----------------------------------
| | Derivative instruments and hedging





| |           
| | ----------
| | Provisions





| |                  
| | -----------------
| | Deferred taxation





| |           
| | ----------
| | Guarantees





| |                        
| | -----------------------
| | Discontinued operations





| |                             
| | ----------------------------
| | Classification of borrowings



F-76



---



##### Table of Contents





| |                   
| | ------------------
| | Proposed dividends



Reimbursements






| |                  
| | -----------------
| | Exceptional items





F-77



---



##### Table of Contents





| |                                             
| | --------------------------------------------
| | Net income/(loss) in accordance with US GAAP



|                                                                   |                                                              |                                     |     |              |              |   |           |              |    |           |              |     |    |               |      |      |    |  |     |      |    |  
|------------------------------------------------------------------ | ------------------------------------------------------------ | ----------------------------------- | --- | ------------ | ------------ | - | --------- | ------------ | -- | --------- | ------------ | --- | -- | ------------- | ---- | ---- | -- |  | --- | ---- | -- | -
|                                                                   |                                                              |                                     |     | Unaudited    |              |   | Unaudited |              |    |           |              |    
|                                                                   |                                                              |                                     |     | three months |              |   | 12 months |              |    | 15 months |              |     |   
|                                                                   |                                                              | Year ended                          |     |              | ended        |   |           | ended        |    |           | ended        |     |    | Year ended    |     
|                                                                   |                                                              | December 31,                        |     |              | December 31, |   |           | December 31, |    |           | December 31, |     |    | September 30, |     
|                                                                   |                                                              | 2004                                |     |              | 2002         |   |           | 2003         |    |           | 2003         |     |    | 2002          |     
|                                                                   |                                                              |                                     |     |              |              |   |           |              |    |           |              |     |    |               |     
|                                                                   |                                                              | (£ million, except per ADS amounts) |    
|Earnings available for shareholders in accordance with UK
    GAAP |                                                              |                                     | 299 |              |              |   | 64        |              |    |           | (45          | )   |    |               | 19   |      |    |  | 457 |     
|Adjustments:                                                       |                                                              |                                     |     |              |              |   |           |              |    |           |              |     |    |               |      |      |    |  |     |     
|                                                                   | Amortization of intangible fixed assets                      |                                     |     | 7            |              |   |           | (4           | )  |           |              | (5  | )  |               |      | (9   | )  |  |     | (105 | ) 
|                                                                   | Impairment of intangible fixed assets on adoption of FAS 142 |                                     |     |             |              |   |           | (712         | )  |           |              |    |    |               |      | (712 | )  |  |     |     |   
|                                                                   | Impairment of tangible fixed assets                          |                                     |     | 10           |              |   |           |             |    |           |              | 45  |    |               |      | 45   |    |  |     | 77   |   
|                                                                   | Disposal of tangible fixed assets                            |                                     |     | 5            |              |   |           | 3            |    |           |              | 5   |    |               |      | 8    |    |  |     | 6    |   
|                                                                   | Depreciation of tangible fixed assets                        |                                     |     | (4           | )            |   |           |             |    |           |              | (4  | )  |               |      | (4   | )  |  |     |     |   
|                                                                   | Deferred revenue                                             |                                     |     | 5            |              |   |           |             |    |           |              | 3   |    |               |      | 3    |    |  |     |     |   
|                                                                   | Gain on held for sale equity investment                      |                                     |     | (28          | )            |   |           |             |    |           |              |    |    |               |      |     |    |  |     |     |   
|                                                                   | Pension costs                                                |                                     |     | (15          | )            |   |           | (9           | )  |           |              | (14 | )  |               |      | (23  | )  |  |     | (21  | ) 
|                                                                   | Staff costs                                                  |                                     |     | (2           | )            |   |           |             |    |           |              | (6  | )  |               |      | (6   | )  |  |     |     |   
|                                                                   | Change in fair value of derivatives(i)                       |                                     |     | 52           |              |   |           | 7            |    |           |              | 26  |    |               |      | 33   |    |  |     | 79   |   
|                                                                   | Provisions                                                   |                                     |     | 69           |              |   |           | (1           | )  |           |              | 3   |    |               |      | 2    |    |  |     |     |   
|                                                                   | Deferred taxation:                                           |                                     |     |              |              |   |           |              |    |           |              |     |    |               |      |      |    |  |     |      |   
|                                                                   |                                                              | on above adjustments                |     |              | (3           | ) |           |              | 2  |           |              |     | 4  |               |      |      | 6  |  |     |      | (4 | )
|                                                                   |                                                              | methodology                         |     |              | (59          | ) |           |              | (2 | )         |              |     | 14 |               |      |      | 12 |  |     |      | 7  |  
|                                                                   |                                                              |                                     |     |              |              |   |           |              |    |           |              |     |    |               |     
|                                                                   |                                                              |                                     | 37  |              |              |   | (716      | )            |    |           | 71           |     |    |               | (645 | )    |    |  | 39  |     
|                                                                   | Minority share of above adjustments                          |                                     |     | 4            |              |   |           |             |    |           |              | 3   |    |               |      | 3    |    |  |     | 3    |   
|                                                                   |                                                              |                                     |     |              |              |   |           |              |    |           |              |     |    |               |     
|                                                                   |                                                              |                                     | 41  |              |              |   | (716      | )            |    |           | 74           |     |    |               | (642 | )    |    |  | 42  |     
|                                                                   |                                                              |                                     |     |              |              |   |           |              |    |           |              |     |    |               |     
|Net income/(loss) in accordance with US GAAP                       |                                                              |                                     | 340 |              |              |   | (652      | )            |    |           | 29           |     |    |               | (623 | )    |    |  | 499 |     
|                                                                   |                                                              |                                     |     |              |              |   |           |              |    |           |              |     |    |               |     

See page F-79 for footnotes.


F-78



---



##### Table of Contents





|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |        |    |  |  |        |  
|--------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ------ | ------------ | ------------ |  | --------- | ------------ |  | --------- | ------------ | -- |  | ------------- | ------ | -- |  |  | ------ | -
|                                                                                                                |  |                                     |        | Unaudited    |              |  | Unaudited |              |  |           |              |   
|                                                                                                                |  |                                     |        | three months |              |  | 12 months |              |  | 15 months |              |    | 
|                                                                                                                |  | Year ended                          |        |              | ended        |  |           | ended        |  |           | ended        |    |  | Year ended    |       
|                                                                                                                |  | December 31,                        |        |              | December 31, |  |           | December 31, |  |           | December 31, |    |  | September 30, |       
|                                                                                                                |  | 2004                                |        |              | 2002         |  |           | 2003         |  |           | 2003         |    |  | 2002          |       
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|                                                                                                                |  | (£ million, except per ADS amounts) |       
|Net sales                                                                                                       |  |                                     | 2,377  |              |              |  | 532       |              |  |           | 2,224        |    |  |               | 2,756  |    |  |  | 2,189  |  
|Operating and administrative expense                                                                            |  |                                     | (2,055 | )            |              |  | (483      | )            |  |           | (2,104       | )  |  |               | (2,587 | )  |  |  | (1,900 | )
|Interest expense, net                                                                                           |  |                                     | (33    | )            |              |  | (2        | )            |  |           | (158         | )  |  |               | (160   | )  |  |  | (17    | )
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Income/(loss) before income tax expense and minority interest                                                   |  |                                     | 289    |              |              |  | 47        |              |  |           | (38          | )  |  |               | 9      |    |  |  | 272    |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Income tax credit/(expense)                                                                                     |  |                                     | 53     |              |              |  | (14       | )            |  |           | 60           |    |  |               | 46     |    |  |  | (87    | )
|Minority interest                                                                                               |  |                                     | (24    | )            |              |  | (4        | )            |  |           | (27          | )  |  |               | (31    | )  |  |  | (22    | )
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Income from continuing operations before cumulative effect on
    prior years of change in accounting principle |  |                                     | 318    |              |              |  | 29        |              |  |           | (5           | )  |  |               | 24     |    |  |  | 163    |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Discontinued operations:                                                                                        |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |        |    |  |  |        |  
|Result for period, net of tax(iv)(vi)                                                                           |  |                                     | 1      |              |              |  | 31        |              |  |           | 34           |    |  |               | 65     |    |  |  | 165    |  
|Surplus on disposal, net of tax(v)(vii)                                                                         |  |                                     | 21     |              |              |  |          |              |  |           |             |    |  |               |       |    |  |  | 171    |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|                                                                                                                |  |                                     | 22     |              |              |  | 31        |              |  |           | 34           |    |  |               | 65     |    |  |  | 336    |  
|Cumulative effect on prior years of adoption of FAS 142                                                         |  |                                     |       |              |              |  | (712      | )            |  |           |             |    |  |               | (712   | )  |  |  |       |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Net income/(loss)                                                                                               |  |                                     | 340    |              |              |  | (652      | )            |  |           | 29           |    |  |               | (623   | )  |  |  | 499    |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Per ordinary share and American Depositary
    Share(ii) basic                                                  |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |        |    |  |  |        |  
|Income/(loss) before cumulative effect on prior years of change
    in accounting principle:                    |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |        |    |  |  |        |  
|Total continuing operations                                                                                     |  |                                     | 44.8p  |              |              |  | 4.0p      |              |  |           | (0.6         | )p |  |               | 3.3p   |    |  |  | 22.3p  |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Total discontinued operations                                                                                   |  |                                     | 3.1p   |              |              |  | 4.2p      |              |  |           | 4.6p         |    |  |               | 8.9p   |    |  |  | 46.0p  |  
|Cumulative effect on prior years of adoption of FAS 142                                                         |  |                                     |       |              |              |  | (97.1     | )p           |  |           |             |    |  |               | (97.1  | )p |  |  |       |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Net income/(loss)                                                                                               |  |                                     | 47.9p  |              |              |  | (88.9     | )p           |  |           | 4.0p         |    |  |               | (84.9  | )p |  |  | 68.3p  |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Diluted(iii)                                                                                                    |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |        |    |  |  |        |  
|Income/(loss) Before cumulative effect on prior years of change
    in accounting principle:                    |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |        |    |  |  |        |  
|Total continuing operations                                                                                     |  |                                     | 42.6p  |              |              |  | 4.0p      |              |  |           | (0.6         | )p |  |               | 3.3p   |    |  |  | 22.2p  |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Total discontinued operations                                                                                   |  |                                     | 3.1p   |              |              |  | 4.2p      |              |  |           | 4.6p         |    |  |               | 8.9p   |    |  |  | 45.8p  |  
|Cumulative effect on prior years of adoption of FAS 142                                                         |  |                                     |       |              |              |  | (97.1     | )p           |  |           |             |    |  |               | (97.1  | )p |  |  |       |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       
|Net income/(loss)                                                                                               |  |                                     | 45.7p  |              |              |  | (88.9     | )p           |  |           | 4.0p         |    |  |               | (84.9  | )p |  |  | 68.0p  |  
|                                                                                                                |  |                                     |        |              |              |  |           |              |  |           |              |    |  |               |       






|      |                                                                                                                                                                                                                                                                                                                                                                                  
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)   | Comprises net gains in the fair value of derivatives that do not
    qualify for hedge accounting of £50 million (2003
    £28 million, 2002 £75 million) and net gains
    reclassified from other comprehensive income of
    £2 million (2003 £5 million, 2002
    £4 million).                                                                                               
|     
|(ii)  | Calculated by dividing net income/(loss) in accordance with US
    GAAP of £340 million income (2003
    £623 million loss, 2002 £499 million
    income), by 710 million (2002 733 million, 2002
    731 million) shares, being the weighted average number of
    ordinary shares in issue during the period. Each American
    Depositary Share represents one ordinary share.
|     
|(iii) | Calculated by adjusting basic net income/(loss) in accordance
    with US GAAP of £329 million income to reflect both
    the future compensation on share-based payments and the notional
    exercise of the                                                                                                                                                                   

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|      |                                                                                                                                                                                                                                                                                                                                           
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | weighted average number of dilutive ordinary share options
    outstanding during the period. The resulting weighted average
    number of ordinary shares is 720 million (2003
    733 million, 2002 734 million).                                                                                                                       
|     
|(iv)  | Discontinued operations relate to 11 hotels in 2004, 2003 and
    2002, Mitchells & Butlers plc for 2003 and 2002 and
    Bass Brewers in fiscal 2002.                                                                                                                                                                                    
|     
|(v)   | Relates to profit on disposal of Bass Brewers relating to the
    finalization of completion accounts and the release of prior
    over provisions for tax.                                                                                                                                                                               
|     
|(vi)  | Tax for the year ended December 31, 2004 of
    £1 million (15 months ended December 31,
    2003 of £11 million charge, 12 months ended
    December 31, 2003 (unaudited) of £4 million
    credit, three months ended December 31, 2002
    (unaudited) of £15 million charge, year ended
    September 30, 2002 of £76 million charge).
|     
|(vii) | Tax for the year ended December 31, 2004 of
    £3 million credit (15 months ended
    December 31, 2003 of £nil million, 12 months
    ended December 31, 2003 (unaudited) of
    £nil million, three months ended December 31,
    2002 (unaudited) of £nil million, year ended
    September 30, 2002 of £114 million credit).         



| |                            
| | ---------------------------
| | Comprehensive income/(loss)



|                                                                                                           |  |              |     |              |              |  |           |              |  |           |              |   |  |               |      |   |  |  |      |  
|---------------------------------------------------------------------------------------------------------- |  | ------------ | --- | ------------ | ------------ |  | --------- | ------------ |  | --------- | ------------ | - |  | ------------- | ---- | - |  |  | ---- | -
|                                                                                                           |  |              |     | Unaudited    |              |  | Unaudited |              |  |           |              |  
|                                                                                                           |  |              |     | three months |              |  | 12 months |              |  | 15 months |              |   | 
|                                                                                                           |  | Year ended   |     |              | ended        |  |           | ended        |  |           | ended        |   |  | Year ended    |     
|                                                                                                           |  | December 31, |     |              | December 31, |  |           | December 31, |  |           | December 31, |   |  | September 30, |     
|                                                                                                           |  | 2004         |     |              | 2002         |  |           | 2003         |  |           | 2003         |   |  | 2002          |     
|                                                                                                           |  |              |     |              |              |  |           |              |  |           |              |   |  |               |     
|                                                                                                           |  | (£ million)  |    
|Net income/(loss) in accordance with US GAAP                                                               |  |              | 340 |              |              |  | (652      | )            |  |           | 29           |   |  |               | (623 | ) |  |  | 499  |  
|Other comprehensive income:                                                                                |  |              |     |              |              |  |           |              |  |           |              |   |  |               |      |   |  |  |      |  
|Transfer to MAB of minimum pension liability on April 1,
    2003, net of tax of £108 million              |  |              |    |              |              |  |          |              |  |           | 253          |   |  |               | 253  |   |  |  |     |  
|Minimum pension liability, net of tax of £1 million
    (2003 £22 million, 2002 £108 million)              |  |              | 8   |              |              |  | (37       | )            |  |           | (14          | ) |  |               | (51  | ) |  |  | (253 | )
|Change in valuation of marketable securities, net of tax of
    £3 million (2003 and 2002 £nil million)    |  |              | 29  |              |              |  | (9        | )            |  |           | 40           |   |  |               | 31   |   |  |  | (1   | )
|Change in fair value of derivatives, net of tax of
    £nil million (2003 £1 million, 2002
    £1 million) |  |              | (2  | )            |              |  | (1        | )            |  |           | (3           | ) |  |               | (4   | ) |  |  | (3   | )
|Currency translation differences                                                                           |  |              | 74  |              |              |  | (21       | )            |  |           | (99          | ) |  |               | (120 | ) |  |  | (107 | )
|                                                                                                           |  |              |     |              |              |  |           |              |  |           |              |   |  |               |     
|                                                                                                           |  |              | 109 |              |              |  | (68       | )            |  |           | 177          |   |  |               | 109  |   |  |  | (364 | )
|                                                                                                           |  |              |     |              |              |  |           |              |  |           |              |   |  |               |     
|Comprehensive income/(loss) in accordance with US GAAP                                                     |  |              | 449 |              |              |  | (720      | )            |  |           | 206          |   |  |               | (514 | ) |  |  | 135  |  
|                                                                                                           |  |              |     |              |              |  |           |              |  |           |              |   |  |               |     

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##### Table of Contents





|                                                                  |  |             |      |   |              |  |     |                |  |  |             |   |  |       |      |   |  |  |      |  
|----------------------------------------------------------------- |  | ----------- | ---- | - | ------------ |  | --- | -------------- |  |  | ----------- | - |  | ----- | ---- | - |  |  | ---- | -
|                                                                  |  | Minimum     |      |   | Change in    |  |     | Derivative     |  |  |             |   | 
|                                                                  |  | pension     |      |   | valuation of |  |     | financial      |  |  | Currency    |   |  |      
|                                                                  |  | liability   |      |   | marketable   |  |     | instruments    |  |  | translation |   |  |      
|                                                                  |  | adjustment  |      |   | securities   |  |     | gains/(losses) |  |  | differences |   |  | Total |     
|                                                                  |  |             |      |   |              |  |     |                |  |  |             |   |  |       |     
|                                                                  |  | (£ million) |     
|At October 1, 2001                                                |  |             |     |   |              |  | (28 | )              |  |  | 11          |   |  |       | 237  |   |  |  | 220  |  
|Movement in the year                                              |  |             | (253 | ) |              |  | (1  | )              |  |  | (3          | ) |  |       | (107 | ) |  |  | (364 | )
|                                                                  |  |             |      |   |              |  |     |                |  |  |             |   |  |       |     
|At September 30, 2002                                             |  |             | (253 | ) |              |  | (29 | )              |  |  | 8           |   |  |       | 130  |   |  |  | (144 | )
|Movement in the three months to
    December 31, 2002 (unaudited) |  |             | (37  | ) |              |  | (9  | )              |  |  | (1          | ) |  |       | (21  | ) |  |  | (68  | )
|Movement in the 12 months to
    December 31, 2003 (unaudited)    |  |             | 239  |   |              |  | 40  |                |  |  | (3          | ) |  |       | (99  | ) |  |  | 177  |  
|                                                                  |  |             |      |   |              |  |     |                |  |  |             |   |  |       |     
|At December 31, 2003                                              |  |             | (51  | ) |              |  | 2   |                |  |  | 4           |   |  |       | 10   |   |  |  | (35  | )
|Movement in the year                                              |  |             | 8    |   |              |  | 29  |                |  |  | (2          | ) |  |       | 74   |   |  |  | 109  |  
|                                                                  |  |             |      |   |              |  |     |                |  |  |             |   |  |       |     
|At December 31, 2004                                              |  |             | (43  | ) |              |  | 31  |                |  |  | 2           |   |  |       | 84   |   |  |  | 74   |  
|                                                                  |  |             |      |   |              |  |     |                |  |  |             |   |  |       |     

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##### Table of Contents





| |                                                    
| | ---------------------------------------------------
| | Shareholders equity in accordance with US
    GAAP



|                                                |                                                 |                                             |                      |     |              |      |       |     |      |      |  
|----------------------------------------------- | ----------------------------------------------- | ------------------------------------------- | -------------------- | --- | ------------ | ---- | ----- | --- | ---- | ---- | -
|                                                |                                                 | December 31,                                |                      |     | December 31, |     
|                                                |                                                 | 2004                                        |                      |     | 2003         |     
|                                                |                                                 |                                             |                      |     |              |     
|                                                |                                                 | (£ million)                                 |                     
|Shareholders funds in accordance with UK GAAP  |                                                 |                                             | 1,977                |     |              |      | 2,554 |    
|                                                |                                                 |                                             |                      |     |              |     
|Adjustments:                                    |                                                 |                                             |                      |     |              |      |       |    
|                                                | Intangible fixed assets:                        |                                             |                      |     |              |      |       |     |     
|                                                |                                                 | Cost: goodwill                              |                      |     | 781          |      |       |     | 837  |     
|                                                |                                                 | other                                       |                      |     | 689          |      |       |     | 843  |     
|                                                |                                                 | Accumulated amortization                    |                      |     | (245         | )    |       |     | (257 | )   
|                                                |                                                 |                                             |                      |     |              |     
|                                                |                                                 |                                             | 1,225                |     |              |      | 1,423 |    
|                                                | Intangible asset  minimum pension liability    |                                             |                      | 3   |              |      |       | 6   |     
|                                                |                                                 |                                             |                      |     |              |     
|                                                |                                                 |                                             | 1,228                |     |              |      | 1,429 |    
|                                                | Tangible fixed assets:                          |                                             |                      |     |              |      |       |     |     
|                                                |                                                 | Cost                                        |                      |     | (82          | )    |       |     | (68  | )   
|                                                |                                                 | Assets held for sale                        |                      |     | (300         | )    |       |     |     |     
|                                                |                                                 | Accumulated depreciation                    |                      |     | 60           |      |       |     | 33   |     
|                                                |                                                 |                                             |                      |     |              |     
|                                                |                                                 |                                             | (322                 | )   |              |      | (35   | )  
|                                                | Fixed asset investments:                        |                                             |                      |     |              |      |       |     |     
|                                                |                                                 | Investments and advances                    |                      |     | 3            |      |       |     | 2    |     
|                                                |                                                 | Assets held for sale                        |                      |     | 300          |      |       |     |     |     
|                                                | Current assets:                                 |                                             |                      |     |              |      |       |     |     
|                                                |                                                 | Pension prepayment                          |                      |     | (52          | )    |       |     | (47  | )   
|                                                |                                                 | Other debtors                               |                      |     | 22           |      |       |     | 22   |     
|                                                |                                                 | Derivatives                                 |                      |     | 9            |      |       |     | 4    |     
|                                                | Creditors: amounts falling due within one year: |                                             |                      |     |              |      |       |     |     
|                                                |                                                 | Other creditors                             |                      |     | 5            |      |       |     | (2   | )   
|                                                |                                                 | Proposed dividend of parent company         |                      |     | 62           |      |       |     | 70   |     
|                                                |                                                 | Proposed dividend for minority shareholders |                      |     | 19           |      |       |     | 16   |     
|                                                |                                                 | Derivatives                                 |                      |     | (1           | )    |       |     | (6   | )   
|                                                | Creditors: amounts falling due after one year:  |                                             |                      |     |              |      |       |     |     
|                                                |                                                 | Other creditors                             |                      |     | (99          | )    |       |     | (114 | )   
|                                                |                                                 | Derivatives                                 |                      |     | (2           | )    |       |     | (24  | )   
|                                                | Provisions for liabilities and charges:         |                                             |                      |     |              |      |       |     |     
|                                                |                                                 | Provisions                                  |                      |     | 98           |      |       |     | 25   |     
|                                                |                                                 | Accrued pension cost                        |                      |     | (64          | )    |       |     | (54  | )   
|                                                |                                                 | Deferred taxation:                          |                      |     |              |      |       |     |      |     
|                                                |                                                 |                                             | on above adjustments |     |              | (187 | )     |     |      | (238 | )
|                                                |                                                 |                                             | methodology          |     |              | (155 | )     |     |      | (169 | )
|                                                |                                                 |                                             |                      |     |              |     
|                                                |                                                 |                                             | 864                  |     |              |      | 879   |    
|                                                | Minority share of above adjustments             |                                             |                      | (45 | )            |      |       | (53 | )   
|                                                |                                                 |                                             |                      |     |              |     
|                                                |                                                 |                                             | 819                  |     |              |      | 826   |    
|                                                |                                                 |                                             |                      |     |              |     
|Shareholders equity in accordance with US GAAP |                                                 |                                             | 2,796                |     |              |      | 3,380 |    
|                                                |                                                 |                                             |                      |     |              |     

F-82



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##### Table of Contents





| |                                                                                
| | -------------------------------------------------------------------------------
| | Additional information required by US GAAP in respect of
    earnings per share



|                                                                           |                                                             |                                     |       |              |              |  |           |              |  |           |              |     |   |               |     |     |  |  |       |     | 
|-------------------------------------------------------------------------- | ----------------------------------------------------------- | ----------------------------------- | ----- | ------------ | ------------ |  | --------- | ------------ |  | --------- | ------------ | --- | - | ------------- | --- | --- |  |  | ----- | --- | 
|                                                                           |                                                             |                                     |       | Unaudited    |              |  | Unaudited |              |  |           |              |    
|                                                                           |                                                             |                                     |       | three months |              |  | 12 months |              |  | 15 months |              |     |  
|                                                                           |                                                             | Year ended                          |       |              | ended        |  |           | ended        |  |           | ended        |     |   | Year ended    |    
|                                                                           |                                                             | December 31,                        |       |              | December 31, |  |           | December 31, |  |           | December 31, |     |   | September 30, |    
|                                                                           |                                                             | 2004                                |       |              | 2002         |  |           | 2003         |  |           | 2003         |     |   | 2002          |    
|                                                                           |                                                             |                                     |       |              |              |  |           |              |  |           |              |     |   |               |    
|                                                                           |                                                             | (£ million, except per ADS amounts) |      
|Numerator:                                                                 |                                                             |                                     |       |              |              |  |           |              |  |           |              |     |   |               |     |     |  |  |       |    
|                                                                           | Numerator for basic earnings per ordinary share and ADS     |                                     |       | 318          |              |  |           | 29           |  |           |              | (5  | ) |               |     | 24  |  |  |       | 163 | 
|                                                                           | Deduct: FAS No. 123 compensation cost                       |                                     |       | (15          | )            |  |           |             |  |           |              |    |   |               |     |    |  |  |       |    | 
|                                                                           | Tax effect                                                  |                                     |       | 4            |              |  |           |             |  |           |              |    |   |               |     |    |  |  |       |    | 
|                                                                           |                                                             |                                     |       |              |              |  |           |              |  |           |              |     |   |               |    
|                                                                           | Numerator for diluted earnings per ordinary share and ADS   |                                     |       | 307          |              |  |           | 29           |  |           |              | (5  | ) |               |     | 24  |  |  |       | 163 | 
|                                                                           |                                                             |                                     |       |              |              |  |           |              |  |           |              |     |   |               |    
|Denominator:                                                               |                                                             |                                     |       |              |              |  |           |              |  |           |              |     |   |               |     |     |  |  |       |    
|                                                                           | Denominator for basic earnings per ordinary share and ADS   |                                     |       | 710          |              |  |           | 733          |  |           |              | 733 |   |               |     | 733 |  |  |       | 731 | 
|                                                                           | Effect of dilutive securities:                              |                                     |       |              |              |  |           |              |  |           |              |     |   |               |     |     |  |  |       |     | 
|                                                                           | Employee options and restricted stock awards                |                                     |       | 10           |              |  |           |             |  |           |              |    |   |               |     |    |  |  |       | 3   | 
|                                                                           |                                                             |                                     |       |              |              |  |           |              |  |           |              |     |   |               |    
|                                                                           | Denominator for diluted earnings per ordinary share and ADS |                                     |       | 720          |              |  |           | 733          |  |           |              | 733 |   |               |     | 733 |  |  |       | 734 | 
|                                                                           |                                                             |                                     |       |              |              |  |           |              |  |           |              |     |   |               |    
|Basic earnings per ordinary share and ADS from continuing
    operations   |                                                             |                                     | 44.8p |              |              |  | 4.0       | p            |  |           | (0.6         | )p  |   |               | 3.3 | p   |  |  | 22.3p |    
|                                                                           |                                                             |                                     |       |              |              |  |           |              |  |           |              |     |   |               |    
|Diluted earnings per ordinary share and ADS from continuing
    operations |                                                             |                                     | 42.6p |              |              |  | 4.0       | p            |  |           | (0.6         | )p  |   |               | 3.3 | p   |  |  | 22.2p |    
|                                                                           |                                                             |                                     |       |              |              |  |           |              |  |           |              |     |   |               |    



| |                                     
| | ------------------------------------
| | Consolidated statement of cash flows





F-83



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##### Table of Contents





|                                                 |                             |              |      |              |              |  |           |              |  |           |              |     |  |               |      |     |  |  |      |     | 
|------------------------------------------------ | --------------------------- | ------------ | ---- | ------------ | ------------ |  | --------- | ------------ |  | --------- | ------------ | --- |  | ------------- | ---- | --- |  |  | ---- | --- | 
|                                                 |                             |              |      | Unaudited    |              |  | Unaudited |              |  |           |              |    
|                                                 |                             |              |      | three months |              |  | 12 months |              |  | 15 months |              |     | 
|                                                 |                             | Year ended   |      |              | ended        |  |           | ended        |  |           | ended        |     |  | Year ended    |     
|                                                 |                             | December 31, |      |              | December 31, |  |           | December 31, |  |           | December 31, |     |  | September 30, |     
|                                                 |                             | 2004         |      |              | 2002         |  |           | 2003         |  |           | 2003         |     |  | 2002          |     
|                                                 |                             |              |      |              |              |  |           |              |  |           |              |     |  |               |     
|                                                 |                             | (£ million)  |     
|Cash inflow from operating activities            |                             |              | 439  |              |              |  | 132       |              |  |           | 481          |     |  |               | 613  |     |  |  | 535  |    
|Cash outflow on investing activities             |                             |              | (148 | )            |              |  | (127      | )            |  |           | (200         | )   |  |               | (327 | )   |  |  | (320 | )  
|Cash outflow from financing activities           |                             |              | (620 | )            |              |  | (32       | )            |  |           | (147         | )   |  |               | (179 | )   |  |  | (220 | )  
|                                                 |                             |              |      |              |              |  |           |              |  |           |              |     |  |               |     
|(Decrease)/increase in cash and cash equivalents |                             |              | (329 | )            |              |  | (27       | )            |  |           | 134          |     |  |               | 107  |     |  |  | (5   | )  
|Effect of foreign exchange rate changes          |                             |              | (17  | )            |              |  | 20        |              |  |           | 1            |     |  |               | 21   |     |  |  | 82   |    
|Cash and cash equivalents                        |                             |              |      |              |              |  |           |              |  |           |              |     |  |               |      |     |  |  |      |    
|                                                 | At start of the fiscal year |              |      | 429          |              |  |           | 301          |  |           |              | 294 |  |               |      | 301 |  |  |      | 224 | 
|                                                 |                             |              |      |              |              |  |           |              |  |           |              |     |  |               |     
|                                                 | At end of the fiscal year   |              |      | 83           |              |  |           | 294          |  |           |              | 429 |  |               |      | 429 |  |  |      | 301 | 
|                                                 |                             |              |      |              |              |  |           |              |  |           |              |     |  |               |     



| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Additional information required by US GAAP in respect of
    the Groups principal pension plans



|                               |  |                     |     |           |                     |  |     |                            |  |  |              |   |  |              |    |   |               |           |    |              |  |  |              |   |  |               |   |  |  |  |   |  |  |  |   | 
|------------------------------ |  | ------------------- | --- | --------- | ------------------- |  | --- | -------------------------- |  |  | ------------ | - |  | ------------ | -- | - | ------------- | --------- | -- | ------------ |  |  | ------------ | - |  | ------------- | - |  |  |  | - |  |  |  | - | 
|                               |  | UK pension benefits |     |           | US pension benefits |  |     | US postretirement benefits | 
|                               |  |                     |     |           |                     |  |     |                            | 
|                               |  |                     |     | 15 months |                     |  |     |                            |  |  | 15 months    |   |  |              |    |   |               | 15 months |    |              | 
|                               |  | Year ended          |     |           | ended               |  |     | Year ended                 |  |  | Year ended   |   |  | ended        |    |   | Year ended    |           |    | Year ended   |  |  | ended        |   |  | Year ended    |  
|                               |  | December 31,        |     |           | December 31,        |  |     | September 30,              |  |  | December 31, |   |  | December 31, |    |   | September 30, |           |    | December 31, |  |  | December 31, |   |  | September 30, |  
|                               |  | 2004                |     |           | 2003                |  |     | 2002                       |  |  | 2004         |   |  | 2003         |    |   | 2002          |           |    | 2004         |  |  | 2003         |   |  | 2002          |  
|                               |  |                     |     |           |                     |  |     |                            |  |  |              |   |  |              |    |   |               |           |    |              |  |  |              |   |  |               |  
|                               |  | (£ million)         |    
|Service cost                   |  |                     | 17  |           |                     |  | 34  |                            |  |  | 31           |   |  |              |   |   |               |           |   |              |  |  |             |   |  |               |  |  |  |  |  |  |  |  |  | 
|Interest cost                  |  |                     | 26  |           |                     |  | 53  |                            |  |  | 66           |   |  |              | 5  |   |               |           | 7  |              |  |  | 9            |   |  |               | 1 |  |  |  | 1 |  |  |  | 1 | 
|Expected return on plan assets |  |                     | (25 | )         |                     |  | (49 | )                          |  |  | (76          | ) |  |              | (4 | ) |               |           | (5 | )            |  |  | (4           | ) |  |               |  |  |  |  |  |  |  |  |  | 
|Net amortization and deferral  |  |                     | 7   |           |                     |  | 14  |                            |  |  | 2            |   |  |              |   |   |               |           |   |              |  |  |             |   |  |               |  |  |  |  |  |  |  |  |  | 
|Recognized net actuarial gain  |  |                     |    |           |                     |  |    |                            |  |  |             |   |  |              | 2  |   |               |           | 2  |              |  |  |             |   |  |               |  |  |  |  |  |  |  |  |  | 
|                               |  |                     |     |           |                     |  |     |                            |  |  |              |   |  |              |    |   |               |           |    |              |  |  |              |   |  |               |  
|Net periodic pension cost      |  |                     | 25  |           |                     |  | 52  |                            |  |  | 23           |   |  |              | 3  |   |               |           | 4  |              |  |  | 5            |   |  |               | 1 |  |  |  | 1 |  |  |  | 1 | 
|                               |  |                     |     |           |                     |  |     |                            |  |  |              |   |  |              |    |   |               |           |    |              |  |  |              |   |  |               |  



|                                                 |  |                     |       |           |                     |  |       |                            |             |  |              |           |  |              |       |  |               |  |       |              |  |  |              |  |  |               |       |  |  |  |       |  |  |  |       | 
|------------------------------------------------ |  | ------------------- | ----- | --------- | ------------------- |  | ----- | -------------------------- | ----------- |  | ------------ | --------- |  | ------------ | ----- |  | ------------- |  | ----- | ------------ |  |  | ------------ |  |  | ------------- | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                                 |  | UK pension benefits |       |           | US pension benefits |  |       | US postretirement benefits |            
|                                                 |  |                     |       |           |                     |  |       |                            |            
|                                                 |  |                     |       | 15 months |                     |  |       |                            | Year months |  |              | 15 months |  |              |       |  | Year months   |  |       | 15 months    |  |  |             
|                                                 |  | Year ended          |       |           | ended               |  |       | Year ended                 |             |  | ended        |           |  | ended        |       |  | Year ended    |  |       | ended        |  |  | ended        |  |  | Year ended    |      
|                                                 |  | December 31,        |       |           | December 31,        |  |       | September 31,              |             |  | December 31, |           |  | December 31, |       |  | September 31, |  |       | December 31, |  |  | December 31, |  |  | September 31, |      
|                                                 |  | 2004                |       |           | 2003                |  |       | 2002                       |             |  | 2004         |           |  | 2003         |       |  | 2002          |  |       | 2004         |  |  | 2003         |  |  | 2002          |      
|                                                 |  |                     |       |           |                     |  |       |                            |             |  |              |           |  |              |       |  |               |  |       |              |  |  |              |  |  |               |      
|Expected long-term rate of return on plan assets |  |                     | 6.90% |           |                     |  | 6.90% |                            |             |  | 7.00%        |           |  |              | 8.00% |  |               |  | 8.00% |              |  |  | 9.00%        |  |  |               |      |  |  |  |      |  |  |  |      | 
|Discount rate                                    |  |                     | 5.30% |           |                     |  | 5.40% |                            |             |  | 5.50%        |           |  |              | 5.75% |  |               |  | 6.30% |              |  |  | 6.80%        |  |  |               | 5.75% |  |  |  | 6.30% |  |  |  | 6.80% | 
|Expected long-term rate of earnings increases    |  |                     | 4.30% |           |                     |  | 4.30% |                            |             |  | 3.80%        |           |  |              | 3.50% |  |               |  | 3.50% |              |  |  | 3.50%        |  |  |               |      |  |  |  |      |  |  |  |      | 



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|                                                    |  |      |      |   |      |  |      |      |  |  |      |  
|--------------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                    |  | 2004 |      |   | 2003 |  |      | 2002 | 
|                                                    |  |      |      |   |      |  |      |      | 
|Health care cost trend rate assumed for next year   |  |      | 9.5  | % |      |  | 10.0 | %    |  |  | 7.5  | %
|Rate that the cost trend rate gradually declines to |  |      | 4.5  | % |      |  | 4.5  | %    |  |  | 5.0  | %
|Year that rate reaches the assumed ultimate rate    |  |      | 2014 |   |      |  | 2014 |      |  |  | 2007 |  



|                                          |                                        |                      |     |     |                      |  |       |                            |   |  |                 |    |   |              |    |     |                 |  |    |    |   |  |    |    |  
|----------------------------------------- | -------------------------------------- | -------------------- | --- | --- | -------------------- |  | ----- | -------------------------- | - |  | --------------- | -- | - | ------------ | -- | --- | --------------- |  | -- | -- | - |  | -- | -- | -
|                                          |                                        | UK pensions benefits |     |     | US pensions benefits |  |       | US postretirement benefits |  
|                                          |                                        |                      |     |     |                      |  |       |                            |  
|                                          |                                        | Year ended           |     |     | 15 months ended      |  |       | Year ended                 |   |  | 15 months ended |    |   | Year ended   |    |     | 15 months ended | 
|                                          |                                        | December 31,         |     |     | December 31,         |  |       | December 31,               |   |  | December 31,    |    |   | December 31, |    |     | December 31,    | 
|Change in benefit obligation              |                                        | 2004                 |     |     | 2003                 |  |       | 2004                       |   |  | 2003            |    |   | 2004         |    |     | 2003            | 
|                                          |                                        |                      |     |     |                      |  |       |                            |   |  |                 |    |   |              |    |     |                 | 
|                                          |                                        | (£ million)          |    
|Benefit obligation at beginning of period |                                        |                      | 477 |     |                      |  | 1,311 |                            |   |  | 90              |    |   |              | 95 |     |                 |  | 12 |    |   |  | 9  |   
|                                          | Service cost                           |                      |     | 17  |                      |  |       | 34                         |   |  |                 |   |   |              |    |    |                 |  |    |   |   |  |    |   |  
|                                          | Members contributions                  |                      |     |    |                      |  |       | 6                          |   |  |                 |   |   |              |    |    |                 |  |    |   |   |  |    |   |  
|                                          | Interest expense                       |                      |     | 26  |                      |  |       | 53                         |   |  |                 | 5  |   |              |    | 7   |                 |  |    | 1  |   |  |    | 1  |  
|                                          | Benefits paid                          |                      |     | (12 | )                    |  |       | (50                        | ) |  |                 | (5 | ) |              |    | (7  | )               |  |    | (1 | ) |  |    | (1 | )
|                                          | Age-related national insurance rebates |                      |     | 5   |                      |  |       | 5                          |   |  |                 |   |   |              |    |    |                 |  |    |   |   |  |    |   |  
|                                          | Bulk transfer to scheme                |                      |     | 27  |                      |  |       |                           |   |  |                 |   |   |              |    |    |                 |  |    |   |   |  |    |   |  
|                                          | Actuarial loss arising in the year     |                      |     | 60  |                      |  |       | 128                        |   |  |                 | 5  |   |              |    | 7   |                 |  |    |   |   |  |    | 3  |  
|                                          | Separation of MAB                      |                      |     |    |                      |  |       | (1,010                     | ) |  |                 |   |   |              |    |    |                 |  |    |   |   |  |    |   |  
|                                          | Exchange                               |                      |     |    |                      |  |       |                           |   |  |                 | (6 | ) |              |    | (12 | )               |  |    | (1 | ) |  |    |   |  
|                                          |                                        |                      |     |     |                      |  |       |                            |   |  |                 |    |   |              |    |     |                 | 
|Benefit obligation at end of period       |                                        |                      | 600 |     |                      |  | 477   |                            |   |  | 89              |    |   |              | 90 |     |                 |  | 11 |    |   |  | 12 |   
|                                          |                                        |                      |     |     |                      |  |       |                            |   |  |                 |    |   |              |    |     |                 | 

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|                                                        |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 |  |     |    |   |  |     |    |  
|------------------------------------------------------- | -------------------------------------- | -------------------- | ---- | --- | -------------------- |  | ---- | -------------------------- | - |  | --------------- | -- | - | ------------ | --- | -- | --------------- |  | --- | -- | - |  | --- | -- | -
|                                                        |                                        | UK pensions benefits |      |     | US pensions benefits |  |      | US postretirement benefits |  
|                                                        |                                        |                      |      |     |                      |  |      |                            |  
|                                                        |                                        | Year ended           |      |     | 15 months ended      |  |      | Year ended                 |   |  | 15 months ended |    |   | Year ended   |     |    | 15 months ended | 
|                                                        |                                        | December 31,         |      |     | December 31,         |  |      | December 31,               |   |  | December 31,    |    |   | December 31, |     |    | December 31,    | 
|Changes in plan assets                                  |                                        | 2004                 |      |     | 2003                 |  |      | 2004                       |   |  | 2003            |    |   | 2004         |     |    | 2003            | 
|                                                        |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 | 
|                                                        |                                        | (£ million)          |     
|Fair value of plan assets at beginning of period        |                                        |                      | 355  |     |                      |  | 996  |                            |   |  | 48              |    |   |              | 49  |    |                 |  |    |    |   |  |    |   
|                                                        | Contributions payable                  |                      |      | 72  |                      |  |      | 45                         |   |  |                 | 11 |   |              |     | 1  |                 |  |     | 1  |   |  |     | 1  |  
|                                                        | Age-related national insurance rebates |                      |      | 5   |                      |  |      | 5                          |   |  |                 |   |   |              |     |   |                 |  |     |   |   |  |     |   |  
|                                                        | Benefits paid                          |                      |      | (12 | )                    |  |      | (50                        | ) |  |                 | (5 | ) |              |     | (7 | )               |  |     | (1 | ) |  |     | (1 | )
|                                                        | Bulk Transfer to scheme                |                      |      | 14  |                      |  |      |                           |   |  |                 |   |   |              |     |   |                 |  |     |   |   |  |     |   |  
|                                                        | Actual return on assets                |                      |      | 38  |                      |  |      |                           |   |  |                 | 5  |   |              |     |   |                 |  |     |   |   |  |     |   |  
|                                                        | Actuarial loss on assets               |                      |      |    |                      |  |      | 81                         |   |  |                 |   |   |              |     | 10 |                 |  |     |   |   |  |     |   |  
|                                                        | Separation of MAB                      |                      |      |    |                      |  |      | (722                       | ) |  |                 |   |   |              |     |   |                 |  |     |   |   |  |     |   |  
|                                                        | Exchange                               |                      |      |    |                      |  |      |                           |   |  |                 | (4 | ) |              |     | (5 | )               |  |     |   |   |  |     |   |  
|                                                        |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 | 
|Fair value of plan assets at end of period              |                                        |                      | 472  |     |                      |  | 355  |                            |   |  | 55              |    |   |              | 48  |    |                 |  |    |    |   |  |    |   
|                                                        |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 | 
|Accumulated benefit obligation (all vested)             |                                        |                      | 519  |     |                      |  | 409  |                            |   |  | 87              |    |   |              | 88  |    |                 |  |    |    |   |  |    |   
|                                                        |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 | 
|Fair value of plan assets                               |                                        |                      | 472  |     |                      |  | 355  |                            |   |  | 55              |    |   |              | 48  |    |                 |  |    |    |   |  |    |   
|Projected benefit obligation                            |                                        |                      | (600 | )   |                      |  | (477 | )                          |   |  | (89             | )  |   |              | (90 | )  |                 |  | (11 | )  |   |  | (12 | ) 
|                                                        |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 | 
|Net plan obligation                                     |                                        |                      | (128 | )   |                      |  | (122 | )                          |   |  | (34             | )  |   |              | (42 | )  |                 |  | (11 | )  |   |  | (12 | ) 
|Unrecognized transitional asset, net of amortization    |                                        |                      |     |     |                      |  | (1   | )                          |   |  |                |    |   |              |    |    |                 |  |    |    |   |  |    |   
|Unrecognized prior service cost                         |                                        |                      | 5    |     |                      |  | 5    |                            |   |  |                |    |   |              |    |    |                 |  |    |    |   |  |    |   
|Unrecognized net loss                                   |                                        |                      | 199  |     |                      |  | 142  |                            |   |  | 23              |    |   |              | 20  |    |                 |  | 3   |    |   |  | 3   |   
|                                                        |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 | 
|Net amount recognized                                   |                                        |                      | 76   |     |                      |  | 24   |                            |   |  | (11             | )  |   |              | (22 | )  |                 |  | (8  | )  |   |  | (9  | ) 
|                                                        |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 | 
|The amounts recognized in the balance sheet consist of: |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 |  |     |    |   |  |     |   
|Prepaid pension cost                                    |                                        |                      | 57   |     |                      |  |     |                            |   |  |                |    |   |              |    |    |                 |  |    |    |   |  |    |   
|Accrued pension cost                                    |                                        |                      | (54  | )   |                      |  | (54  | )                          |   |  | (31             | )  |   |              | (40 | )  |                 |  | (8  | )  |   |  | (8  | ) 
|Pension costs                                           |                                        |                      |     |     |                      |  |     |                            |   |  |                |    |   |              |    |    |                 |  |    |    |   |  | (1  | ) 
|Intangible asset                                        |                                        |                      | 3    |     |                      |  | 6    |                            |   |  |                |    |   |              |    |    |                 |  |    |    |   |  |    |   
|Other comprehensive income (before tax)                 |                                        |                      | 70   |     |                      |  | 72   |                            |   |  | 20              |    |   |              | 18  |    |                 |  |    |    |   |  |    |   
|                                                        |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 | 
|Net amount recognized                                   |                                        |                      | 76   |     |                      |  | 24   |                            |   |  | (11             | )  |   |              | (22 | )  |                 |  | (8  | )  |   |  | (9  | ) 
|                                                        |                                        |                      |      |     |                      |  |      |                            |   |  |                 |    |   |              |     |    |                 | 



| |                                                                                   
| | ----------------------------------------------------------------------------------
| | Additional information required by US GAAP in respect of
    Groups share options



| |                                                      
| | -----------------------------------------------------
| | Accounting and disclosure of stock-based compensation



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| |                              
| | -----------------------------
| | Concentrations of credit risk









| |                                     
| | ------------------------------------
| | Fair values of financial instruments



|                              |                                        |              |     |        |              |  |     |          |   |  |       |      |   |  |     |      |  
|----------------------------- | -------------------------------------- | ------------ | --- | ------ | ------------ |  | --- | -------- | - |  | ----- | ---- | - |  | --- | ---- | -
|                              |                                        | December 31, |     |        | December 31, | 
|                              |                                        | 2004         |     |        | 2003         | 
|                              |                                        |              |     |        |              | 
|                              |                                        | Carrying     |     |        | Fair         |  |     | Carrying |   |  | Fair  |     
|                              |                                        | amount       |     |        | value        |  |     | amount   |   |  | value |     
|                              |                                        |              |     |        |              |  |     |          |   |  |       |     
|                              |                                        | (£ million)  |    
|Assets                        |                                        |              |     |        |              |  |     |          |   |  |       |      |   |  |     |     
|Cash                          |                                        |              | 43  |        |              |  | 43  |          |   |  | 55    |      |   |  | 55  |     
|Current asset investments     |                                        |              | 116 |        |              |  | 116 |          |   |  | 377   |      |   |  | 381 |     
|Listed investments            |                                        |              | 1   |        |              |  | 4   |          |   |  | 64    |      |   |  | 66  |     
|Unlisted investments          |                                        |              | 98  |        |              |  | 98  |          |   |  | 108   |      |   |  | 108 |     
|Liabilities                   |                                        |              |     |        |              |  |     |          |   |  |       |      |   |  |     |     
|Total borrowings:             |                                        |              |     |        |              |  |     |          |   |  |       |      |   |  |     |     
|                              | Loan capital and noncurrent bank loans |              |     | (1,174 | )            |  |     | (1,174   | ) |  |       | (988 | ) |  |     | (992 | )
|                              | Current bank loans and overdrafts      |              |     | (25    | )            |  |     | (25      | ) |  |       | (13  | ) |  |     | (13  | )
|Off-balance sheet instruments |                                        |              |     |        |              |  |     |          |   |  |       |      |   |  |     |     
|Interest rate swaps           |                                        |              |     |        |              |  | (3  | )        |   |  |       |      |   |  | (29 | )   
|Foreign exchange contracts    |                                        |              |     |        |              |  | 9   |          |   |  |       |      |   |  | (1  | )   



Cash:


Current asset investments:


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Listed investments:


Unlisted investments:


Borrowings:


Off-balance sheet instruments:




| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | Additional information required by US GAAP in respect of
    accounting for the impairment of fixed assets and fixed assets
    to be disposed of



|                                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |     |    |  |  |     |    | 
|----------------------------------------------------------------------------- | -------------------------------------------------------------- | ------------ | --- | ------------ | ------------ |  | --------- | ------------ |  | --------- | ------------ | -- |  | ------------- | --- | -- |  |  | --- | -- | 
|                                                                              |                                                                |              |     | Three months |              |  | 12 months |              |  | 15 months |              |    | 
|                                                                              |                                                                | Year ended   |     |              | ended        |  |           | ended        |  |           | ended        |    |  | Year ended    |    
|                                                                              |                                                                | December 31, |     |              | December 31, |  |           | December 31, |  |           | December 31, |    |  | September 30, |    
|                                                                              |                                                                | 2004         |     |              | 2002         |  |           | 2003         |  |           | 2003         |    |  | 2002          |    
|                                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |    
|                                                                              |                                                                | (£ million)  |    
|Assets to be disposed of                                                      |                                                                |              |    |              |              |  |          |              |  |           | 9            |    |  |               | 9   |    |  |  | 14  |   
|Assets to be held and used                                                    |                                                                |              | 18  |              |              |  |          |              |  |           | 6            |    |  |               | 6   |    |  |  |    |   
|                                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |    
|Total                                                                         |                                                                |              | 18  |              |              |  |          |              |  |           | 15           |    |  |               | 15  |    |  |  | 14  |   
|                                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |    
|Disclosed as:                                                                 |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |     |    |  |  |     |   
|Impairment charges recognized under UK GAAP:                                  |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |     |    |  |  |     |   
|                                                                              | Operating exceptional  impairment charges                     |              |     | 28           |              |  |           |             |  |           |              | 51 |  |               |     | 51 |  |  |     | 77 | 
|                                                                              | Non-operating exceptional  provision for loss on
    disposal |              |     | 74           |              |  |           |             |  |           |              | 9  |  |               |     | 9  |  |  |     | 14 | 
|                                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |    
|Charge for the year under UK GAAP                                             |                                                                |              | 102 |              |              |  |          |              |  |           | 60           |    |  |               | 60  |    |  |  | 91  |   
|Less: Adjustment to impairment recognized under US GAAP                       |                                                                |              | (84 | )            |              |  |          |              |  |           | (45          | )  |  |               | (45 | )  |  |  | (77 | ) 
|                                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |    
|Total charge before cumulative effect of a change in accounting
    principle |                                                                |              | 18  |              |              |  |          |              |  |           | 15           |    |  |               | 15  |    |  |  | 14  |   
|Add: Cumulative effect on adoption of FAS 142 under
    US GAAP               |                                                                |              |    |              |              |  | 712       |              |  |           |             |    |  |               | 712 |    |  |  |    |   
|                                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |    
|                                                                              |                                                                |              | 18  |              |              |  | 712       |              |  |           | 15           |    |  |               | 727 |    |  |  | 14  |   
|                                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |    
|Charged against:                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |     |    |  |  |     |   
|Intangible assets  goodwill                                                  |                                                                |              |    |              |              |  | 712       |              |  |           |             |    |  |               | 712 |    |  |  |    |   
|Tangible assets                                                               |                                                                |              | 18  |              |              |  |          |              |  |           | 15           |    |  |               | 15  |    |  |  | 14  |   
|                                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |    
|                                                                              |                                                                |              | 18  |              |              |  | 712       |              |  |           | 15           |    |  |               | 727 |    |  |  | 14  |   
|                                                                              |                                                                |              |     |              |              |  |           |              |  |           |              |    |  |               |    



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| |                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------
| | Additional information required by US GAAP in respect of
    accounting for intangible assets subject to amortization



|                                 |  |                   |     |             |                   |  |          |       |  |  |      |             |  |              |          |  |       |  |      |   |  |  |    | 
|-------------------------------- |  | ----------------- | --- | ----------- | ----------------- |  | -------- | ----- |  |  | ---- | ----------- |  | ------------ | -------- |  | ----- |  | ---- | - |  |  | -- | 
|                                 |  | December 31, 2004 |     |             | December 31, 2003 | 
|                                 |  |                   |     |             |                   | 
|                                 |  |                   |     | Accumulated |                   |  | Net book |       |  |  |      | Accumulated |  |              | Net book | 
|                                 |  | Cost              |     |             | amortization      |  |          | value |  |  | Cost |             |  | amortization |          |  | value | 
|                                 |  |                   |     |             |                   |  |          |       |  |  |      |             |  |              |          |  |       | 
|                                 |  | (£ million)       |    
|Management & franchise contracts |  |                   | 307 |             |                   |  | (270     | )     |  |  | 37   |             |  |              | 326      |  |       |  | (291 | ) |  |  | 35 | 
|Other                            |  |                   | 4   |             |                   |  | (1       | )     |  |  | 3    |             |  |              | 4        |  |       |  |     |   |  |  | 4  | 
|                                 |  |                   |     |             |                   |  |          |       |  |  |      |             |  |              |          |  |       | 
|                                 |  |                   | 311 |             |                   |  | (271     | )     |  |  | 40   |             |  |              | 330      |  |       |  | (291 | ) |  |  | 39 | 
|                                 |  |                   |     |             |                   |  |          |       |  |  |      |             |  |              |          |  |       | 





| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | Additional information required by US GAAP in respect of
    accounting for intangible assets not subject to
    amortization

|           |  |                   |       |  |                   |  |     |       |  |  |        |  |  |             |       |  |       |  |     |  |  |  |       | 
|---------- |  | ----------------- | ----- |  | ----------------- |  | --- | ----- |  |  | ------ |  |  | ----------- | ----- |  | ----- |  | --- |  |  |  | ----- | 
|           |  | December 31, 2004 |       |  | December 31, 2003 | 
|           |  |                   |       |  |                   | 
|           |  | Hotels            |       |  | Soft drinks       |  |     | Total |  |  | Hotels |  |  | Soft drinks |       |  | Total | 
|           |  |                   |       |  |                   |  |     |       |  |  |        |  |  |             |       |  |       | 
|           |  | (£ million)       |      
|Goodwill   |  |                   | 840   |  |                   |  | 124 |       |  |  | 964    |  |  |             | 907   |  |       |  | 122 |  |  |  | 1,029 | 
|Trademarks |  |                   | 474   |  |                   |  |    |       |  |  | 474    |  |  |             | 513   |  |       |  |    |  |  |  | 513   | 
|           |  |                   |       |  |                   |  |     |       |  |  |        |  |  |             |       |  |       | 
|Total      |  |                   | 1,314 |  |                   |  | 124 |       |  |  | 1,438  |  |  |             | 1,420 |  |       |  | 122 |  |  |  | 1,542 | 
|           |  |                   |       |  |                   |  |     |       |  |  |        |  |  |             |       |  |       | 



| |                                                                               
| | ------------------------------------------------------------------------------
| | Additional pro forma information required by US GAAP in
    respect of FAS 142



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|                                                               |                                 |                                     |       |              |              |  |           |              |   |           |              |   |   |               |       |    |   |  |       |      |      | 
|-------------------------------------------------------------- | ------------------------------- | ----------------------------------- | ----- | ------------ | ------------ |  | --------- | ------------ | - | --------- | ------------ | - | - | ------------- | ----- | -- | - |  | ----- | ---- | ---- | 
|                                                               |                                 |                                     |       | Unaudited    |              |  | Unaudited |              |   |           |              |  
|                                                               |                                 |                                     |       | three months |              |  | 12 months |              |   | 15 months |              |   |  
|                                                               |                                 | Year ended                          |       |              | ended        |  |           | ended        |   |           | ended        |   |   | Year ended    |      
|                                                               |                                 | December 31,                        |       |              | December 31, |  |           | December 31, |   |           | December 31, |   |   | September 30, |      
|                                                               |                                 | 2004                                |       |              | 2002         |  |           | 2003         |   |           | 2003         |   |   | 2002          |      
|                                                               |                                 |                                     |       |              |              |  |           |              |   |           |              |   |   |               |      
|                                                               |                                 | (£ million, except per ADS amounts) |      
|Net income/(loss) in accordance with US GAAP, as reported      |                                 |                                     | 340   |              |              |  | (652      | )            |   |           | 29           |   |   |               | (623  | )  |   |  | 499   |     
|                                                               | Add back: goodwill amortization |                                     |       |             |              |  |           |             |   |           |              |  |   |               |       |   |   |  |       | 69   |     
|                                                               |                                 | trademarks amortization             |       |              |             |  |           |              |  |           |              |   |  |               |       |    |  |  |       |      | 13   | 
|Pro forma net income/(loss) in accordance with US GAAP         |                                 |                                     | 340   |              |              |  | (652      | )            |   |           | 29           |   |   |               | (623  | )  |   |  | 581   |     
|Pro forma basic net income/(loss) per ordinary share and ADS   |                                 |                                     | 47.9p |              |              |  | (88.9     | )p           |   |           | 4.0p         |   |   |               | (84.9 | )p |   |  | 68.3p |     
|                                                               | Add back: goodwill amortization |                                     |       |             |              |  |           |             |   |           |              |  |   |               |       |   |   |  |       | 9.4p |     
|                                                               |                                 | trademarks amortization             |       |              |             |  |           |              |  |           |              |   |  |               |       |    |  |  |       |      | 1.8p | 
|Pro forma basic net income/(loss) per ordinary share and ADS   |                                 |                                     | 47.9p |              |              |  | (88.9     | )p           |   |           | 4.0p         |   |   |               | (84.9 | )p |   |  | 79.5p |     
|Pro forma diluted net income/(loss) per ordinary share and ADS |                                 |                                     | 45.7p |              |              |  | (88.9     | )p           |   |           | 4.0p         |   |   |               | (84.9 | )p |   |  | 68.0p |     
|                                                               | Add back: goodwill amortization |                                     |       |             |              |  |           |             |   |           |              |  |   |               |       |   |   |  |       | 9.4p |     
|                                                               |                                 | trademarks amortization             |       |              |             |  |           |              |  |           |              |   |  |               |       |    |  |  |       |      | 1.8p | 
|Pro forma diluted net income/(loss) per ordinary share and ADS |                                 |                                     | 45.7p |              |              |  | (88.9     | )p           |   |           | 4.0p         |   |   |               | (84.9 | )p |   |  | 79.2p |     



| |                                                                      
| | ---------------------------------------------------------------------
| | Additional information required by US GAAP in respect of
    taxation



| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | Analysis of tax (credit)/charge on continuing operations in
    accordance with US GAAP

|               |  |                   |     |   |                   |  |     |                   |  |  |    |  
|-------------- |  | ----------------- | --- | - | ----------------- |  | --- | ----------------- |  |  | -- | -
|               |  | Year ended        |     |   | Year ended        |  |     | Year ended        | 
|               |  | December 31, 2004 |     |   | December 31, 2003 |  |     | December 31, 2002 | 
|               |  |                   |     |   |                   |  |     |                   | 
|               |  | (£ million)       |    
|Current taxes  |  |                   | (60 | ) |                   |  | (48 | )                 |  |  | 93 |  
|Deferred taxes |  |                   | 7   |   |                   |  | 2   |                   |  |  | (6 | )
|               |  |                   |     |   |                   |  |     |                   | 
|               |  |                   | (53 | ) |                   |  | (46 | )                 |  |  | 87 |  
|               |  |                   |     |   |                   |  |     |                   | 

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| |                                                                                                       
| | ------------------------------------------------------------------------------------------------------
| | Reconciliation of UK statutory tax rate to US GAAP tax
    charge on income from continuing operations

|                                                          |  |                   |       |   |                   |  |        |                   |  |  |      |  
|--------------------------------------------------------- |  | ----------------- | ----- | - | ----------------- |  | ------ | ----------------- |  |  | ---- | -
|                                                          |  | Year ended        |       |   | Year ended        |  |        | Year ended        | 
|                                                          |  | December 31, 2004 |       |   | December 31, 2003 |  |        | December 31, 2002 | 
|                                                          |  |                   |       |   |                   |  |        |                   | 
|                                                          |  | (%)               |      
|UK corporate tax standard rate                            |  |                   | 30.0  |   |                   |  | 30.0   |                   |  |  | 30.0 |  
|Permanent differences                                     |  |                   | 1.1   |   |                   |  | (17.8  | )                 |  |  | (4.0 | )
|Net effect of different rates of tax in overseas business |  |                   | 6.7   |   |                   |  | 178.5  |                   |  |  | 5.0  |  
|Adjustment to tax charge in respect of prior periods      |  |                   | (20.4 | ) |                   |  | (574.2 | )                 |  |  | (5.6 | )
|Other                                                     |  |                   | (0.2  | ) |                   |  | 0.6    |                   |  |  | (0.5 | )
|Exceptional items                                         |  |                   | (35.5 | ) |                   |  | (128.2 | )                 |  |  | 7.1  |  
|                                                          |  |                   |       |   |                   |  |        |                   | 
|Effective current tax rate on continuing operations       |  |                   | (18.3 | ) |                   |  | (511.1 | )                 |  |  | 32.0 |  
|                                                          |  |                   |       |   |                   |  |        |                   | 

Deferred
taxation in accordance with US GAAP


|                                         |  |              |       | 
|---------------------------------------- |  | ------------ | ----- | 
|                                         |  | Deferred tax |      
|                                         |  |              |      
|                                         |  | (£ million)  |      
|At September 30, 2002                    |  |              | 862   | 
|Exchange and other adjustments           |  |              | (36)  | 
|Profit and loss account                  |  |              | (8)   | 
|Separation of MAB                        |  |              | (97)  | 
|                                         |  |              |      
|At December 31, 2003                     |  |              | 721   | 
|Exchange and other adjustments           |  |              | (20)  | 
|Profit and loss account                  |  |              |      | 
|Adjustment to other intangible assets(1) |  |              | (110) | 
|                                         |  |              |      
|At December 31, 2004                     |  |              | 591   | 
|                                         |  |              |      






|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In 2004, the adjustment to other intangible assets relates to
    the recognition of pre-acquisition losses in respect of which a
    valuation allowance had previously been made.

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|                               |                                                          |                   |      |      |                   |  |      |     |  
|------------------------------ | -------------------------------------------------------- | ----------------- | ---- | ---- | ----------------- |  | ---- | --- | -
|                               |                                                          | December 31, 2004 |      |      | December 31, 2003 | 
|                               |                                                          |                   |      |      |                   | 
|                               |                                                          | (£ million)       |     
|Deferred taxation liabilities: |                                                          |                   |      |      |                   |  |      |    
|                               | Excess of book value over taxation value of fixed assets |                   |      | 590  |                   |  |      | 667 |  
|                               | Other temporary differences                              |                   |      | 197  |                   |  |      | 188 |  
|                               |                                                          |                   |      |      |                   | 
|                               |                                                          |                   | 787  |      |                   |  | 855  |    
|                               |                                                          |                   |      |      |                   | 
|Deferred taxation assets:      |                                                          |                   |      |      |                   |  |      |    
|                               | Taxation effect of losses carried forward                |                   |      | (113 | )                 |  |      | (37 | )
|                               | Taxation effect of pension cost liability                |                   |      | (6   | )                 |  |      | (13 | )
|                               | Other temporary differences                              |                   |      | (77  | )                 |  |      | (84 | )
|                               |                                                          |                   |      |      |                   | 
|                               |                                                          |                   | (196 | )    |                   |  | (134 | )  
|                               |                                                          |                   |      |      |                   | 
|                               |                                                          |                   | 591  |      |                   |  | 721  |    
|                               |                                                          |                   |      |      |                   | 
|Of which:                      |                                                          |                   |      |      |                   |  |      |    
|                               | Current                                                  |                   |      | (45  | )                 |  |      | (4  | )
|                               | Noncurrent                                               |                   |      | 636  |                   |  |      | 725 |  
|                               |                                                          |                   |      |      |                   | 
|                               |                                                          |                   | 591  |      |                   |  | 721  |    
|                               |                                                          |                   |      |      |                   | 







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| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | Additional information required under US GAAP in respect
    of restructuring provisions

|                               |  |             |     |   |            |  |    |       |  |  |       |   |  |                |     |   |       |  |    |   |  |  |     |  
|------------------------------ |  | ----------- | --- | - | ---------- |  | -- | ----- |  |  | ----- | - |  | -------------- | --- | - | ----- |  | -- | - |  |  | --- | -
|                               |  | IHG         |     |   | MAB        | 
|                               |  |             |     |   |            | 
|                               |  | Employee    |     |   | Facilities |  |    | Other |  |  | IHG   |   |  | MAB            |     |   | Group | 
|                               |  | costs       |     |   | costs      |  |    | costs |  |  | total |   |  | reorganization |     |   | total | 
|                               |  |             |     |   |            |  |    |       |  |  |       |   |  |                |     |   |       | 
|                               |  | (£ million) |    
|Balance at October 1, 2001     |  |             |    |   |            |  |   |       |  |  |      |   |  |                |    |   |       |  | 9  |   |  |  | 9   |  
|Profit and loss account        |  |             |    |   |            |  |   |       |  |  |      |   |  |                |    |   |       |  | 2  |   |  |  | 2   |  
|                               |  |             |     |   |            |  |    |       |  |  |       |   |  |                |     |   |       | 
|Balance at September 30, 2002  |  |             |    |   |            |  |   |       |  |  |      |   |  |                |    |   |       |  | 11 |   |  |  | 11  |  
|Expenditure                    |  |             |    |   |            |  |   |       |  |  |      |   |  |                |    |   |       |  | (1 | ) |  |  | (1  | )
|                               |  |             |     |   |            |  |    |       |  |  |       |   |  |                |     |   |       | 
|Balance at December 31, 2002   |  |             |    |   |            |  |   |       |  |  |      |   |  |                |    |   |       |  | 10 |   |  |  | 10  |  
|Exchange and other adjustments |  |             |    |   |            |  | (3 | )     |  |  |      |   |  |                | (3  | ) |       |  | (6 | ) |  |  | (9  | )
|Profit and loss account        |  |             | 30  |   |            |  | 13 |       |  |  | 15    |   |  |                | 58  |   |       |  |    |   |  |  | 58  |  
|Expenditure                    |  |             | (23 | ) |            |  | (3 | )     |  |  | (11   | ) |  |                | (37 | ) |       |  | (1 | ) |  |  | (38 | )
|Separation of MAB              |  |             |    |   |            |  |   |       |  |  |      |   |  |                |    |   |       |  | (3 | ) |  |  | (3  | )
|                               |  |             |     |   |            |  |    |       |  |  |       |   |  |                |     |   |       | 
|Balance at December 31, 2003   |  |             | 7   |   |            |  | 7  |       |  |  | 4     |   |  |                | 18  |   |       |  |   |   |  |  | 18  |  
|Expenditure                    |  |             | (7  | ) |            |  | (3 | )     |  |  | (4    | ) |  |                | (14 | ) |       |  |   |   |  |  | (14 | )
|                               |  |             |     |   |            |  |    |       |  |  |       |   |  |                |     |   |       | 
|Balance at December 31, 2004   |  |             |    |   |            |  | 4  |       |  |  |      |   |  |                | 4   |   |       |  |   |   |  |  | 4   |  
|                               |  |             |     |   |            |  |    |       |  |  |       |   |  |                |     |   |       | 



| |                         
| | ------------------------
| | New Accounting Standards









F-93



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F-94



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##### Table of Contents



INTERCONTINENTAL HOTELS GROUP PLC





SCHEDULE II


VALUATION AND QUALIFYING ACCOUNTS


|                                      |                                                  |            |    |           |            |  |    |             |  |  |            |            |        |        |     |    |   |  |    |    | 
|------------------------------------- | ------------------------------------------------ | ---------- | -- | --------- | ---------- |  | -- | ----------- |  |  | ---------- | ---------- | ------ | ------ | --- | -- | - |  | -- | -- | 
|                                      |                                                  |            |    | Additions |            |  |    |             |  |  |           
|                                      |                                                  | Balance at |    |           | charged to |  |    |             |  |  |            | Balance at |       
|                                      |                                                  | beginning  |    |           | costs and  |  |    | Exchange    |  |  |            |            | end of |       
|                                      |                                                  | of period  |    |           | expenses   |  |    | differences |  |  | Deductions |            |        | period |    
|                                      |                                                  |            |    |           |            |  |    |             |  |  |            |            |        |        |    
|Year ended December 31, 2004          |                                                  |            |    |           |            |  |    |             |  |  |            |            |        |        |     |    |   |  |    |   
|Provisions for bad and doubtful debts |                                                  |            | 45 |           |            |  | 20 |             |  |  | (3         | )          |        |        | (19 | )  |   |  | 43 |   
|15 months ended December 31, 2003     |                                                  |            |    |           |            |  |    |             |  |  |            |            |        |        |     |    |   |  |    |   
|Provisions for bad and doubtful debts |                                                  |            | 55 |           |            |  | 9  |             |  |  | (6         | )          |        |        | (13 | )  |   |  | 45 |   
|                                      | Three months ended December 31, 2003 (unaudited) |            |    |           |            |  |    |             |  |  |            |            |        |        |     |    |   |  |    |    | 
|                                      | Provision for bad and doubtful debts             |            |    | 55        |            |  |    | 2           |  |  |            | (2         | )      |        |     | (5 | ) |  |    | 50 | 
|                                      | 12 months ended December 31, 2003 (unaudited)    |            |    |           |            |  |    |             |  |  |            |            |        |        |     |    |   |  |    |    | 
|                                      | Provision for bad and doubtful debts             |            |    | 50        |            |  |    | 7           |  |  |            | (4         | )      |        |     | (8 | ) |  |    | 45 | 
|Year ended September 30, 2002         |                                                  |            |    |           |            |  |    |             |  |  |            |            |        |        |     |    |   |  |    |   
|Provisions for bad and doubtful debts |                                                  |            | 41 |           |            |  | 24 |             |  |  | 1          |            |        |        | (9  | )  |   |  | 55 |   

S-1



---



##### Table of Contents



SIGNATURES






| |                                  
| | ---------------------------------
| | INTERCONTINENTAL HOTELS GROUP PLC
| | (Registrant)                     



| |     |                     
| | --- | --------------------
| | By: | /s/ Richard Solomons

| |                          
| | -------------------------
| |                          
| | Name: Richard Solomons   
| | Title:   Finance Director