##### 









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, 2006                                                           
|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
    113/7
    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
113/7
pence
each                              356,116,049


þ o


o þ


þ o


12b-2


| |                            |                      |                          | 
| | -------------------------- | -------------------- | ------------------------ | 
| | Large accelerated filer  þ | Accelerated filer  o | Non-accelerated filer  o | 



o þ


12b-2


o þ










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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                                                                                  |   |      | 16 | 
|                                                         |  | Summary                                                                                                     |   |      | 16 | 
|                                                         |  | Segmental Information                                                                                       |   |      | 20 | 
|                                                         |  | Hotels                                                                                                      |   |      | 24 | 
|                                                         |  | Soft Drinks                                                                                                 |   |      | 45 | 
|                                                         |  | Trademarks                                                                                                  |   |      | 45 | 
|                                                         |  | Organizational Structure                                                                                    |   |      | 45 | 
|                                                         |  | Property, Plant and Equipment                                                                               |   |      | 45 | 
|                                                         |  | Environment                                                                                                 |   |      | 46 | 
|Item 4A.                                                 |  | Unresolved Staff Comments                                                                                   |   |      | 47 | 
|Item 5.                                                  |  | Operating and Financial Review and
    Prospects                                                            |   |      | 47 | 
|                                                         |  | Introduction                                                                                                |   |      | 47 | 
|                                                         |  | Critical Accounting Policies Under
    International Financial Reporting Standards (IFRS)
    and US GAAP |   |      | 47 | 
|                                                         |  | Operating Results                                                                                           |   |      | 50 | 
|                                                         |  | Liquidity and Capital Resources                                                                             |   |      | 60 | 
|Item 6.                                                  |  | Directors, Senior Management and
    Employees                                                              |   |      | 62 | 
|                                                         |  | Directors and Senior Management                                                                             |   |      | 62 | 
|                                                         |  | Compensation                                                                                                |   |      | 65 | 
|                                                         |  | Board Practices                                                                                             |   |      | 67 | 
|                                                         |  | Employees                                                                                                   |   |      | 69 | 
|                                                         |  | Share Ownership                                                                                             |   |      | 71 | 
|Item 7.                                                  |  | Major Shareholders and Related Party
    Transactions                                                       |   |      | 71 | 
|                                                         |  | Major Shareholders                                                                                          |   |      | 71 | 
|                                                         |  | Related Party Transactions                                                                                  |   |      | 72 | 
|Item 8.                                                  |  | Financial Information                                                                                       |   |      | 72 | 
|                                                         |  | Consolidated Statements and Other Financial
    Information                                                 |   |      | 72 | 
|                                                         |  | Significant Changes                                                                                         |   |      | 72 | 
|Item 9.                                                  |  | The Offer and Listing                                                                                       |   |      | 72 | 
|                                                         |  | Plan of Distribution                                                                                        |   |      | 74 | 
|                                                         |  | Selling Shareholders                                                                                        |   |      | 74 | 
|                                                         |  | Dilution                                                                                                    |   |      | 74 | 
|                                                         |  | Expenses of the Issue                                                                                       |   |      | 74 | 

2



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|          |  |                                                                                  |  |      |    | 
|--------- |  | -------------------------------------------------------------------------------- |  | ---- | -- | 
|          |  |                                                                                  |  | Page |   
|          |  |                                                                                  |  |      |   
|         
|Item 10.  |  | Additional Information                                                           |  |      | 74 | 
|          |  | Memorandum and Articles of Association                                           |  |      | 74 | 
|          |  | Material Contracts                                                               |  |      | 77 | 
|          |  | Exchange Controls                                                                |  |      | 79 | 
|          |  | Taxation                                                                         |  |      | 79 | 
|          |  | Documents on Display                                                             |  |      | 83 | 
|Item 11.  |  | Quantitative and Qualitative Disclosures
    About Market Risk                   |  |      | 83 | 
|Item 12.  |  | Description of Securities Other Than Equity
    Securities                       |  |      | 85 | 
|         
|PART II  
|Item 13.  |  | Defaults, Dividend Arrearages and
    Delinquencies                              |  |      | 85 | 
|Item 14.  |  | Material Modifications to the Rights of
    Security Holders and Use of Proceeds |  |      | 85 | 
|Item 15.  |  | Controls and Procedures                                                          |  |      | 85 | 
|Item 16.  |  | [Reserved]                                                                       |  |      | 86 | 
|Item 16A. |  | Audit Committee Financial Expert                                                 |  |      | 86 | 
|Item 16B. |  | Code of Ethics                                                                   |  |      | 86 | 
|Item 16C. |  | Principal Accountant Fees and Services                                           |  |      | 86 | 
|Item 16D. |  | Exemptions from the Listing Standards for
    Audit Committees                   |  |      | 87 | 
|Item 16E. |  | Purchases of Equity Securities by the
    Issuer and Affiliated Purchasers       |  |      | 87 | 
|         
|PART III 
|Item 17.  |  | Financial Statements                                                             |  |      | 87 | 
|Item 18.  |  | Financial Statements                                                             |  |      | 88 | 
|Item 19.  |  | Exhibits                                                                         |  |      | 88 | 

3



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##### 






INTRODUCTION






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | board refers to the board of directors of
    InterContinental Hotels Group PLC or, where appropriate, the
    board of InterContinental Hotels Limited or Six Continents
    Limited;                                                                                                                                                                                                                                                                                                                                               
|
| |  | Britvic refers to Britannia Soft Drinks Limited for
    the period up to November 18, 2005, and thereafter,
    Britannia SD Holdings Limited (renamed Britvic plc on
    November 21, 2005) which became the holding company of the
    Britvic Group on November 18, 2005;                                                                                                                                                                                                                                                         
|
| |  | Britvic Group refers to Britvic and its subsidiaries
    from time to time;                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Company refers to InterContinental Hotels Group PLC,
    InterContinental Hotels Limited or Six Continents Limited or
    their respective board of directors as the context requires;                                                                                                                                                                                                                                                                                                                                               
|
| |  | Group refers to InterContinental Hotels Group PLC
    and its subsidiaries or, where appropriate, InterContinental
    Hotels Limited or Six Continents Limited and their subsidiaries
    as the context requires;                                                                                                                                                                                                                                                                                                                  
|
| |  | Hotels or IHG Hotels refers to the
    hotels business of the Group;                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | IHG refers to InterContinental Hotels Group PLC or,
    where appropriate, its board of directors;                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | IHL refers to InterContinental Hotels Limited,
    previously InterContinental Hotels Group PLC, former parent
    company of the Group and re-registered as a private limited
    company on June 27, 2005;                                                                                                                                                                                                                                                                                                                         
|
| |  | MAB or Mitchells and Butlers refers to
    Mitchells & Butlers plc;                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | ordinary share or share refers, before
    April 14, 2003, to the ordinary shares of 28 pence each in
    Six Continents Limited; following that date and until
    December 10, 2004 to the ordinary shares of £1 each in
    IHL; following that date and until June 27, 2005 to the
    ordinary shares of 112 pence each in IHL; following that
    date and until June 12, 2006 to the ordinary shares of
    10 pence each in IHG; and following June 12, 2006 to
    the ordinary shares of
    113/7 pence
    each in IHG;
|
| |  | Six Continents refers to Six Continents Limited;
    previously Six Continents PLC and re-registered as a private
    limited company on June 6, 2005;                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Soft Drinks and Britvic business refer
    to the soft drinks business of InterContinental Hotels Group
    PLC, which the Company had through its controlling interest in
    Britvic and which the Company disposed of by way of an initial
    public offering effective December 14, 2005; and                                                                                                                                                                                                                                 
|
| |  | VAT refers to UK value added tax levied by HM
    Revenue and Customs on certain goods and services.                                                                                                                                                                                                                                                                                                                                                                                                                                 



 20-F


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

|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |       |   |  |       |       |  
|---------------------------------------------------------------------- | ---------------------------- | ----------------------------------------------- | ----- | ------ | ---- |  | --- | ------- |  |  | ------- | ----- | - |  | ----- | ----- | -
|                                                                       |                              | Years ended December 31,                        |      
|                                                                       |                              |                                                 |      
|                                                                       |                              | 2006(2)                                         |       |        | 2006 |  |     | 2005(1) |  |  | 2004(1) |      
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|                                                                       |                              | $                                               |       |        | £    |  |     | £       |  |  | £       |      
|                                                                       |                              | (in millions, except per share and ADS amounts) |      
|Amounts in accordance with IFRS                                        |                              |                                                 |       |        |      |  |     |         |  |  |         |       |   |  |       |      
|Revenue:                                                               |                              |                                                 |       |        |      |  |     |         |  |  |         |       |   |  |       |      
|                                                                       | Continuing operations        |                                                 |       | 1,480  |      |  |     | 805     |  |  |         | 713   |   |  |       | 606   |  
|                                                                       | Discontinued operations      |                                                 |       | 285    |      |  |     | 155     |  |  |         | 1,197 |   |  |       | 1,598 |  
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|                                                                       |                              |                                                 | 1,765 |        |      |  | 960 |         |  |  | 1,910   |       |   |  | 2,204 |      
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|Total operating profit before other operating income and
    expenses: |                              |                                                 |       |        |      |  |     |         |  |  |         |       |   |  |       |      
|                                                                       | Continuing operations        |                                                 |       | 369    |      |  |     | 201     |  |  |         | 173   |   |  |       | 120   |  
|                                                                       | Discontinued operations      |                                                 |       | 55     |      |  |     | 30      |  |  |         | 166   |   |  |       | 226   |  
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|                                                                       |                              |                                                 | 424   |        |      |  | 231 |         |  |  | 339     |       |   |  | 346   |      
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|Other operating income and expenses:                                   |                              |                                                 |       |        |      |  |     |         |  |  |         |       |   |  |       |      
|                                                                       | Continuing operations        |                                                 |       | 50     |      |  |     | 27      |  |  |         | (22   | ) |  |       | (49   | )
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|                                                                       |                              |                                                 | 50    |        |      |  | 27  |         |  |  | (22     | )     |   |  | (49   | )    
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|Total operating profit:                                                |                              |                                                 |       |        |      |  |     |         |  |  |         |       |   |  |       |      
|                                                                       | Continuing operations        |                                                 |       | 419    |      |  |     | 228     |  |  |         | 151   |   |  |       | 71    |  
|                                                                       | Discontinued operations      |                                                 |       | 55     |      |  |     | 30      |  |  |         | 166   |   |  |       | 226   |  
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|                                                                       |                              |                                                 | 474   |        |      |  | 258 |         |  |  | 317     |       |   |  | 297   |      
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|Financial income                                                       |                              |                                                 | 48    |        |      |  | 26  |         |  |  | 30      |       |   |  | 70    |      
|Financial expenses                                                     |                              |                                                 | (68   | )      |      |  | (37 | )       |  |  | (63     | )     |   |  | (103  | )    
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|Profit before tax                                                      |                              |                                                 | 454   |        |      |  | 247 |         |  |  | 284     |       |   |  | 264   |      
|Tax                                                                    |                              |                                                 | 75    |        |      |  | 41  |         |  |  | (80     | )     |   |  | 127   |      
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|Profit after tax                                                       |                              |                                                 | 529   |        |      |  | 288 |         |  |  | 204     |       |   |  | 391   |      
|Gain on disposal of assets, net of tax                                 |                              |                                                 | 215   |        |      |  | 117 |         |  |  | 311     |       |   |  | 19    |      
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|Profit available for shareholders                                      |                              |                                                 | 744   |        |      |  | 405 |         |  |  | 515     |       |   |  | 410   |      
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|Attributable to:                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |       |   |  |       |      
|                                                                       | Equity holders of the parent |                                                 |       | 744    |      |  |     | 405     |  |  |         | 496   |   |  |       | 383   |  
|                                                                       | Minority equity interest     |                                                 |       |       |      |  |     |        |  |  |         | 19    |   |  |       | 27    |  
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|Profit for the year                                                    |                              |                                                 | 744   |        |      |  | 405 |         |  |  | 515     |       |   |  | 410   |      
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      
|Earnings per ordinary share:                                           |                              |                                                 |       |        |      |  |     |         |  |  |         |       |   |  |       |      
|                                                                       | Basic                        |                                                 |       | 191.9p |      |  |     | 104.1p  |  |  |         | 95.2p |   |  |       | 53.9p |  
|                                                                       | Diluted                      |                                                 |       | 186.9p |      |  |     | 101.5p  |  |  |         | 93.1p |   |  |       | 53.3p |  
|                                                                       |                              |                                                 |       |        |      |  |     |         |  |  |         |      

Footnotes on page 10.


8



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##### 



|                                                                                             |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |      |    |  |       |      |     |  |      |      |     | 
|-------------------------------------------------------------------------------------------- | ----------------------------- | ----------------------------------- | ----- | ----------------------------------------------- | ------------ |  | ----- | ------------ | -- | ------------ | ------------ | ---- | ---------- | ------------- | ---- | --------- | ---- |  | ----- | ------- | -- | - | ------- | ---- | -- |  | ----- | ---- | --- |  | ---- | ---- | --- | 
|                                                                                             |                               |                                     |       |                                                 |              |  |       |              |    | Three months |              |      | 12 months  |               |      | 15 months |      |  |      
|                                                                                             |                               |                                     |       | ended                                           |              |  | ended |              |    | ended        |              |      | Year ended |              
|                                                                                             |                               | Year ended December 31,             |       |                                                 | December 31, |  |       | December 31, |    |              | December 31, |      |            | September 30, |     
|                                                                                             |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |     
|                                                                                             |                               | 2006(2)                             |       |                                                 | 2006         |  |       | 2005(1)      |    |              | 2004(1)      |      |            | 2002          |      |           | 2003 |  |       | 2003(1) |    |   | 2002(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         |                                     |       | 928                                             |              |  |       | 505          |    |              |              | 104  |            |               |      | 257       |      |  |       | 14      |    |   |         | (63  | )  |  |       | (49  | )   |  |      | 102  |    
|                                                                                             | Discontinued operations:      |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |      |    |  |       |      |     |  |      |      |    
|                                                                                             |                               | Income from discontinued operations |       |                                                 |             |  |       |              |   |              |              |      | 41         |               |      |           | 62   |  |       |         | 46 |   |         |      | 92 |  |       |      | 138 |  |      |      | 226 | 
|                                                                                             |                               | Surplus on disposal                 |       |                                                 |             |  |       |              |   |              |              |      | 210        |               |      |           | 21   |  |       |         |   |   |         |      |   |  |       |      |    |  |      |      | 171 | 
|                                                                                             |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |     
|                                                                                             | Total discontinued operations |                                     |       |                                                |              |  |       |             |    |              |              | 251  |            |               |      | 83        |      |  |       | 46      |    |   |         | 92   |    |  |       | 138  |     |  |      | 397  |    
|Cumulative effect on prior years of:
    adoption of FAS 142                                 |                               |                                     |      |                                                 |              |  |      |              |    |              |             |      |            |               |     |           |      |  | (712  | )       |    |   |        |      |    |  | (712  | )    |     |  |     |     
|                                                                                             | adoption of FAS 123(R)        |                                     |       | (35                                             | )            |  |       | (19          | )  |              |              |     |            |               |      |          |      |  |       |        |    |   |         |     |    |  |       |     |     |  |      |     |    
|                                                                                             |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |     
|Net income/(loss)                                                                            |                               |                                     | 893   |                                                 |              |  | 486   |              |    |              | 355          |      |            |               | 340  |           |      |  | (652  | )       |    |   | 29      |      |    |  | (623  | )    |     |  | 499  |     
|                                                                                             |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |     
|Per ordinary share and American Depositary
    Share(4)                                      |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |      |    |  |       |      |     |  |      |     
|Basic                                                                                        |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |      |    |  |       |      |     |  |      |     
|Income/(loss) before cumulative effect on prior years of change
    in accounting principle: |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |      |    |  |       |      |     |  |      |     
|                                                                                             | Continuing operations         |                                     |       | 238.6                                           | ¢            |  |       | 129.8        | p  |              |              | 20.0 | p          |               |      | 36.2      | p    |  |       | 1.9     | p  |   |         | (8.6 | )p |  |       | (6.7 | )p  |  |      | 14.0 | p  
|                                                                                             | Discontinued operations       |                                     |       |                                                |              |  |       |             |    |              |              | 48.2 | p          |               |      | 11.7      | p    |  |       | 6.3     | p  |   |         | 12.6 | p  |  |       | 18.9 | p   |  |      | 54.3 | p  
|Cumulative effect on prior years of:
    adoption of FAS 142                                 |                               |                                     |      |                                                 |              |  |      |              |    |              |             |      |            |               |     |           |      |  | (97.1 | )p      |    |   |        |      |    |  | (97.1 | )p   |     |  |     |     
|                                                                                             | adoption of FAS 123(R)        |                                     |       | (9.0                                            | )¢           |  |       | (4.9         | )p |              |              |     |            |               |      |          |      |  |       |        |    |   |         |     |    |  |       |     |     |  |      |     |    
|                                                                                             |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |     
|Net income/(loss)                                                                            |                               |                                     | 229.6 | ¢                                               |              |  | 124.9 | p            |    |              | 68.2         | p    |            |               | 47.9 | p         |      |  | (88.9 | )p      |    |   | 4.0     | p    |    |  | (84.9 | )p   |     |  | 68.3 | p   
|                                                                                             |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |     
|Diluted                                                                                      |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |      |    |  |       |      |     |  |      |     
|Income/(loss) before cumulative effect on prior years of change
    in accounting principle: |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |      |    |  |       |      |     |  |      |     
|                                                                                             | Continuing operations         |                                     |       | 233.8                                           | ¢            |  |       | 127.2        | p  |              |              | 19.5 | p          |               |      | 35.7      | p    |  |       | 1.9     | p  |   |         | (8.6 | )p |  |       | (6.7 | )p  |  |      | 13.9 | p  
|                                                                                             | Discontinued operations       |                                     |       |                                                |              |  |       |             |    |              |              | 47.1 | p          |               |      | 11.5      | p    |  |       | 6.3     | p  |   |         | 12.6 | p  |  |       | 18.9 | p   |  |      | 54.1 | p  
|Cumulative effect on prior years of:
    adoption of FAS 142                                 |                               |                                     |      |                                                 |              |  |      |              |    |              |             |      |            |               |     |           |      |  | (97.1 | )p      |    |   |        |      |    |  | (97.1 | )p   |     |  |     |     
|                                                                                             | adoption of FAS 123(R)        |                                     |       | (8.8                                            | )¢           |  |       | (4.8         | )p |              |              |     |            |               |      |          |      |  |       |        |    |   |         |     |    |  |       |     |     |  |      |     |    
|                                                                                             |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |     
|Net income/(loss)                                                                            |                               |                                     | 225.0 | ¢                                               |              |  | 122.4 | p            |    |              | 66.6         | p    |            |               | 47.2 | p         |      |  | (88.9 | )p      |    |   | 4.0     | p    |    |  | (84.9 | )p   |     |  | 68.0 | p   
|                                                                                             |                               |                                     |       |                                                 |              |  |       |              |    |              |              |      |            |               |      |           |      |  |       |         |    |   |         |     

Footnotes on page 10.


9



---



##### 





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

|                                                   |  |               |       |  |      |  |       |      |  |  |       |  |  |  |       | 
|-------------------------------------------------- |  | ------------- | ----- |  | ---- |  | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|                                                   |  | December 31,  |      
|                                                   |  |               |      
|                                                   |  | 2006(3)       |       |  | 2006 |  |       | 2005 |  |  | 2004  | 
|                                                   |  |               |       |  |      |  |       |      |  |  |       | 
|                                                   |  | $             |       |  | £    |  |       | £    |  |  | £     | 
|                                                   |  | (in millions) |      
|Amounts in accordance with IFRS                    |  |               |       |  |      |  |       |      |  |  |       |  |  |  |       | 
|Goodwill and intangible assets                     |  |               | 516   |  |      |  | 263   |      |  |  | 238   |  |  |  | 206   | 
|Property, plant and equipment                      |  |               | 1,956 |  |      |  | 997   |      |  |  | 1,356 |  |  |  | 1,926 | 
|Investments and other financial assets             |  |               | 251   |  |      |  | 128   |      |  |  | 155   |  |  |  | 122   | 
|Current assets                                     |  |               | 892   |  |      |  | 455   |      |  |  | 707   |  |  |  | 598   | 
|Non-current assets classified as held for sale     |  |               | 98    |  |      |  | 50    |      |  |  | 279   |  |  |  | 1,826 | 
|Total assets                                       |  |               | 3,713 |  |      |  | 1,893 |      |  |  | 2,735 |  |  |  | 4,678 | 
|                                                   |  |               |       |  |      |  |       |      |  |  |       | 
|Current
    liabilities(5)                         |  |               | 1,261 |  |      |  | 643   |      |  |  | 794   |  |  |  | 926   | 
|Long-term
    debt(5)                              |  |               | 594   |  |      |  | 303   |      |  |  | 410   |  |  |  | 1,156 | 
|Share capital                                      |  |               | 129   |  |      |  | 66    |      |  |  | 49    |  |  |  | 723   | 
|IHG shareholders equity                           |  |               | 1,330 |  |      |  | 678   |      |  |  | 1,084 |  |  |  | 1,821 | 
|                                                   |  |               |       |  |      |  |       |      |  |  |       | 
|Number of Shares in issue at period end (millions) |  |               |       |  |      |  | 356   |      |  |  | 433   |  |  |  | 622   | 
|                                                   |  |               |       |  |      |  |       |      |  |  |       | 

|                                                   |  |               |       |  |      |  |       |      |  |  |       |  |  |      |       |  |      |  |       |  |  |  |        | 
|-------------------------------------------------- |  | ------------- | ----- |  | ---- |  | ----- | ---- |  |  | ----- |  |  | ---- | ----- |  | ---- |  | ----- |  |  |  | ------ | 
|                                                   |  | December 31,  |      
|                                                   |  |               |      
|                                                   |  | 2006(3)       |       |  | 2006 |  |       | 2005 |  |  | 2004  |  |  | 2003 |       |  | 2002 | 
|                                                   |  |               |       |  |      |  |       |      |  |  |       |  |  |      |       |  |      | 
|                                                   |  | $             |       |  | £    |  |       | £    |  |  | £     |  |  | £    |       |  | £    | 
|                                                   |  | (in millions) |      
|Amounts in accordance with US GAAP                 |  |               |       |  |      |  |       |      |  |  |       |  |  |      |       |  |      |  |       |  |  |  |        | 
|Goodwill and intangible assets                     |  |               | 2,401 |  |      |  | 1,224 |      |  |  | 1,395 |  |  |      | 1,384 |  |      |  | 1,587 |  |  |  | 2,702  | 
|Property, plant and equipment                      |  |               | 2,605 |  |      |  | 1,328 |      |  |  | 1,685 |  |  |      | 3,454 |  |      |  | 3,916 |  |  |  | 6,552  | 
|Investments and other financial assets             |  |               | 214   |  |      |  | 109   |      |  |  | 141   |  |  |      | 115   |  |      |  | 174   |  |  |  | 189    | 
|Current assets                                     |  |               | 979   |  |      |  | 499   |      |  |  | 738   |  |  |      | 699   |  |      |  | 978   |  |  |  | 983    | 
|Non-current assets classified as held for sale     |  |               | 84    |  |      |  | 43    |      |  |  | 258   |  |  |      | 300   |  |      |  |      |  |  |  |       | 
|Total assets                                       |  |               | 6,283 |  |      |  | 3,203 |      |  |  | 4,217 |  |  |      | 5,952 |  |      |  | 6,655 |  |  |  | 10,426 | 
|                                                   |  |               |       |  |      |  |       |      |  |  |       |  |  |      |       |  |      | 
|Current
    liabilities(5)                         |  |               | 1,671 |  |      |  | 852   |      |  |  | 1,161 |  |  |      | 2,021 |  |      |  | 1,496 |  |  |  | 2,109  | 
|Long-term
    debt(5)                              |  |               | 190   |  |      |  | 97    |      |  |  | 36    |  |  |      | 52    |  |      |  | 523   |  |  |  | 622    | 
|Share capital                                      |  |               | 80    |  |      |  | 41    |      |  |  | 43    |  |  |      | 697   |  |      |  | 739   |  |  |  | 243    | 
|IHG shareholders equity                           |  |               | 2,938 |  |      |  | 1,498 |      |  |  | 2,015 |  |  |      | 2,796 |  |      |  | 3,380 |  |  |  | 6,221  | 
|                                                   |  |               |       |  |      |  |       |      |  |  |       |  |  |      |       |  |      | 
|Number of Shares in issue at period end (millions) |  |               |       |  |      |  | 356   |      |  |  | 433   |  |  |      | 622   |  |      |  | 739   |  |  |  | 734    | 
|                                                   |  |               |       |  |      |  |       |      |  |  |       |  |  |      |       |  |      | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The year ended 2002 includes Hotels 12 months and Soft
    Drinks 52 weeks. The period ended 2003 includes Hotels
    15 months, Soft Drinks 64 weeks ended
    December 20, 2003 and Mitchells and Butlers 28 weeks
    ended April 12, 2003. The year ended 2004 includes Hotels
    12 months and Soft Drinks 53 weeks ended
    December 25, 2004. The year ended 2005 includes Hotels
    12 months and Soft Drinks 50 weeks and three days
    ended December 14, 2005.
|   
|(2) | US dollar amounts have been translated at the weighted average
    rate for the year of £1.00 = $1.84.                                                                                                                                                                                                                                                                                                                                                                       
|   
|(3) | US dollar amounts have been translated at the Noon Buying Rate
    on December 31, 2006 of £1.00 = $1.96 solely for
    convenience.                                                                                                                                                                                                                                                                                                                                         
|   
|(4) | Each American Depositary Share represents one ordinary share.                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(5) | Long-term debt under IFRS includes amounts supported by
    long-term credit facilities, which are classified as current
    liabilities under US GAAP.                                                                                                                                                                                                                                                                                                                      

10



---



##### 



Dividends








Ordinary dividend


|                               |  |                          |       |  |           |  |       |       |  |  |         |  |  |       |       |  |       |  |       |     |  |  |       | 
|------------------------------ |  | ------------------------ | ----- |  | --------- |  | ----- | ----- |  |  | ------- |  |  | ----- | ----- |  | ----- |  | ----- | --- |  |  | ----- | 
|                               |  | Pence per ordinary share |       |  | $ per ADS | 
|                               |  |                          |       |  |           | 
|                               |  | Interim                  |       |  | Final     |  |       | Total |  |  | Interim |  |  | Final |       |  | Total | 
|                               |  |                          |       |  |           |  |       |       |  |  |         |  |  |       |       |  |       | 
|Year ended September 30,       |  |                          |       |  |           |  |       |       |  |  |         |  |  |       |       |  |       |  |       |     |  |  |       | 
|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                           |  |                          | 4.30  |  |           |  | 10.00 |       |  |  | 14.30   |  |  |       | 0.077 |  |       |  | 0.191 |     |  |  | 0.268 | 
|2005                           |  |                          | 4.60  |  |           |  | 10.70 |       |  |  | 15.30   |  |  |       | 0.081 |  |       |  | 0.187 |     |  |  | 0.268 | 
|2006                           |  |                          | 5.10  |  |           |  | 13.30 |       |  |  | 18.40   |  |  |       | 0.096 |  |       |  | 0.259 | (2) |  |  | 0.355 | 






|    |                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Restated to reflect an equivalent number of shares in
    InterContinental Hotels Group PLC.                                                                     
|   
|(2) | The 2006 final dividend payable to ADS holders will be paid in
    USD and was set using the closing USD/ GBP spot rate of
    £1.00: $1.94 on February 16, 2007.

Special Dividend


|              |  |                |        |  |           |  |      | 
|------------- |  | -------------- | ------ |  | --------- |  | ---- | 
|              |  | Pence per      |        |  |          
|              |  | ordinary share |        |  | $ per ADS | 
|              |  |                |        |  |           | 
|December 2004 |  |                | 72.00  |  |           |  | 1.39 | 
|June 2006     |  |                | 118.00 |  |           |  | 2.17 | 

Return of Capital


|          |  |                |        |  |           |  |      | 
|--------- |  | -------------- | ------ |  | --------- |  | ---- | 
|          |  | Pence per      |        |  |          
|          |  | ordinary share |        |  | $ per ADS | 
|          |  |                |        |  |           | 
|June 2005 |  |                | 165.00 |  |           |  | 2.86 | 

11



---



##### 



Exchange Rates




|                                    |  |               |      |  |               |  |      | 
|----------------------------------- |  | ------------- | ---- |  | ------------- |  | ---- | 
|                                    |  | Months       |      |  | Months       | 
|                                    |  | highest       |      |  | lowest        | 
|Month                               |  | exchange rate |      |  | exchange rate | 
|                                    |  |               |      |  |               | 
|September 2006                      |  |               | 1.91 |  |               |  | 1.86 | 
|October 2006                        |  |               | 1.91 |  |               |  | 1.86 | 
|November 2006                       |  |               | 1.97 |  |               |  | 1.89 | 
|December 2006                       |  |               | 1.98 |  |               |  | 1.95 | 
|January 2007                        |  |               | 1.99 |  |               |  | 1.93 | 
|February 2007                       |  |               | 1.97 |  |               |  | 1.94 | 
|March 2007 (through March 16, 2007) |  |               | 1.96 |  |               |  | 1.92 | 

|                              |  |        |      |  |         |  |      |      |  |  |      |  |  |  |      | 
|----------------------------- |  | ------ | ---- |  | ------- |  | ---- | ---- |  |  | ---- |  |  |  | ---- | 
|                              |  | Period |      |  | Average |  |      |      |  | 
|                              |  | end    |      |  | rate(1) |  |      | High |  |  | Low  | 
|                              |  |        |      |  |         |  |      |      |  |  |      | 
|Year ended September 30,      |  |        |      |  |         |  |      |      |  |  |      |  |  |  |      | 
|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 | 
|2005                          |  |        | 1.73 |  |         |  | 1.82 |      |  |  | 1.93 |  |  |  | 1.71 | 
|2006                          |  |        | 1.96 |  |         |  | 1.84 |      |  |  | 1.97 |  |  |  | 1.74 | 
|2007 (through March 16, 2007) |  |        | 1.94 |  |         |  | 1.96 |      |  |  | 1.99 |  |  |  | 1.92 | 






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



12



---



##### 






RISK FACTORS


20-F






| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | The Group is reliant on the reputation of its brands and
    the protection of its intellectual property rights









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





13



---



##### 







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







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





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





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





14



---



##### 







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





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





| |                                                                          
| | -------------------------------------------------------------------------
| | The Group may experience a lack of selected development
    opportunities





| |                                               
| | ----------------------------------------------
| | The Group is exposed to the risk of litigation





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





| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | The Group is exposed to a variety of risks associated with
    its ability to borrow and satisfy debt covenants



15



---



##### 







| |                                                                  
| | -----------------------------------------------------------------
| | The Group is required to comply with data privacy
    regulations





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







| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | poor investment performance of pension fund investments which
    are substantially weighted towards global equity markets;                                                                                   
|
| |  | long life expectancy (which will make pensions payable for
    longer and therefore more expensive to provide);                                                                                               
|
| |  | adverse annuity rates (which tend in particular to depend on
    prevailing interest rates and life expectancy) as these will
    make it more expensive to secure pensions with an insurance
    company; and
|
| |  | other events occurring which make past service benefits more
    expensive than predicted in the actuarial assumptions by
    reference to which the Groups past contributions were
    assessed.            








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




SUMMARY




| |               
| | --------------
| | Group Overview



16



---



##### 















| |                                  
| | ---------------------------------
| | InterContinental Hotels Group PLC
| | 67 Alma Road                     
| | Windsor                          
| | Berkshire SL4 3HD                
| | Tel: +44 (0) 1753 410 100        
| | Internet address: www.ihg.com    





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







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







17



---



##### 



















FIGURE 1


|                              |  |                  |     |             |          |  |     |                |  |  |     | 
|----------------------------- |  | ---------------- | --- | ----------- | -------- |  | --- | -------------- |  |  | --- | 
|Asset disposal program detail |  | Number of hotels |     |             | Proceeds |  |     | Net book value | 
|                              |  |                  |     |             |          |  |     |                | 
|                              |  |                  |     | (£ billion) |         
|Disposed to date              |  |                  | 174 |             |          |  | 3.0 |                |  |  | 2.9 | 
|Remaining hotels              |  |                  | 25  |             |          |  |    |                |  |  | 1.0 | 



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









18



---



##### 





FIGURE 2


|                                  |  |        |                           |  |              |             |         |                     |  |  |                      |  |  |  |     | 
|--------------------------------- |  | ------ | ------------------------- |  | ------------ | ----------- | ------- | ------------------- |  |  | -------------------- |  |  |  | --- | 
|Return of funds program           |  | Timing |                           |  | Total return |             |         | Returned to date(i) |  |  | Still to be returned | 
|                                  |  |        |                           |  |              |             |         |                     |  |  |                      | 
|                                  |  |        |                           |  |              | (£ million) |         |                     | 
|£501 million special dividend     |  |        | Paid December 17, 2004    |  |              |             | 501     |                     |  |  | 501                  |  |  |  | Nil | 
|First £250 million share buyback  |  |        | Completed in 2004         |  |              |             | 250     |                     |  |  | 250                  |  |  |  | Nil | 
|£996 million capital return       |  |        | Paid July 8, 2005         |  |              |             | 996     |                     |  |  | 996                  |  |  |  | Nil | 
|Second £250 million share buyback |  |        | Completed in 2006         |  |              |             | 250     |                     |  |  | 250                  |  |  |  | Nil | 
|£497 million special dividend     |  |        | Paid June 22, 2006        |  |              |             | 497     |                     |  |  | 497                  |  |  |  | Nil | 
|Third £250 million share buyback  |  |        | Ongoing                   |  |              |             | 250     |                     |  |  | 244                  |  |  |  | 6   | 
|£700 million special dividend     |  |        | Expected second quarter 2 |  |              |             | 007 700 |                     |  |  |                     |  |  |  | 700 | 
|£150 million share buyback        |  |        | Yet to commence           |  |              |             | 150     |                     |  |  |                     |  |  |  | 150 | 
|                                  |  |        |                           |  |              |             |         |                     |  |  |                      | 
|Total                             |  |        |                           |  |              |             | 3,594   |                     |  |  | 2,738                |  |  |  | 856 | 
|                                  |  |        |                           |  |              |             |         |                     |  |  |                      | 



|    |                      
|--- | ---------------------
|(i) | As at March 16, 2007.



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





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



19



---



##### 






SEGMENTAL INFORMATION




| |                        
| | -----------------------
| | Geographic Segmentation



|                                                                      |                                    |              |     |     |              |  |       |              |   |  |       |       |  
|--------------------------------------------------------------------- | ---------------------------------- | ------------ | --- | --- | ------------ |  | ----- | ------------ | - |  | ----- | ----- | -
|                                                                      |                                    | Year ended   |     |     | Year ended   |  |       | Year ended   |  
|                                                                      |                                    | December 31, |     |     | December 31, |  |       | December 31, |  
|                                                                      |                                    | 2006         |     |     | 2005         |  |       | 2004         |  
|                                                                      |                                    |              |     |     |              |  |       |              |  
|                                                                      |                                    | (£ million)  |    
|Revenue(1)(4)                                                         |                                    |              |     |     |              |  |       |              |   |  |       |      
|                                                                      | Americas                           |              |     | 433 |              |  |       | 384          |   |  |       | 306   |  
|                                                                      | Europe, the Middle East and Africa |              |     | 206 |              |  |       | 200          |   |  |       | 186   |  
|                                                                      | Asia Pacific                       |              |     | 111 |              |  |       | 87           |   |  |       | 74    |  
|                                                                      | Central(5)                         |              |     | 55  |              |  |       | 42           |   |  |       | 40    |  
|                                                                      |                                    |              |     |     |              |  |       |              |  
|Continuing operations                                                 |                                    |              | 805 |     |              |  | 713   |              |   |  | 606   |      
|                                                                      |                                    |              |     |     |              |  |       |              |  
|                                                                      | Americas                           |              |     | 30  |              |  |       | 61           |   |  |       | 189   |  
|                                                                      | Europe, the Middle East and Africa |              |     | 125 |              |  |       | 1,082        |   |  |       | 1,349 |  
|                                                                      | Asia Pacific                       |              |     |    |              |  |       | 54           |   |  |       | 60    |  
|                                                                      |                                    |              |     |     |              |  |       |              |  
|Discontinued
    operations(3)                                        |                                    |              | 155 |     |              |  | 1,197 |              |   |  | 1,598 |      
|                                                                      |                                    |              |     |     |              |  |       |              |  
|Total                                                                 |                                    |              | 960 |     |              |  | 1,910 |              |   |  | 2,204 |      
|                                                                      |                                    |              |     |     |              |  |       |              |  
|Operating profit before other operating income and
    expenses(1)(2) |                                    |              |     |     |              |  |       |              |   |  |       |      
|                                                                      | Americas                           |              |     | 217 |              |  |       | 186          |   |  |       | 149   |  
|                                                                      | Europe, the Middle East and Africa |              |     | 36  |              |  |       | 31           |   |  |       | 11    |  
|                                                                      | Asia Pacific                       |              |     | 29  |              |  |       | 21           |   |  |       | 17    |  
|                                                                      | Central(5)                         |              |     | (81 | )            |  |       | (65          | ) |  |       | (57   | )
|                                                                      |                                    |              |     |     |              |  |       |              |  
|Continuing operations                                                 |                                    |              | 201 |     |              |  | 173   |              |   |  | 120   |      
|                                                                      |                                    |              |     |     |              |  |       |              |  
|                                                                      | Americas                           |              |     | 4   |              |  |       | 12           |   |  |       | 24    |  
|                                                                      | Europe, the Middle East and Africa |              |     | 26  |              |  |       | 143          |   |  |       | 195   |  
|                                                                      | Asia Pacific                       |              |     |    |              |  |       | 11           |   |  |       | 7     |  
|                                                                      |                                    |              |     |     |              |  |       |              |  
|Discontinued
    operations(3)                                        |                                    |              | 30  |     |              |  | 166   |              |   |  | 226   |      
|                                                                      |                                    |              |     |     |              |  |       |              |  
|Total                                                                 |                                    |              | 231 |     |              |  | 339   |              |   |  | 346   |      
|                                                                      |                                    |              |     |     |              |  |       |              |  




Footnotes on page 21.


20



---



##### 



|                                                            |                                    |              |       |       |              |  |       |              |   |  |       |       |  
|----------------------------------------------------------- | ---------------------------------- | ------------ | ----- | ----- | ------------ |  | ----- | ------------ | - |  | ----- | ----- | -
|                                                            |                                    | Year ended   |       |       | Year ended   |  |       | Year ended   |  
|                                                            |                                    | December 31, |       |       | December 31, |  |       | December 31, |  
|                                                            |                                    | 2006         |       |       | 2005         |  |       | 2004         |  
|                                                            |                                    |              |       |       |              |  |       |              |  
|                                                            |                                    | (%)          |      
|Revenue                                                     |                                    |              |       |       |              |  |       |              |   |  |       |      
|                                                            | Americas                           |              |       | 45.1  |              |  |       | 20.1         |   |  |       | 13.9  |  
|                                                            | Europe, the Middle East and Africa |              |       | 21.5  |              |  |       | 10.4         |   |  |       | 8.4   |  
|                                                            | Asia Pacific                       |              |       | 11.6  |              |  |       | 4.6          |   |  |       | 3.4   |  
|                                                            | Central(5)                         |              |       | 5.7   |              |  |       | 2.2          |   |  |       | 1.8   |  
|                                                            |                                    |              |       |       |              |  |       |              |  
|Continuing operations                                       |                                    |              | 83.9  |       |              |  | 37.3  |              |   |  | 27.5  |      
|                                                            |                                    |              |       |       |              |  |       |              |  
|                                                            | Americas                           |              |       | 3.1   |              |  |       | 3.2          |   |  |       | 8.6   |  
|                                                            | Europe, the Middle East and Africa |              |       | 13.0  |              |  |       | 56.7         |   |  |       | 61.2  |  
|                                                            | Asia Pacific                       |              |       |      |              |  |       | 2.8          |   |  |       | 2.7   |  
|                                                            |                                    |              |       |       |              |  |       |              |  
|Discontinued operations                                     |                                    |              | 16.1  |       |              |  | 62.7  |              |   |  | 72.5  |      
|                                                            |                                    |              |       |       |              |  |       |              |  
|Total                                                       |                                    |              | 100.0 |       |              |  | 100.0 |              |   |  | 100.0 |      
|                                                            |                                    |              |       |       |              |  |       |              |  
|Operating profit before other operating income and expenses |                                    |              |       |       |              |  |       |              |   |  |       |      
|                                                            | Americas                           |              |       | 93.9  |              |  |       | 69.1         |   |  |       | 43.1  |  
|                                                            | Europe, the Middle East and Africa |              |       | 15.6  |              |  |       | 11.5         |   |  |       | 3.2   |  
|                                                            | Asia Pacific                       |              |       | 12.6  |              |  |       | 7.8          |   |  |       | 4.9   |  
|                                                            | Central(5)                         |              |       | (35.1 | )            |  |       | (24.1        | ) |  |       | (16.5 | )
|                                                            |                                    |              |       |       |              |  |       |              |  
|Continuing operations                                       |                                    |              | 87.0  |       |              |  | 64.3  |              |   |  | 34.7  |      
|                                                            |                                    |              |       |       |              |  |       |              |  
|                                                            | Americas                           |              |       | 1.7   |              |  |       | 4.5          |   |  |       | 6.9   |  
|                                                            | Europe, the Middle East and Africa |              |       | 11.3  |              |  |       | 27.1         |   |  |       | 56.4  |  
|                                                            | Asia Pacific                       |              |       |      |              |  |       | 4.1          |   |  |       | 2.0   |  
|                                                            |                                    |              |       |       |              |  |       |              |  
|Discontinued operations                                     |                                    |              | 13.0  |       |              |  | 35.7  |              |   |  | 65.3  |      
|                                                            |                                    |              |       |       |              |  |       |              |  
|Total                                                       |                                    |              | 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 rate is 2006:
    £1 = $1.84; (2005: £1 = $1.83,
    2004: £1 = $1.82). In the case of the euro, the
    translation rate is 2006: £1 =
    1.47;
    (2005: £1 =
    1.46,
    2004: £1 =
    1.47).                                                                                                                                   
|   
|(2) | Operating profit before other operating income and expenses does
    not include other operating income and expenses for all periods
    presented. Other operating income and expenses (charge unless
    otherwise noted) by region are the Americas (2006:
    £25 million credit; 2005: £5 million; 2004:
    £15 million credit); Europe, the Middle East and
    Africa (2006: £2 million credit; 2005:
    £12 million; 2004: £57 million); and
    Asia Pacific (2006: £nil; 2005: £5 million;
    2004: £7 million).
|   
|(3) | Europe, the Middle East and Africa includes discontinued
    operations for Hotels (2006: £26 million; 2005:
    £73 million; 2004: £118 million) and
    Soft Drinks (2006: £nil; 2005: £70 million; 2004:
    £77 million). The Americas and Asia Pacific
    discontinued operations all relate to Hotels. Hotels
    discontinued operations were all owned and leased.                                                                                                                                                  
|   
|(4) | Amounts are reported by origin. See Note 2 of Notes to the
    Consolidated Financial Statements for details by destination,
    for which the amounts are not significantly different.                                                                                                                                                                                                                                                                                                                                      
|   
|(5) | Central revenue primarily relates to Holidex (IHGs
    proprietary reservation system) fee income. Central operating
    profit includes central revenue less costs related to global
    functions.                                                                                                                                                                                                                                                                                                                        

21



---



##### 



Activity Segmentation




|                                                                      |             |                                    |     |   |              |   |       |              |     |   |       |     |     |  
|--------------------------------------------------------------------- | ----------- | ---------------------------------- | --- | - | ------------ | - | ----- | ------------ | --- | - | ----- | --- | --- | -
|                                                                      |             | Year ended                         |     |   | Year ended   |   |       | Year ended   |    
|                                                                      |             | December 31,                       |     |   | December 31, |   |       | December 31, |    
|                                                                      |             | 2006                               |     |   | 2005         |   |       | 2004         |    
|                                                                      |             |                                    |     |   |              |   |       |              |    
|                                                                      |             | (£ million)                        |    
|Revenue(1)(4)                                                         |             |                                    |     |   |              |   |       |              |     |   |       |    
|                                                                      | Hotels      |                                    |     |   |              |   |       |              |     |   |       |     |    
|                                                                      |             | Americas                           |     |   | 433          |   |       |              | 384 |   |       |     | 306 |  
|                                                                      |             | Europe, the Middle East and Africa |     |   | 206          |   |       |              | 200 |   |       |     | 186 |  
|                                                                      |             | Asia Pacific                       |     |   | 111          |   |       |              | 87  |   |       |     | 74  |  
|                                                                      |             | Central(5)                         |     |   | 55           |   |       |              | 42  |   |       |     | 40  |  
|                                                                      |             |                                    |     |   |              |   |       |              |    
|Continuing operations                                                 |             |                                    | 805 |   |              |   | 713   |              |     |   | 606   |    
|                                                                      |             |                                    |     |   |              |   |       |              |    
|                                                                      | Hotels(3)   |                                    |     |   |              |   |       |              |     |   |       |     |    
|                                                                      |             | Americas                           |     |   | 30           |   |       |              | 61  |   |       |     | 189 |  
|                                                                      |             | Europe, the Middle East and Africa |     |   | 125          |   |       |              | 411 |   |       |     | 643 |  
|                                                                      |             | Asia Pacific                       |     |   |             |   |       |              | 54  |   |       |     | 60  |  
|                                                                      | Soft Drinks |                                    |     |  |              |   |       | 671          |     |   |       | 706 |    
|                                                                      |             |                                    |     |   |              |   |       |              |    
|Discontinued operations                                               |             |                                    | 155 |   |              |   | 1,197 |              |     |   | 1,598 |    
|                                                                      |             |                                    |     |   |              |   |       |              |    
|Total                                                                 |             |                                    | 960 |   |              |   | 1,910 |              |     |   | 2,204 |    
|                                                                      |             |                                    |     |   |              |   |       |              |    
|Operating profit before other operating income and
    expenses(1)(2) |             |                                    |     |   |              |   |       |              |     |   |       |    
|                                                                      | Hotels      |                                    |     |   |              |   |       |              |     |   |       |     |    
|                                                                      |             | Americas                           |     |   | 217          |   |       |              | 186 |   |       |     | 149 |  
|                                                                      |             | Europe, the Middle East and Africa |     |   | 36           |   |       |              | 31  |   |       |     | 11  |  
|                                                                      |             | Asia Pacific                       |     |   | 29           |   |       |              | 21  |   |       |     | 17  |  
|                                                                      |             | Central(5)                         |     |   | (81          | ) |       |              | (65 | ) |       |     | (57 | )
|                                                                      |             |                                    |     |   |              |   |       |              |    
|Continuing operations                                                 |             |                                    | 201 |   |              |   | 173   |              |     |   | 120   |    
|                                                                      |             |                                    |     |   |              |   |       |              |    
|                                                                      | Hotels(3)   |                                    |     |   |              |   |       |              |     |   |       |     |    
|                                                                      |             | Americas                           |     |   | 4            |   |       |              | 12  |   |       |     | 24  |  
|                                                                      |             | Europe, the Middle East and Africa |     |   | 26           |   |       |              | 73  |   |       |     | 118 |  
|                                                                      |             | Asia Pacific                       |     |   |             |   |       |              | 11  |   |       |     | 7   |  
|                                                                      | Soft Drinks |                                    |     |  |              |   |       | 70           |     |   |       | 77  |    
|                                                                      |             |                                    |     |   |              |   |       |              |    
|Discontinued operations                                               |             |                                    | 30  |   |              |   | 166   |              |     |   | 226   |    
|                                                                      |             |                                    |     |   |              |   |       |              |    
|Total                                                                 |             |                                    | 231 |   |              |   | 339   |              |     |   | 346   |    
|                                                                      |             |                                    |     |   |              |   |       |              |    




Footnotes on page 23.


22



---



##### 



|                                                            |                         |                                    |       |      |              |   |       |              |       |   |       |      |       |  
|----------------------------------------------------------- | ----------------------- | ---------------------------------- | ----- | ---- | ------------ | - | ----- | ------------ | ----- | - | ----- | ---- | ----- | -
|                                                            |                         | Year ended                         |       |      | Year ended   |   |       | Year ended   |      
|                                                            |                         | December 31,                       |       |      | December 31, |   |       | December 31, |      
|                                                            |                         | 2006                               |       |      | 2005         |   |       | 2004         |      
|                                                            |                         |                                    |       |      |              |   |       |              |      
|                                                            |                         | (%)                                |      
|Revenue                                                     |                         |                                    |       |      |              |   |       |              |       |   |       |     
|                                                            | Hotels                  |                                    |       |      |              |   |       |              |       |   |       |      |      
|                                                            |                         | Americas                           |       |      | 45.1         |   |       |              | 20.1  |   |       |      | 13.9  |  
|                                                            |                         | Europe, the Middle East and Africa |       |      | 21.5         |   |       |              | 10.4  |   |       |      | 8.4   |  
|                                                            |                         | Asia Pacific                       |       |      | 11.6         |   |       |              | 4.6   |   |       |      | 3.4   |  
|                                                            |                         | Central                            |       |      | 5.7          |   |       |              | 2.2   |   |       |      | 1.8   |  
|                                                            |                         |                                    |       |      |              |   |       |              |      
|Continuing operations                                       |                         |                                    | 83.9  |      |              |   | 37.3  |              |       |   | 27.5  |     
|                                                            |                         |                                    |       |      |              |   |       |              |      
|                                                            | Hotels                  |                                    |       |      |              |   |       |              |       |   |       |      |      
|                                                            |                         | Americas                           |       |      | 3.1          |   |       |              | 3.2   |   |       |      | 8.6   |  
|                                                            |                         | Europe, the Middle East and Africa |       |      | 13.0         |   |       |              | 21.5  |   |       |      | 29.2  |  
|                                                            |                         | Asia Pacific                       |       |      |             |   |       |              | 2.9   |   |       |      | 2.7   |  
|                                                            | Soft Drinks             |                                    |       |     |              |   |       | 35.1         |       |   |       | 32.0 |      
|                                                            |                         |                                    |       |      |              |   |       |              |      
|Discontinued operations                                     |                         |                                    | 16.1  |      |              |   | 62.7  |              |       |   | 72.5  |     
|                                                            |                         |                                    |       |      |              |   |       |              |      
|Total                                                       |                         |                                    | 100.0 |      |              |   | 100.0 |              |       |   | 100.0 |     
|                                                            |                         |                                    |       |      |              |   |       |              |      
|Operating profit before other operating income and expenses |                         |                                    |       |      |              |   |       |              |       |   |       |     
|                                                            | Hotels                  |                                    |       |      |              |   |       |              |       |   |       |      |      
|                                                            |                         | Americas                           |       |      | 93.9         |   |       |              | 54.9  |   |       |      | 43.1  |  
|                                                            |                         | Europe, the Middle East and Africa |       |      | 15.6         |   |       |              | 9.1   |   |       |      | 3.2   |  
|                                                            |                         | Asia Pacific                       |       |      | 12.6         |   |       |              | 6.2   |   |       |      | 4.9   |  
|                                                            |                         | Central                            |       |      | (35.1        | ) |       |              | (19.2 | ) |       |      | (16.5 | )
|                                                            |                         |                                    |       |      |              |   |       |              |      
|Continuing operations                                       |                         |                                    | 87.0  |      |              |   | 51.0  |              |       |   | 34.7  |     
|                                                            |                         |                                    |       |      |              |   |       |              |      
|                                                            | Hotels                  |                                    |       |      |              |   |       |              |       |   |       |      |      
|                                                            |                         | Americas                           |       |      | 1.7          |   |       |              | 3.6   |   |       |      | 6.9   |  
|                                                            |                         | Europe, the Middle East and Africa |       |      | 11.3         |   |       |              | 21.5  |   |       |      | 34.1  |  
|                                                            |                         | Asia Pacific                       |       |      |             |   |       |              | 3.2   |   |       |      | 2.0   |  
|                                                            | Soft Drinks             |                                    |       |     |              |   |       | 20.7         |       |   |       | 22.3 |      
|                                                            |                         |                                    |       |      |              |   |       |              |      
|                                                            | Discontinued operations |                                    |       | 13.0 |              |   |       | 49.0         |       |   |       | 65.3 |      
|                                                            |                         |                                    |       |      |              |   |       |              |      
|Total                                                       |                         |                                    | 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 rate is 2006:
    £1 = $1.84 (2005: $1.83, 2004: £1 = $1.82).
    In the case of the euro, the translation rate is 2006:
    £1 = 1.47
    (2005: £1 =
    1.46, 2004:
    £1 = 1.47).                                                                                                                                                                         
|   
|(2) | Operating profit before other operating income and expenses does
    not include other operating income and expenses for all periods
    presented. Other operating income and expenses items (charge
    unless otherwise noted) by business segment are the Americas
    (2006: £25 million credit; 2005: £7 million;
    2004: £15 million credit); Europe, the Middle East and
    Africa (2006: £2 million credit; 2005:
    £10 million; 2004: £57 million); and Asia
    Pacific (2006: nil million; 2005: £5 million;
    2004: £7 million).
|   
|(3) | Hotels discontinued operations were all owned and leased.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(4) | Amounts are reported by origin. See Note 2 of Notes to the
    Consolidated Financial Statements for details by destination,
    for which the amounts are not significantly different.                                                                                                                                                                                                                                                                                                                                                             
|   
|(5) | Central revenue primarily relates to Holidex (IHGs
    proprietary reservation system) fee income. Central operating
    profit includes central revenue less costs related to global
    functions.                                                                                                                                                                                                                                                                                                                                               

23



---



##### 






HOTELS


Overview










FIGURE 3


|                                            |  |      |     | 
|------------------------------------------- |  | ---- | --- | 
|Percentage of branded hotel rooms by region |  | 2004 |    
|                                            |  |      |    
|North America                               |  |      | 65% | 
|South America                               |  |      | 20% | 
|Europe                                      |  |      | 25% | 
|Middle East                                 |  |      | 25% | 
|East Asia                                   |  |      | 25% | 










| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | change in demographics  as the population ages and
    becomes wealthier, increased leisure time and income encourages
    more travel and hotel visits;
|
| |  | increase in travel volumes as low cost airlines grow rapidly;                                                                                            
|
| |  | globalisation of trade and tourism;                                                                                                                      
|
| |  | increase in affluence and freedom to travel within the Chinese
    middle class; and                                                                     
|
| |  | increase in the preference for branded hotels amongst consumers.                                                                                         



24



---



##### 





Operations




franchised


managed


owned and leased (O & L)




25



---



##### 





|     |  |                 |     |                     |          |            |        |            |  |  |        |  |  |        |         |  |        |  |       |        |  |  |         |  |  |  |       |  |  |  |         | 
|---- |  | --------------- | --- | ------------------- | -------- | ---------- | ------ | ---------- |  |  | ------ |  |  | ------ | ------- |  | ------ |  | ----- | ------ |  |  | ------- |  |  |  | ----- |  |  |  | ------- | 
|     |  |                 |     |                     |          | 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   | 
|     |  |                 |     |                     |          |            |        |            |  |  |        |  |  |        |         |  |        |  |       |        |  |  |         | 
|2006 |  |                 | 25  |                     |          |            | 8,460  |            |  |  | 512    |  |  |        | 125,214 |  |        |  | 3,204 |        |  |  | 422,572 |  |  |  | 3,741 |  |  |  | 556,246 | 
|2005 |  |                 | 55  |                     |          |            | 15,485 |            |  |  | 504    |  |  |        | 121,249 |  |        |  | 3,047 |        |  |  | 400,799 |  |  |  | 3,606 |  |  |  | 537,533 | 
|2004 |  |                 | 166 |                     |          |            | 38,420 |            |  |  | 403    |  |  |        | 98,953  |  |        |  | 2,971 |        |  |  | 396,829 |  |  |  | 3,540 |  |  |  | 534,202 | 



Strategy








| |   |                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | brand performance  to operate a portfolio of brands
    attractive to both owners and guests that have clear market
    positions in relation to competitors;
|
| |  | excellent hotel returns  to generate higher owner
    returns through revenue delivery and improved operating
    efficiency;                                
|
| |  | market scale and knowledge  to accelerate profitable
    growth in the largest markets where the Group currently has
    scale; and                          
|
| |  | aligned organisation  to create a more efficient
    organization with strong core capabilities.                                                             





| |   |                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | organic growth of at least 50,000 to 60,000 net rooms by the end
    of 2008 (up 19,246 from 537,000 in June 2005), with specific
    growth targets for the InterContinental brand and the key
    Chinese market; and
|
| |  | out-performance of total shareholder return against a competitor
    set.                                                                                                                                              





26



---



##### 







| |   |                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a strong brand portfolio across the major markets, including two
    leading brands: InterContinental and Holiday Inn;                          
|
| |  | market coverage  a presence in nearly 100 countries
    and territories;                                                                       
|
| |  | scale  3,741 hotels, 556,246 rooms and
    130 million guest stays per annum;                                                                  
|
| |  | IHG global reservation channels delivering $5.7 billion of
    global system room revenue in 2006, including $2.0 billion
    from the internet;
|
| |  | a loyalty program, Priority Club Rewards, contributing
    $4.4 billion of global system room revenue; and                                      
|
| |  | a strong web presence  holidayinn.com is the
    industrys most visited site, with around 75 million
    total site visits per annum.         



27



---



##### 





| |                  
| | -----------------
| | Segmental Results



|                                                                                 |              |                    |     |     |              |   |     |              |     |   |     |     |     |  
|-------------------------------------------------------------------------------- | ------------ | ------------------ | --- | --- | ------------ | - | --- | ------------ | --- | - | --- | --- | --- | -
|                                                                                 |              | Year ended         |     |     | Year ended   |   |     | Year ended   |    
|                                                                                 |              | December 31,       |     |     | December 31, |   |     | December 31, |    
|                                                                                 |              | 2006               |     |     | 2005         |   |     | 2004         |    
|                                                                                 |              |                    |     |     |              |   |     |              |    
|                                                                                 |              | (£ million)        |    
|Continuing
    revenue(1)(4)                                                     |              |                    |     |     |              |   |     |              |     |   |     |    
|                                                                                 | Americas     |                    |     |     |              |   |     |              |     |   |     |     |    
|                                                                                 |              | Owned and leased   |     |     | 115          |   |     |              | 106 |   |     |     | 80  |  
|                                                                                 |              | Managed            |     |     | 77           |   |     |              | 65  |   |     |     | 30  |  
|                                                                                 |              | Franchised         |     |     | 241          |   |     |              | 213 |   |     |     | 196 |  
|                                                                                 |              |                    |     |     |              |   |     |              |    
|                                                                                 |              |                    | 433 |     |              |   | 384 |              |     |   | 306 |    
|                                                                                 | EMEA         |                    |     |     |              |   |     |              |     |   |     |     |    
|                                                                                 |              | Owned and leased   |     |     | 100          |   |     |              | 110 |   |     |     | 116 |  
|                                                                                 |              | Managed            |     |     | 71           |   |     |              | 55  |   |     |     | 43  |  
|                                                                                 |              | Franchised         |     |     | 35           |   |     |              | 35  |   |     |     | 27  |  
|                                                                                 |              |                    |     |     |              |   |     |              |    
|                                                                                 |              |                    | 206 |     |              |   | 200 |              |     |   | 186 |    
|                                                                                 | Asia         |                    |     |     |              |   |     |              |     |   |     |     |    
|                                                                                 |              | Owned and leased   |     |     | 71           |   |     |              | 59  |   |     |     | 50  |  
|                                                                                 |              | Managed            |     |     | 36           |   |     |              | 25  |   |     |     | 21  |  
|                                                                                 |              | Franchised         |     |     | 4            |   |     |              | 3   |   |     |     | 3   |  
|                                                                                 |              |                    |     |     |              |   |     |              |    
|                                                                                 |              |                    | 111 |     |              |   | 87  |              |     |   | 74  |    
|                                                                                 | Central(3)   |                    |     | 55  |              |   |     | 42           |     |   |     | 40  |    
|                                                                                 |              |                    |     |     |              |   |     |              |    
|Total                                                                            |              |                    | 805 |     |              |   | 713 |              |     |   | 606 |    
|                                                                                 |              |                    |     |     |              |   |     |              |    
|Continuing operating profit before other operating income and
    expenses(1)(2) |              |                    |     |     |              |   |     |              |     |   |     |    
|                                                                                 | Americas     |                    |     |     |              |   |     |              |     |   |     |     |    
|                                                                                 |              | Owned and leased   |     |     | 14           |   |     |              | 14  |   |     |     | 3   |  
|                                                                                 |              | Managed            |     |     | 27           |   |     |              | 20  |   |     |     | 6   |  
|                                                                                 |              | Franchised         |     |     | 208          |   |     |              | 186 |   |     |     | 167 |  
|                                                                                 |              | Regional overheads |     |     | (32          | ) |     |              | (34 | ) |     |     | (27 | )
|                                                                                 |              |                    |     |     |              |   |     |              |    
|                                                                                 |              |                    | 217 |     |              |   | 186 |              |     |   | 149 |    
|                                                                                 | EMEA         |                    |     |     |              |   |     |              |     |   |     |     |    
|                                                                                 |              | Owned and leased   |     |     | (5           | ) |     |              | (5  | ) |     |     | (11 | )
|                                                                                 |              | Managed            |     |     | 37           |   |     |              | 31  |   |     |     | 24  |  
|                                                                                 |              | Franchised         |     |     | 24           |   |     |              | 26  |   |     |     | 21  |  
|                                                                                 |              | Regional overheads |     |     | (20          | ) |     |              | (21 | ) |     |     | (23 | )
|                                                                                 |              |                    |     |     |              |   |     |              |    
|                                                                                 |              |                    | 36  |     |              |   | 31  |              |     |   | 11  |    
|                                                                                 | Asia Pacific |                    |     |     |              |   |     |              |     |   |     |     |    
|                                                                                 |              | Owned and leased   |     |     | 17           |   |     |              | 11  |   |     |     | 9   |  
|                                                                                 |              | Managed            |     |     | 21           |   |     |              | 16  |   |     |     | 14  |  
|                                                                                 |              | Franchised         |     |     | 3            |   |     |              | 2   |   |     |     | 2   |  
|                                                                                 |              | Regional overheads |     |     | (12          | ) |     |              | (8  | ) |     |     | (8  | )
|                                                                                 |              |                    |     |     |              |   |     |              |    
|                                                                                 |              |                    | 29  |     |              |   | 21  |              |     |   | 17  |    
|                                                                                 | Central(3)   |                    |     | (81 | )            |   |     | (65          | )   |   |     | (57 | )  
|                                                                                 |              |                    |     |     |              |   |     |              |    
|Total                                                                            |              |                    | 201 |     |              |   | 173 |              |     |   | 120 |    
|                                                                                 |              |                    |     |     |              |   |     |              |    




Footnotes on page 29.


28



---



##### 



|                                                                           |              |                    |       |       |              |   |       |              |       |   |       |       |       |  
|-------------------------------------------------------------------------- | ------------ | ------------------ | ----- | ----- | ------------ | - | ----- | ------------ | ----- | - | ----- | ----- | ----- | -
|                                                                           |              | Year ended         |       |       | Year ended   |   |       | Year ended   |      
|                                                                           |              | December 31,       |       |       | December 31, |   |       | December 31, |      
|                                                                           |              | 2006               |       |       | 2005         |   |       | 2004         |      
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              | (%)                |      
|Continuing revenue                                                         |              |                    |       |       |              |   |       |              |       |   |       |      
|                                                                           | Americas     |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | 14.3         |   |       |              | 14.8  |   |       |       | 13.2  |  
|                                                                           |              | Managed            |       |       | 9.6          |   |       |              | 9.1   |   |       |       | 5.0   |  
|                                                                           |              | Franchised         |       |       | 29.9         |   |       |              | 29.9  |   |       |       | 32.3  |  
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 53.8  |       |              |   | 53.8  |              |       |   | 50.5  |      
|                                                                           | EMEA         |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | 12.4         |   |       |              | 15.4  |   |       |       | 19.1  |  
|                                                                           |              | Managed            |       |       | 8.8          |   |       |              | 7.8   |   |       |       | 7.1   |  
|                                                                           |              | Franchised         |       |       | 4.4          |   |       |              | 4,9   |   |       |       | 4.5   |  
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 25.6  |       |              |   | 28.1  |              |       |   | 30.7  |      
|                                                                           | Asia Pacific |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | 8.8          |   |       |              | 8.3   |   |       |       | 8.2   |  
|                                                                           |              | Managed            |       |       | 4.5          |   |       |              | 3.5   |   |       |       | 3.5   |  
|                                                                           |              | Franchised         |       |       | 0.5          |   |       |              | 0.4   |   |       |       | 0.5   |  
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 13.8  |       |              |   | 12.2  |              |       |   | 12.2  |      
|                                                                           | Central      |                    |       | 6.8   |              |   |       | 5.9          |       |   |       | 6.6   |      
|                                                                           |              |                    |       |       |              |   |       |              |      
|Total                                                                      |              |                    | 100.0 |       |              |   | 100.0 |              |       |   | 100.0 |      
|                                                                           |              |                    |       |       |              |   |       |              |      
|Continuing operating profit before other operating income and
    expenses |              |                    |       |       |              |   |       |              |       |   |       |      
|                                                                           | Americas     |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | 7.0          |   |       |              | 8.0   |   |       |       | 2.5   |  
|                                                                           |              | Managed            |       |       | 13.6         |   |       |              | 11.4  |   |       |       | 5.0   |  
|                                                                           |              | Franchised         |       |       | 103.5        |   |       |              | 107.9 |   |       |       | 139.2 |  
|                                                                           |              | Regional overheads |       |       | (16.0        | ) |       |              | (19.7 | ) |       |       | (22.5 | )
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 108.1 |       |              |   | 107.6 |              |       |   | 124.2 |      
|                                                                           | EMEA         |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | (2.5         | ) |       |              | (2.9  | ) |       |       | (9.2  | )
|                                                                           |              | Managed            |       |       | 18.4         |   |       |              | 18.0  |   |       |       | 20.0  |  
|                                                                           |              | Franchised         |       |       | 12.0         |   |       |              | 15.1  |   |       |       | 17.5  |  
|                                                                           |              | Regional overheads |       |       | (10.0        | ) |       |              | (12.2 | ) |       |       | (19.2 | )
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 17.9  |       |              |   | 18.0  |              |       |   | 9.1   |      
|                                                                           | Asia Pacific |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | 8.4          |   |       |              | 6.4   |   |       |       | 7.5   |  
|                                                                           |              | Managed            |       |       | 10.6         |   |       |              | 9.2   |   |       |       | 11.7  |  
|                                                                           |              | Franchised         |       |       | 1.3          |   |       |              | 1.3   |   |       |       | 1.7   |  
|                                                                           |              | Regional overheads |       |       | (6.0         | ) |       |              | (4.8  | ) |       |       | (6.7  | )
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 14.3  |       |              |   | 12.1  |              |       |   | 14.2  |      
|                                                                           | Central      |                    |       | (40.3 | )            |   |       | (37.7        | )     |   |       | (47.5 | )    
|                                                                           |              |                    |       |       |              |   |       |              |      
|Total                                                                      |              |                    | 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 rate is 2006:
    £1 = $1.84; (2005: £1 = $1.83,
    2004: £1 = $1.82). In the case of the euro, the
    translation rate is 2006: £1 =
    1.47;
    (2005: £1 =
    1.46,
    2004: £1 =
    1.47).                                                                                                                                   
|   
|(2) | Operating profit before other operating income and expenses does
    not include other operating income and expenses for all periods
    presented. Other operating income and expenses (charge unless
    otherwise noted) by region are the Americas (2006:
    £25 million credit; 2005: £5 million; 2004:
    £15 million credit); Europe, the Middle East and
    Africa (2006: £2 million credit; 2005:
    £12 million; 2004: £57 million); and
    Asia Pacific (2006: £nil; 2005: £5 million;
    2004: £7 million).
|   
|(3) | Central revenue primarily relates to Holidex (IHGs
    proprietary reservation system) fee income. Central operating
    profit includes central revenue less costs related to global
    functions.                                                                                                                                                                                                                                                                                                                        
|   
|(4) | Amounts are reported by origin. See Note 2 of Notes to the
    Consolidated Financial Statements for details by destination,
    for which the amounts are not significantly different.                                                                                                                                                                                                                                                                                                                                      

29



---



##### 





|                                                                                 |              |                    |       |      |              |   |       |              |     |   |       |      |     |  
|-------------------------------------------------------------------------------- | ------------ | ------------------ | ----- | ---- | ------------ | - | ----- | ------------ | --- | - | ----- | ---- | --- | -
|                                                                                 |              | Year ended         |       |      | Year ended   |   |       | Year ended   |    
|                                                                                 |              | December 31,       |       |      | December 31, |   |       | December 31, |    
|                                                                                 |              | 2006               |       |      | 2005         |   |       | 2004         |    
|                                                                                 |              |                    |       |      |              |   |       |              |    
|                                                                                 |              | ($ million)        |      
|Continuing
    revenue(1)(4)                                                     |              |                    |       |      |              |   |       |              |     |   |       |     
|                                                                                 | Americas     |                    |       |      |              |   |       |              |     |   |       |      |    
|                                                                                 |              | Owned and leased   |       |      | 211          |   |       |              | 195 |   |       |      | 146 |  
|                                                                                 |              | Managed            |       |      | 143          |   |       |              | 118 |   |       |      | 55  |  
|                                                                                 |              | Franchised         |       |      | 443          |   |       |              | 389 |   |       |      | 357 |  
|                                                                                 |              |                    |       |      |              |   |       |              |    
|                                                                                 |              |                    | 797   |      |              |   | 702   |              |     |   | 558   |     
|                                                                                 | EMEA         |                    |       |      |              |   |       |              |     |   |       |      |    
|                                                                                 |              | Owned and leased   |       |      | 184          |   |       |              | 201 |   |       |      | 211 |  
|                                                                                 |              | Managed            |       |      | 131          |   |       |              | 100 |   |       |      | 78  |  
|                                                                                 |              | Franchised         |       |      | 63           |   |       |              | 64  |   |       |      | 50  |  
|                                                                                 |              |                    |       |      |              |   |       |              |    
|                                                                                 |              |                    | 378   |      |              |   | 365   |              |     |   | 339   |     
|                                                                                 | Asia Pacific |                    |       |      |              |   |       |              |     |   |       |      |    
|                                                                                 |              | Owned and leased   |       |      | 131          |   |       |              | 108 |   |       |      | 91  |  
|                                                                                 |              | Managed            |       |      | 65           |   |       |              | 45  |   |       |      | 38  |  
|                                                                                 |              | Franchised         |       |      | 8            |   |       |              | 6   |   |       |      | 5   |  
|                                                                                 |              |                    |       |      |              |   |       |              |    
|                                                                                 |              |                    | 204   |      |              |   | 159   |              |     |   | 134   |     
|                                                                                 | Central(3)   |                    |       | 101  |              |   |       | 77           |     |   |       | 74   |    
|                                                                                 |              |                    |       |      |              |   |       |              |    
|Total                                                                            |              |                    | 1,480 |      |              |   | 1,303 |              |     |   | 1,105 |     
|                                                                                 |              |                    |       |      |              |   |       |              |    
|Continuing operating profit before other operating income and
    expenses(1)(2) |              |                    |       |      |              |   |       |              |     |   |       |     
|                                                                                 | Americas     |                    |       |      |              |   |       |              |     |   |       |      |    
|                                                                                 |              | Owned and leased   |       |      | 26           |   |       |              | 25  |   |       |      | 6   |  
|                                                                                 |              | Managed            |       |      | 50           |   |       |              | 36  |   |       |      | 12  |  
|                                                                                 |              | Franchised         |       |      | 382          |   |       |              | 340 |   |       |      | 304 |  
|                                                                                 |              | Regional overheads |       |      | (59          | ) |       |              | (62 | ) |       |      | (50 | )
|                                                                                 |              |                    |       |      |              |   |       |              |    
|                                                                                 |              |                    | 399   |      |              |   | 339   |              |     |   | 272   |     
|                                                                                 | EMEA         |                    |       |      |              |   |       |              |     |   |       |      |    
|                                                                                 |              | Owned and leased   |       |      | (9           | ) |       |              | (9  | ) |       |      | (20 | )
|                                                                                 |              | Managed            |       |      | 68           |   |       |              | 56  |   |       |      | 43  |  
|                                                                                 |              | Franchised         |       |      | 44           |   |       |              | 48  |   |       |      | 38  |  
|                                                                                 |              | Regional overheads |       |      | (36          | ) |       |              | (39 | ) |       |      | (42 | )
|                                                                                 |              |                    |       |      |              |   |       |              |    
|                                                                                 |              |                    | 67    |      |              |   | 56    |              |     |   | 19    |     
|                                                                                 | Asia Pacific |                    |       |      |              |   |       |              |     |   |       |      |    
|                                                                                 |              | Owned and leased   |       |      | 31           |   |       |              | 20  |   |       |      | 17  |  
|                                                                                 |              | Managed            |       |      | 39           |   |       |              | 29  |   |       |      | 25  |  
|                                                                                 |              | Franchised         |       |      | 5            |   |       |              | 5   |   |       |      | 3   |  
|                                                                                 |              | Regional overheads |       |      | (23          | ) |       |              | (15 | ) |       |      | (15 | )
|                                                                                 |              |                    |       |      |              |   |       |              |    
|                                                                                 |              |                    | 52    |      |              |   | 39    |              |     |   | 30    |     
|                                                                                 | Central(3)   |                    |       | (149 | )            |   |       | (118         | )   |   |       | (102 | )  
|                                                                                 |              |                    |       |      |              |   |       |              |    
|Total                                                                            |              |                    | 369   |      |              |   | 316   |              |     |   | 219   |     
|                                                                                 |              |                    |       |      |              |   |       |              |    




Footnotes on pages 31 and 32.


30



---



##### 



|                                                                           |              |                    |       |       |              |   |       |              |       |   |       |       |       |  
|-------------------------------------------------------------------------- | ------------ | ------------------ | ----- | ----- | ------------ | - | ----- | ------------ | ----- | - | ----- | ----- | ----- | -
|                                                                           |              | Year ended         |       |       | Year ended   |   |       | Year ended   |      
|                                                                           |              | December 31,       |       |       | December 31, |   |       | December 31, |      
|                                                                           |              | 2006               |       |       | 2005         |   |       | 2004         |      
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              | (%)                |      
|Continuing revenue                                                         |              |                    |       |       |              |   |       |              |       |   |       |      
|                                                                           | Americas     |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | 14.3         |   |       |              | 15.0  |   |       |       | 13.2  |  
|                                                                           |              | Managed            |       |       | 9.7          |   |       |              | 9.0   |   |       |       | 5.0   |  
|                                                                           |              | Franchised         |       |       | 29.9         |   |       |              | 29.9  |   |       |       | 32.3  |  
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 53.9  |       |              |   | 53.9  |              |       |   | 50.5  |      
|                                                                           | EMEA         |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | 12.4         |   |       |              | 15.4  |   |       |       | 19.1  |  
|                                                                           |              | Managed            |       |       | 8.8          |   |       |              | 7.7   |   |       |       | 7.1   |  
|                                                                           |              | Franchised         |       |       | 4.3          |   |       |              | 4.9   |   |       |       | 4.5   |  
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 25.5  |       |              |   | 28.0  |              |       |   | 30.7  |      
|                                                                           | Asia Pacific |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | 8.9          |   |       |              | 8.3   |   |       |       | 8.2   |  
|                                                                           |              | Managed            |       |       | 4.4          |   |       |              | 3.4   |   |       |       | 3.4   |  
|                                                                           |              | Franchised         |       |       | 0.5          |   |       |              | 0.5   |   |       |       | 0.5   |  
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 13.8  |       |              |   | 12.2  |              |       |   | 12.1  |      
|                                                                           | Central      |                    |       | 6.8   |              |   |       | 5.9          |       |   |       | 6.7   |      
|                                                                           |              |                    |       |       |              |   |       |              |      
|Total                                                                      |              |                    | 100.0 |       |              |   | 100.0 |              |       |   | 100.0 |      
|                                                                           |              |                    |       |       |              |   |       |              |      
|Continuing operating profit before other operating income and
    expenses |              |                    |       |       |              |   |       |              |       |   |       |      
|                                                                           | Americas     |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | 7.0          |   |       |              | 8.1   |   |       |       | 2.7   |  
|                                                                           |              | Managed            |       |       | 13.5         |   |       |              | 10.4  |   |       |       | 5.5   |  
|                                                                           |              | Franchised         |       |       | 103.5        |   |       |              | 98.0  |   |       |       | 138.8 |  
|                                                                           |              | Regional overheads |       |       | (16.0        | ) |       |              | (17.9 | ) |       |       | (22.8 | )
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 108.0 |       |              |   | 98.6  |              |       |   | 124.2 |      
|                                                                           | EMEA         |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | (2.4         | ) |       |              | 5.8   |   |       |       | (9.1  | )
|                                                                           |              | Managed            |       |       | 18.4         |   |       |              | 16.4  |   |       |       | 19.6  |  
|                                                                           |              | Franchised         |       |       | 11.9         |   |       |              | 13.5  |   |       |       | 17.4  |  
|                                                                           |              | Regional overheads |       |       | (9.7         | ) |       |              | (11.0 | ) |       |       | (19.2 | )
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 18.2  |       |              |   | 24.7  |              |       |   | 8.7   |      
|                                                                           | Asia         |                    |       |       |              |   |       |              |       |   |       |       |      
|                                                                           |              | Owned and leased   |       |       | 8.4          |   |       |              | 5.5   |   |       |       | 7.8   |  
|                                                                           |              | Managed            |       |       | 10.6         |   |       |              | 8.4   |   |       |       | 11.4  |  
|                                                                           |              | Franchised         |       |       | 1.3          |   |       |              | 1.4   |   |       |       | 1.4   |  
|                                                                           |              | Regional overheads |       |       | (6.2         | ) |       |              | (4.3  | ) |       |       | (6.9  | )
|                                                                           |              |                    |       |       |              |   |       |              |      
|                                                                           |              |                    | 14.1  |       |              |   | 11.0  |              |       |   | 13.7  |      
|                                                                           | Central      |                    |       | (40.3 | )            |   |       | (34.3        | )     |   |       | (46.6 | )    
|                                                                           |              |                    |       |       |              |   |       |              |      
|Total                                                                      |              |                    | 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 rate is 2006:
    £1 = $1.84; (2005: £1 = $1.83,
    2004: £1 = $1.82). In the case of the euro, the
    translation rate is 2006: £1 =
    1.47;
    (2005: £1 =
    1.46,
    2004: £1 =
    1.47).

31



---



##### 





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Operating profit before other operating income and expenses does
    not include other operating income and expenses for all periods
    presented. Other operating income and expenses (charge unless
    otherwise noted) by region are the Americas (2006:
    £25 million credit; 2005: £5 million; 2004:
    £15 million credit); Europe, the Middle East and
    Africa (2006: £2 million credit; 2005:
    £12 million; 2004: £57 million); and
    Asia Pacific (2006: £nil; 2005: £5 million;
    2004: £7 million).
|   
|(3) | Central revenue primarily relates to Holidex (IHGs
    proprietary reservation system) fee income. Central operating
    profit includes central revenue less costs related to global
    functions.                                                                                                                                                                                                                                                                                                                        
|   
|(4) | Amounts are reported by origin. See Note 2 of Notes to the
    Consolidated Financial Statements for details by destination,
    for which the amounts are not significantly different.                                                                                                                                                                                                                                                                                                                                      

Global System




Priority Club Rewards:


Central Reservation System Technology:


Reservation Call Centers:


Internet:






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



32



---



##### 







|  |                                                                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                   



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



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



|                    |  |                   |         |  |        |  |       | 
|------------------- |  | ----------------- | ------- |  | ------ |  | ----- | 
|                    |  | December 31, 2006 |        
|                    |  |                   |        
|Brands              |  | Room numbers      |         |  | Hotels | 
|                    |  |                   |         |  |        | 
|InterContinental    |  |                   | 49,599  |  |        |  | 148   | 
|Crowne Plaza        |  |                   | 75,632  |  |        |  | 275   | 
|Holiday Inn         |  |                   | 260,470 |  |        |  | 1,395 | 
|Holiday Inn Express |  |                   | 143,582 |  |        |  | 1,686 | 
|Staybridge Suites   |  |                   | 10,953  |  |        |  | 97    | 
|Candlewood Suites   |  |                   | 14,149  |  |        |  | 130   | 
|Hotel Indigo        |  |                   | 893     |  |        |  | 6     | 
|Other               |  |                   | 968     |  |        |  | 4     | 
|Total               |  |                   | 556,246 |  |        |  | 3,741 | 



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

|                           |  |          |        |  |          |  |        |       |  |  |        |  |  |              |        |  |  |  |        | 
|-------------------------- |  | -------- | ------ |  | -------- |  | ------ | ----- |  |  | ------ |  |  | ------------ | ------ |  |  |  | ------ | 
|                           |  | Americas |        |  | Americas |  |        | EMEA  |  |  | EMEA   |  |  |             
|                           |  | total    |        |  | O & L    |  |        | total |  |  | O & L  |  |  | Asia Pacific |       
|                           |  |          |        |  |          |  |        |       |  |  |        |  |  |              |       
|Average room rate
    $(1) |  |          | 152.75 |  |          |  | 227.59 |       |  |  | 164.11 |  |  |              | 269.15 |  |  |  | 160.73 | 
|Room
    numbers(2)        |  |          | 16,525 |  |          |  | 2,271  |       |  |  | 21,423 |  |  |              | 1,288  |  |  |  | 11,651 | 






|    |                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2006; quoted at constant
    US$ exchange rate. Owned and leased average room rate is for
    comparable InterContinental hotels.
|   
|(2) | As at December 31, 2006.                                                                                                                                         







33



---



##### 





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

|                           |  |          |        |  |          |  |       |       |  |  |        |  |  |              |        |  |  |  |        | 
|-------------------------- |  | -------- | ------ |  | -------- |  | ----- | ----- |  |  | ------ |  |  | ------------ | ------ |  |  |  | ------ | 
|                           |  | Americas |        |  | Americas |  |       | EMEA  |  |  | EMEA   |  |  |             
|                           |  | total    |        |  | O & L    |  |       | total |  |  | O & L  |  |  | Asia Pacific |       
|                           |  |          |        |  |          |  |       |       |  |  |        |  |  |              |       
|Average room rate
    $(1) |  |          | 111.05 |  |          |  | 85.24 |       |  |  | 130.75 |  |  |              | 111.64 |  |  |  | 95.21  | 
|Room
    numbers(2)        |  |          | 42,604 |  |          |  | 293   |       |  |  | 16,440 |  |  |              | 732    |  |  |  | 16,588 | 






|    |                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2006; quoted at constant
    US$ exchange rate. Owned and leased average room rate is for
    comparable Crowne Plaza hotels.
|   
|(2) | As at December 31, 2006.                                                                                                                                     









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

|                           |  |          |         |  |          |  |       |       |  |  |        |  |  |              |       |  |  |  |        | 
|-------------------------- |  | -------- | ------- |  | -------- |  | ----- | ----- |  |  | ------ |  |  | ------------ | ----- |  |  |  | ------ | 
|                           |  | Americas |         |  | Americas |  |       | EMEA  |  |  | EMEA   |  |  |             
|                           |  | total    |         |  | O & L    |  |       | total |  |  | O & L  |  |  | Asia Pacific |      
|                           |  |          |         |  |          |  |       |       |  |  |        |  |  |              |      
|Average room rate
    $(1) |  |          | 91.35   |  |          |  | 93.67 |       |  |  | 105.70 |  |  |              | 92.86 |  |  |  | 73.82  | 
|Room
    numbers(2)        |  |          | 186,067 |  |          |  | 1,882 |       |  |  | 50,628 |  |  |              | 915   |  |  |  | 23,775 | 






|    |                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2006; quoted at constant
    US$ exchange rate. Owned and leased average room rate is for
    comparable Holiday Inn hotels.
|   
|(2) | As at December 31, 2006.                                                                                                                                    

mid-market






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

|                           |  |          |         |  |       |  |        |              |  |  |       | 
|-------------------------- |  | -------- | ------- |  | ----- |  | ------ | ------------ |  |  | ----- | 
|                           |  | Americas |         |  | EMEA  |  |        |             
|                           |  | total    |         |  | total |  |        | Asia Pacific | 
|                           |  |          |         |  |       |  |        |              | 
|Average room rate
    $(1) |  |          | 87.46   |  |       |  | 91.82  |              |  |  | 42.86 | 
|Room
    numbers(2)        |  |          | 123,718 |  |       |  | 18,109 |              |  |  | 1,755 | 






|    |                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2006; quoted at constant
    US$ exchange rate. Owned and leased average room rate is for
    comparable Express hotels.
|   
|(2) | As at December 31, 2006.                                                                                                                                

34



---



##### 



limited-service








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

|                           |  |          |        | 
|-------------------------- |  | -------- | ------ | 
|                           |  | Americas |       
|                           |  | total    |       
|                           |  |          |       
|Average room rate
    $(1) |  |          | 100.53 | 
|Room
    numbers(2)        |  |          | 10,953 | 






|    |                                                                                
|--- | -------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2006; quoted at constant
    US$ exchange rate.
|   
|(2) | As at December 31, 2006.                                                       

long-stay high-speed




Candlewood Suites


|                           |  |          |        | 
|-------------------------- |  | -------- | ------ | 
|                           |  | Americas |       
|                           |  | total    |       
|                           |  |          |       
|Average room rate
    $(1) |  |          | 67.27  | 
|Room
    numbers(2)        |  |          | 14,149 | 






|    |                                                                                
|--- | -------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2006; quoted at constant
    US$ exchange rate.
|   
|(2) | As at December 31, 2006.                                                       



35



---



##### 



Hotel Indigo


24-hour


|                           |  |          |        | 
|-------------------------- |  | -------- | ------ | 
|                           |  | Americas |       
|                           |  | total    |       
|                           |  |          |       
|Average room rate
    $(1) |  |          | 100.77 | 
|Room
    numbers(2)        |  |          | 893    | 






|    |                                                                                
|--- | -------------------------------------------------------------------------------
|(1) | For the year ended December 31, 2006; quoted at constant
    US$ exchange rate.
|   
|(2) | As at December 31, 2006.                                                       

Geographical Analysis






|                                                                                                           |  |              |    |  |      |  |    |              |  |  |    | 
|---------------------------------------------------------------------------------------------------------- |  | ------------ | -- |  | ---- |  | -- | ------------ |  |  | -- | 
|                                                                                                           |  | Americas     |    |  | EMEA |  |    | Asia Pacific | 
|                                                                                                           |  |              |    |  |      |  |    |              | 
|                                                                                                           |  | (% of total) |   
|Room
    numbers(1)                                                                                        |  |              | 71 |  |      |  | 19 |              |  |  | 10 | 
|Hotel level operating profit (before central overheads and other
    operating income and
    expenses)(2) |  |              | 77 |  |      |  | 13 |              |  |  | 10 | 






|    |                                      
|--- | -------------------------------------
|(1) | As at December 31, 2006.             
|   
|(2) | For the year ended December 31, 2006.



|              |                     |                 |   |                     |                    |  |       |            |  |  |       |    |  |        |        |       |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |         | 
|------------- | ------------------- | --------------- | - | ------------------- | ------------------ |  | ----- | ---------- |  |  | ----- | -- |  | ------ | ------ | ----- | ----- |  | ----- | ------ |  |  | ------- | ------- |  |  | ----- | ----- |  |  | ------- | ------- | 
|              |                     |                 |   | Management contract |                    |  |       |            | 
|              |                     | Owned or leased |   |                     | and joint ventures |  |       | Franchised |  |  | Total |   
|              |                     |                 |   |                     |                    |  |       |            |  |  |       |   
|              |                     | Hotels          |   |                     | Rooms              |  |       | Hotels     |  |  | Rooms |    |  | Hotels |        |       | Rooms |  |       | Hotels |  |  | Rooms   |        
|              |                     |                 |   |                     |                    |  |       |            |  |  |       |    |  |        |        |       |       |  |       |        |  |  |         |        
|United States |                     |                 |   |                     |                    |  |       |            |  |  |       |    |  |        |        |       |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|              | InterContinental    |                 |   | 4                   |                    |  |       | 1,914      |  |  |       | 10 |  |        |        | 4,103 |       |  |       | 3      |  |  |         | 852     |  |  |       | 17    |  |  |         | 6,869   | 
|              | Crowne Plaza        |                 |   |                    |                    |  |       |           |  |  |       | 14 |  |        |        | 5,439 |       |  |       | 108    |  |  |         | 30,224  |  |  |       | 122   |  |  |         | 35,663  | 
|              | Holiday Inn         |                 |   | 3                   |                    |  |       | 758        |  |  |       | 26 |  |        |        | 8,639 |       |  |       | 817    |  |  |         | 152,758 |  |  |       | 846   |  |  |         | 162,155 | 
|              | Holiday Inn Express |                 |   |                    |                    |  |       |           |  |  |       | 1  |  |        |        | 252   |       |  |       | 1,430  |  |  |         | 115,138 |  |  |       | 1,431 |  |  |         | 115,390 | 
|              | Staybridge Suites   |                 |   | 2                   |                    |  |       | 233        |  |  |       | 39 |  |        |        | 4,765 |       |  |       | 51     |  |  |         | 5,356   |  |  |       | 92    |  |  |         | 10,354  | 
|              | Candlewood Suites   |                 |   |                    |                    |  |       |           |  |  |       | 77 |  |        |        | 9,340 |       |  |       | 53     |  |  |         | 4,809   |  |  |       | 130   |  |  |         | 14,149  | 
|              | Hotel Indigo        |                 |   |                    |                    |  |       |           |  |  |       | 2  |  |        |        | 305   |       |  |       | 4      |  |  |         | 588     |  |  |       | 6     |  |  |         | 893     | 
|              |                     |                 |   |                     |                    |  |       |            |  |  |       |    |  |        |        |       |       |  |       |        |  |  |         |        
|Total         |                     |                 | 9 |                     |                    |  | 2,905 |            |  |  | 169   |    |  |        | 32,843 |       |       |  | 2,466 |        |  |  | 309,725 |         |  |  | 2,644 |       |  |  | 345,473 |        
|              |                     |                 |   |                     |                    |  |       |            |  |  |       |    |  |        |        |       |       |  |       |        |  |  |         |        

36



---



##### 



|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |         | 
|---------------- | ------------------- | --------------- | -- | ------------------- | ------------------ |  | ----- | ---------- |  |  | ----- | -- |  | ------ | ------ | ------ | ----- |  | ----- | ------ |  |  | ------- | ------- |  |  | ----- | ----- |  |  | ------- | ------- | 
|                 |                     |                 |    | Management contract |                    |  |       |            | 
|                 |                     | Owned or leased |    |                     | and joint ventures |  |       | Franchised |  |  | Total |   
|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |   
|                 |                     | Hotels          |    |                     | Rooms              |  |       | Hotels     |  |  | Rooms |    |  | Hotels |        |        | Rooms |  |       | Hotels |  |  | Rooms   |        
|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Rest of Americas |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                 | InterContinental    |                 |    | 1                   |                    |  |       | 357        |  |  |       | 11 |  |        |        | 3,498  |       |  |       | 20     |  |  |         | 5,801   |  |  |       | 32    |  |  |         | 9,656   | 
|                 | Crowne Plaza        |                 |    | 1                   |                    |  |       | 293        |  |  |       | 3  |  |        |        | 737    |       |  |       | 29     |  |  |         | 5,911   |  |  |       | 33    |  |  |         | 6,941   | 
|                 | Holiday Inn         |                 |    | 2                   |                    |  |       | 1,124      |  |  |       | 4  |  |        |        | 1,844  |       |  |       | 135    |  |  |         | 20,944  |  |  |       | 141   |  |  |         | 23,912  | 
|                 | Holiday Inn Express |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |       | 75     |  |  |         | 8,328   |  |  |       | 75    |  |  |         | 8,328   | 
|                 | Staybridge Suites   |                 |    |                    |                    |  |       |           |  |  |       | 2  |  |        |        | 335    |       |  |       | 3      |  |  |         | 264     |  |  |       | 5     |  |  |         | 599     | 
|                 | Candlewood Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                 | Hotel Indigo        |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total            |                     |                 | 4  |                     |                    |  | 1,774 |            |  |  | 20    |    |  |        | 6,414  |        |       |  | 262   |        |  |  | 41,248  |         |  |  | 286   |       |  |  | 49,436  |        
|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total Americas   |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                 | InterContinental    |                 |    | 5                   |                    |  |       | 2,271      |  |  |       | 21 |  |        |        | 7,601  |       |  |       | 23     |  |  |         | 6,653   |  |  |       | 49    |  |  |         | 16,525  | 
|                 | Crowne Plaza        |                 |    | 1                   |                    |  |       | 293        |  |  |       | 17 |  |        |        | 6,176  |       |  |       | 137    |  |  |         | 36,135  |  |  |       | 155   |  |  |         | 42,604  | 
|                 | Holiday Inn         |                 |    | 5                   |                    |  |       | 1,882      |  |  |       | 30 |  |        |        | 10,483 |       |  |       | 952    |  |  |         | 173,702 |  |  |       | 987   |  |  |         | 186,067 | 
|                 | Holiday Inn Express |                 |    |                    |                    |  |       |           |  |  |       | 1  |  |        |        | 252    |       |  |       | 1,505  |  |  |         | 123,466 |  |  |       | 1,506 |  |  |         | 123,718 | 
|                 | Staybridge Suites   |                 |    | 2                   |                    |  |       | 233        |  |  |       | 41 |  |        |        | 5,100  |       |  |       | 54     |  |  |         | 5,620   |  |  |       | 97    |  |  |         | 10,953  | 
|                 | Candlewood Suites   |                 |    |                    |                    |  |       |           |  |  |       | 77 |  |        |        | 9,340  |       |  |       | 53     |  |  |         | 4,809   |  |  |       | 130   |  |  |         | 14,149  | 
|                 | Hotel Indigo        |                 |    |                    |                    |  |       |           |  |  |       | 2  |  |        |        | 305    |       |  |       | 4      |  |  |         | 588     |  |  |       | 6     |  |  |         | 893     | 
|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total            |                     |                 | 13 |                     |                    |  | 4,679 |            |  |  | 189   |    |  |        | 39,257 |        |       |  | 2,728 |        |  |  | 350,973 |         |  |  | 2,930 |       |  |  | 394,909 |        
|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|United Kingdom   |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                 | InterContinental    |                 |    | 1                   |                    |  |       | 447        |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       | 1     |  |  |         | 447     | 
|                 | Crowne Plaza        |                 |    |                    |                    |  |       |           |  |  |       | 6  |  |        |        | 1,530  |       |  |       | 9      |  |  |         | 1,938   |  |  |       | 15    |  |  |         | 3,468   | 
|                 | Holiday Inn         |                 |    |                    |                    |  |       |           |  |  |       | 58 |  |        |        | 9,973  |       |  |       | 46     |  |  |         | 6,483   |  |  |       | 104   |  |  |         | 16,456  | 
|                 | Holiday Inn Express |                 |    |                    |                    |  |       |           |  |  |       | 1  |  |        |        | 120    |       |  |       | 106    |  |  |         | 10,949  |  |  |       | 107   |  |  |         | 11,069  | 
|                 | Staybridge Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                 | Candlewood Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total            |                     |                 | 1  |                     |                    |  | 447   |            |  |  | 65    |    |  |        | 11,623 |        |       |  | 161   |        |  |  | 19,370  |         |  |  | 227   |       |  |  | 31,440  |        
|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Europe           |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|                 | InterContinental    |                 |    | 1                   |                    |  |       | 470        |  |  |       | 23 |  |        |        | 7,972  |       |  |       | 3      |  |  |         | 951     |  |  |       | 27    |  |  |         | 9,393   | 
|                 | Crowne Plaza        |                 |    | 3                   |                    |  |       | 732        |  |  |       | 6  |  |        |        | 1,351  |       |  |       | 32     |  |  |         | 7,644   |  |  |       | 41    |  |  |         | 9,727   | 
|                 | Holiday Inn         |                 |    | 3                   |                    |  |       | 915        |  |  |       | 9  |  |        |        | 2,059  |       |  |       | 174    |  |  |         | 26,393  |  |  |       | 186   |  |  |         | 29,367  | 
|                 | Holiday Inn Express |                 |    | 1                   |                    |  |       | 153        |  |  |       | 9  |  |        |        | 1,005  |       |  |       | 54     |  |  |         | 5,778   |  |  |       | 64    |  |  |         | 6,936   | 
|                 | Staybridge Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                 | Candlewood Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |       |       |  |  |         |        |  |  |       |      |  |  |         |        | 
|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        
|Total            |                     |                 | 8  |                     |                    |  | 2,270 |            |  |  | 47    |    |  |        | 12,387 |        |       |  | 263   |        |  |  | 40,766  |         |  |  | 318   |       |  |  | 55,423  |        
|                 |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |       |        |  |  |         |        

37



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|                                        |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |        |  |  |     |     |  |  |         |        | 
|--------------------------------------- | ------------------- | --------------- | -- | ------------------- | ------------------ |  | ----- | ---------- |  |  | ----- | -- |  | ------ | ------ | ------ | ----- |  | --- | ------ |  |  | ------ | ------ |  |  | --- | --- |  |  | ------- | ------ | 
|                                        |                     |                 |    | Management contract |                    |  |       |            | 
|                                        |                     | Owned or leased |    |                     | and joint ventures |  |       | Franchised |  |  | Total |   
|                                        |                     |                 |    |                     |                    |  |       |            |  |  |       |   
|                                        |                     | Hotels          |    |                     | Rooms              |  |       | Hotels     |  |  | Rooms |    |  | Hotels |        |        | Rooms |  |     | Hotels |  |  | Rooms  |       
|                                        |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |       
|The Middle East and Africa              |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |        |  |  |     |     |  |  |         |       
|                                        | InterContinental    |                 |    | 1                   |                    |  |       | 371        |  |  |       | 33 |  |        |        | 10,264 |       |  |     | 4      |  |  |        | 948    |  |  |     | 38  |  |  |         | 11,583 | 
|                                        | Crowne Plaza        |                 |    |                    |                    |  |       |           |  |  |       | 11 |  |        |        | 3,041  |       |  |     | 1      |  |  |        | 204    |  |  |     | 12  |  |  |         | 3,245  | 
|                                        | Holiday Inn         |                 |    |                    |                    |  |       |           |  |  |       | 18 |  |        |        | 3,360  |       |  |     | 9      |  |  |        | 1,445  |  |  |     | 27  |  |  |         | 4,805  | 
|                                        | Holiday Inn Express |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |     | 1      |  |  |        | 104    |  |  |     | 1   |  |  |         | 104    | 
|                                        | Staybridge Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |     |       |  |  |        |       |  |  |     |    |  |  |         |       | 
|                                        | Candlewood Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |     |       |  |  |        |       |  |  |     |    |  |  |         |       | 
|                                        | Other               |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |     |       |  |  |        |       |  |  |     |    |  |  |         |       | 
|                                        |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |       
|Total                                   |                     |                 | 1  |                     |                    |  | 371   |            |  |  | 62    |    |  |        | 16,665 |        |       |  | 15  |        |  |  | 2,701  |        |  |  | 78  |     |  |  | 19,737  |       
|                                        |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |       
|Total EMEA                              |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |        |  |  |     |     |  |  |         |       
|                                        | InterContinental    |                 |    | 3                   |                    |  |       | 1,288      |  |  |       | 56 |  |        |        | 18,236 |       |  |     | 7      |  |  |        | 1,899  |  |  |     | 66  |  |  |         | 21,423 | 
|                                        | Crowne Plaza        |                 |    | 3                   |                    |  |       | 732        |  |  |       | 23 |  |        |        | 5,922  |       |  |     | 42     |  |  |        | 9,786  |  |  |     | 68  |  |  |         | 16,440 | 
|                                        | Holiday Inn         |                 |    | 3                   |                    |  |       | 915        |  |  |       | 85 |  |        |        | 15,392 |       |  |     | 229    |  |  |        | 34,321 |  |  |     | 317 |  |  |         | 50,628 | 
|                                        | Holiday Inn Express |                 |    | 1                   |                    |  |       | 153        |  |  |       | 10 |  |        |        | 1,125  |       |  |     | 161    |  |  |        | 16,831 |  |  |     | 172 |  |  |         | 18,109 | 
|                                        | Staybridge Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |     |       |  |  |        |       |  |  |     |    |  |  |         |       | 
|                                        | Candlewood Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |     |       |  |  |        |       |  |  |     |    |  |  |         |       | 
|                                        | Other               |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |     |       |  |  |        |       |  |  |     |    |  |  |         |       | 
|                                        |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |       
|Total                                   |                     |                 | 10 |                     |                    |  | 3,088 |            |  |  | 174   |    |  |        | 40,675 |        |       |  | 439 |        |  |  | 62,837 |        |  |  | 623 |     |  |  | 106,600 |       
|                                        |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |       
|Far East and Australasia (Asia Pacific) |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |        |  |  |     |     |  |  |         |       
|                                        | InterContinental    |                 |    | 1                   |                    |  |       | 495        |  |  |       | 24 |  |        |        | 8,789  |       |  |     | 8      |  |  |        | 2,367  |  |  |     | 33  |  |  |         | 11,651 | 
|                                        | Crowne Plaza        |                 |    |                    |                    |  |       |           |  |  |       | 44 |  |        |        | 13,806 |       |  |     | 8      |  |  |        | 2,782  |  |  |     | 52  |  |  |         | 16,588 | 
|                                        | Holiday Inn         |                 |    | 1                   |                    |  |       | 198        |  |  |       | 70 |  |        |        | 20,101 |       |  |     | 20     |  |  |        | 3,476  |  |  |     | 91  |  |  |         | 23,775 | 
|                                        | Holiday Inn Express |                 |    |                    |                    |  |       |           |  |  |       | 7  |  |        |        | 1,618  |       |  |     | 1      |  |  |        | 137    |  |  |     | 8   |  |  |         | 1,755  | 
|                                        | Staybridge Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |     |       |  |  |        |       |  |  |     |    |  |  |         |       | 
|                                        | Candlewood Suites   |                 |    |                    |                    |  |       |           |  |  |       |   |  |        |        |       |       |  |     |       |  |  |        |       |  |  |     |    |  |  |         |       | 
|                                        | Other               |                 |    |                    |                    |  |       |           |  |  |       | 4  |  |        |        | 968    |       |  |     |       |  |  |        |       |  |  |     | 4   |  |  |         | 968    | 
|                                        |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |       
|Total                                   |                     |                 | 2  |                     |                    |  | 693   |            |  |  | 149   |    |  |        | 45,282 |        |       |  | 37  |        |  |  | 8,762  |        |  |  | 188 |     |  |  | 54,737  |       
|                                        |                     |                 |    |                     |                    |  |       |            |  |  |       |    |  |        |        |        |       |  |     |        |  |  |        |       

38



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|      |                     |                 |    |                     |                    |  |       |            |  |  |       |     |  |        |         |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |         | 
|----- | ------------------- | --------------- | -- | ------------------- | ------------------ |  | ----- | ---------- |  |  | ----- | --- |  | ------ | ------- | ------ | ----- |  | ----- | ------ |  |  | ------- | ------- |  |  | ----- | ----- |  |  | ------- | ------- | 
|      |                     |                 |    | Management contract |                    |  |       |            | 
|      |                     | Owned or leased |    |                     | and joint ventures |  |       | Franchised |  |  | Total |    
|      |                     |                 |    |                     |                    |  |       |            |  |  |       |    
|      |                     | Hotels          |    |                     | Rooms              |  |       | Hotels     |  |  | Rooms |     |  | Hotels |         |        | Rooms |  |       | Hotels |  |  | Rooms   |        
|      |                     |                 |    |                     |                    |  |       |            |  |  |       |     |  |        |         |        |       |  |       |        |  |  |         |        
|Total |                     |                 |    |                     |                    |  |       |            |  |  |       |     |  |        |         |        |       |  |       |        |  |  |         |         |  |  |       |       |  |  |         |        
|      | InterContinental    |                 |    | 9                   |                    |  |       | 4,054      |  |  |       | 101 |  |        |         | 34,626 |       |  |       | 38     |  |  |         | 10,919  |  |  |       | 148   |  |  |         | 49,599  | 
|      | Crowne Plaza        |                 |    | 4                   |                    |  |       | 1,025      |  |  |       | 84  |  |        |         | 25,904 |       |  |       | 187    |  |  |         | 48,703  |  |  |       | 275   |  |  |         | 75,632  | 
|      | Holiday Inn         |                 |    | 9                   |                    |  |       | 2,995      |  |  |       | 185 |  |        |         | 45,976 |       |  |       | 1,201  |  |  |         | 211,499 |  |  |       | 1,395 |  |  |         | 260,470 | 
|      | Holiday Inn Express |                 |    | 1                   |                    |  |       | 153        |  |  |       | 18  |  |        |         | 2,995  |       |  |       | 1,667  |  |  |         | 140,434 |  |  |       | 1,686 |  |  |         | 143,582 | 
|      | Staybridge Suites   |                 |    | 2                   |                    |  |       | 233        |  |  |       | 41  |  |        |         | 5,100  |       |  |       | 54     |  |  |         | 5,620   |  |  |       | 97    |  |  |         | 10,953  | 
|      | Candlewood Suites   |                 |    |                    |                    |  |       |           |  |  |       | 77  |  |        |         | 9,340  |       |  |       | 53     |  |  |         | 4,809   |  |  |       | 130   |  |  |         | 14,149  | 
|      | Hotel Indigo        |                 |    |                    |                    |  |       |           |  |  |       | 2   |  |        |         | 305    |       |  |       | 4      |  |  |         | 588     |  |  |       | 6     |  |  |         | 893     | 
|      | Other               |                 |    |                    |                    |  |       |           |  |  |       | 4   |  |        |         | 968    |       |  |       |       |  |  |         |        |  |  |       | 4     |  |  |         | 968     | 
|      |                     |                 |    |                     |                    |  |       |            |  |  |       |     |  |        |         |        |       |  |       |        |  |  |         |        
|Total |                     |                 | 25 |                     |                    |  | 8,460 |            |  |  | 512   |     |  |        | 125,214 |        |       |  | 3,204 |        |  |  | 422,572 |         |  |  | 3,741 |       |  |  | 556,246 |        
|      |                     |                 |    |                     |                    |  |       |            |  |  |       |     |  |        |         |        |       |  |       |        |  |  |         |        

Americas




EMEA




Asia Pacific




Room Count and System
Pipeline






39



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FIGURE 4


|                                                 |                     |        |       |        |       |  |       |           |        |  |      |     |   |      |         |         |           |  |         |         |  |  |        |        |  
|------------------------------------------------ | ------------------- | ------ | ----- | ------ | ----- |  | ----- | --------- | ------ |  | ---- | --- | - | ---- | ------- | ------- | --------- |  | ------- | ------- |  |  | ------ | ------ | -
|                                                 |                     | Hotels |       |        | Rooms | 
|                                                 |                     |        |       |        |       | 
|                                                 |                     |        |       | Change |       |  |       |           | Change | 
|Global hotel and room count at December 31, 2006 |                     | 2006   |       |        | 2005  |  |       | over 2005 |        |  | 2006 |     |   | 2005 |         |         | over 2005 | 
|                                                 |                     |        |       |        |       |  |       |           |        |  |      |     |   |      |         |         |           | 
|Analyzed by brand:                               |                     |        |       |        |       |  |       |           |        |  |      |     |   |      |         |         |           |  |         |         |  |  |        |       
|                                                 | InterContinental    |        |       | 148    |       |  |       | 137       |        |  |      | 11  |   |      |         | 49,599  |           |  |         | 46,262  |  |  |        | 3,337  |  
|                                                 | Crowne Plaza        |        |       | 275    |       |  |       | 235       |        |  |      | 40  |   |      |         | 75,632  |           |  |         | 65,404  |  |  |        | 10,228 |  
|                                                 | Holiday Inn         |        |       | 1,395  |       |  |       | 1,435     |        |  |      | (40 | ) |      |         | 260,470 |           |  |         | 267,816 |  |  |        | (7,346 | )
|                                                 | Holiday Inn Express |        |       | 1,686  |       |  |       | 1,590     |        |  |      | 96  |   |      |         | 143,582 |           |  |         | 133,554 |  |  |        | 10,028 |  
|                                                 | Staybridge Suites   |        |       | 97     |       |  |       | 87        |        |  |      | 10  |   |      |         | 10,953  |           |  |         | 9,915   |  |  |        | 1,038  |  
|                                                 | Candlewood Suites   |        |       | 130    |       |  |       | 112       |        |  |      | 18  |   |      |         | 14,149  |           |  |         | 12,683  |  |  |        | 1,466  |  
|                                                 | Hotel Indigo        |        |       | 6      |       |  |       | 3         |        |  |      | 3   |   |      |         | 893     |           |  |         | 497     |  |  |        | 396    |  
|                                                 | Other               |        |       | 4      |       |  |       | 7         |        |  |      | (3  | ) |      |         | 968     |           |  |         | 1,402   |  |  |        | (434   | )
|                                                 |                     |        |       |        |       |  |       |           |        |  |      |     |   |      |         |         |           | 
|Total                                            |                     |        | 3,741 |        |       |  | 3,606 |           |        |  | 135  |     |   |      | 556,246 |         |           |  | 537,533 |         |  |  | 18,713 |       
|                                                 |                     |        |       |        |       |  |       |           |        |  |      |     |   |      |         |         |           | 
|Analyzed by ownership type:                      |                     |        |       |        |       |  |       |           |        |  |      |     |   |      |         |         |           |  |         |         |  |  |        |       
|                                                 | Owned and leased    |        |       | 25     |       |  |       | 55        |        |  |      | (30 | ) |      |         | 8,460   |           |  |         | 15,485  |  |  |        | (7,025 | )
|                                                 | Managed             |        |       | 512    |       |  |       | 504       |        |  |      | 8   |   |      |         | 125,214 |           |  |         | 121,249 |  |  |        | 3,965  |  
|                                                 | Franchised          |        |       | 3,204  |       |  |       | 3,047     |        |  |      | 157 |   |      |         | 422,572 |           |  |         | 400,799 |  |  |        | 21,773 |  
|                                                 |                     |        |       |        |       |  |       |           |        |  |      |     |   |      |         |         |           | 
|Total                                            |                     |        | 3,741 |        |       |  | 3,606 |           |        |  | 135  |     |   |      | 556,246 |         |           |  | 537,533 |         |  |  | 18,713 |       
|                                                 |                     |        |       |        |       |  |       |           |        |  |      |     |   |      |         |         |           | 

40



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##### 



FIGURE 5


|                                     |                     |        |       |        |       |  |     |           |        |  |      |     |   |      |         |         |           |  |         |        |  |  |        |        |  
|------------------------------------ | ------------------- | ------ | ----- | ------ | ----- |  | --- | --------- | ------ |  | ---- | --- | - | ---- | ------- | ------- | --------- |  | ------- | ------ |  |  | ------ | ------ | -
|                                     |                     | Hotels |       |        | Rooms | 
|                                     |                     |        |       |        |       | 
|                                     |                     |        |       | Change |       |  |     |           | Change | 
|Global pipeline at December 31, 2006 |                     | 2006   |       |        | 2005  |  |     | over 2005 |        |  | 2006 |     |   | 2005 |         |         | over 2005 | 
|                                     |                     |        |       |        |       |  |     |           |        |  |      |     |   |      |         |         |           | 
|Analyzed by brand:                   |                     |        |       |        |       |  |     |           |        |  |      |     |   |      |         |         |           |  |         |        |  |  |        |       
|                                     | InterContinental    |        |       | 36     |       |  |     | 27        |        |  |      | 9   |   |      |         | 13,211  |           |  |         | 9,353  |  |  |        | 3,858  |  
|                                     | Crowne Plaza        |        |       | 60     |       |  |     | 54        |        |  |      | 6   |   |      |         | 17,113  |           |  |         | 13,514 |  |  |        | 3,599  |  
|                                     | Holiday Inn         |        |       | 299    |       |  |     | 204       |        |  |      | 95  |   |      |         | 44,774  |           |  |         | 31,035 |  |  |        | 13,739 |  
|                                     | Holiday Inn Express |        |       | 574    |       |  |     | 429       |        |  |      | 145 |   |      |         | 55,520  |           |  |         | 38,066 |  |  |        | 17,454 |  
|                                     | Staybridge Suites   |        |       | 120    |       |  |     | 79        |        |  |      | 41  |   |      |         | 12,605  |           |  |         | 8,195  |  |  |        | 4,410  |  
|                                     | Candlewood Suites   |        |       | 128    |       |  |     | 83        |        |  |      | 45  |   |      |         | 11,723  |           |  |         | 7,467  |  |  |        | 4,256  |  
|                                     | Hotel Indigo        |        |       | 24     |       |  |     | 8         |        |  |      | 16  |   |      |         | 3,045   |           |  |         | 882    |  |  |        | 2,163  |  
|                                     |                     |        |       |        |       |  |     |           |        |  |      |     |   |      |         |         |           | 
|Total                                |                     |        | 1,241 |        |       |  | 884 |           |        |  | 357  |     |   |      | 157,991 |         |           |  | 108,512 |        |  |  | 49,479 |       
|                                     |                     |        |       |        |       |  |     |           |        |  |      |     |   |      |         |         |           | 
|Analyzed by ownership type:          |                     |        |       |        |       |  |     |           |        |  |      |     |   |      |         |         |           |  |         |        |  |  |        |       
|                                     | Owned and leased    |        |       |       |       |  |     | 2         |        |  |      | (2  | ) |      |         |        |           |  |         | 574    |  |  |        | (574   | )
|                                     | Managed             |        |       | 139    |       |  |     | 98        |        |  |      | 41  |   |      |         | 41,648  |           |  |         | 27,805 |  |  |        | 13,843 |  
|                                     | Franchised          |        |       | 1,102  |       |  |     | 784       |        |  |      | 318 |   |      |         | 116,343 |           |  |         | 80,133 |  |  |        | 36,210 |  
|                                     |                     |        |       |        |       |  |     |           |        |  |      |     |   |      |         |         |           | 
|Total                                |                     |        | 1,241 |        |       |  | 884 |           |        |  | 357  |     |   |      | 157,991 |         |           |  | 108,512 |        |  |  | 49,479 |       
|                                     |                     |        |       |        |       |  |     |           |        |  |      |     |   |      |         |         |           | 



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





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





| |                  
| | -----------------
| | Key Relationships







41



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| |                                  
| | ---------------------------------
| | Key Performance Indicators (KPIs)





| |   |                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | total gross revenue  measure of the scale and reach
    of IHGs brands;                                                                                                    
|
| |  | revenue per available room (RevPAR)  measure of
    underlying hotel revenue with year-on-year performance being
    measured by the RevPAR movement against the prior year;
|
| |  | hotel and room count  measure of the size of
    IHGs portfolio; and                                                                                                       
|
| |  | pipeline of hotels and rooms  measure of demand and
    growth potential for IHGs brands.                                                                                  



42



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##### 





| |       
| | ------
| | RevPAR







|         |                     |                           |  |           |                    |   |  |            |           |   |      |  |       |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |      |       
|-------- | ------------------- | ------------------------- |  | --------- | ------------------ | - |  | ---------- | --------- | - | ---- |  | ----- | --------- |  | - | ------ | - |  | ---- | ------ | - | ---- |  | ---- | ------ |  | - | ------ | - |  | - | ------ | - |  |  | ---- | ------
|         |                     | Owned & leased comparable |  |           | Managed comparable |   |  | Franchised |          
|         |                     |                           |  |           |                    |   |  |            |          
|         |                     |                           |  | Change vs |                    |   |  |            | Change vs |   |      |  |       | Change vs | 
|         |                     | 2006                      |  |           | 2005               |   |  | 2005       |           |   | 2006 |  |       | 2005      |  |   | 2005   |   |  | 2006 |        |   | 2005 |  |      | 2005   | 
|         |                     |                           |  |           |                    |   |  |            |           |   |      |  |       |           |  |   |        |   |  |      |        |   |      |  |      |        | 
|Americas |                     |                           |  |           |                    |   |  |            |           |   |      |  |       |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  | 
|         | InterContinental    |                           |  |           |                    |   |  |            |           |   |      |  |       |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|         |                     | Occupancy                 |  |           | 78.5               | % |  |            | 73.5      | % |      |  | 5.0   | % pts     |  |   | 68.7   | % |  |      | 67.2   | % |      |  | 1.5  | % pts. |  |   | 61.7   | % |  |   | 59.8   | % |  |  | 1.9  | % pts.
|         |                     | Average daily rate        |  | $         | 227.59             |   |  | $          | 216.58    |   |      |  | 5.1   | %         |  | $ | 157.11 |   |  | $    | 145.82 |   |      |  | 7.7  | %      |  | $ | 117.50 |   |  | $ | 106.53 |   |  |  | 10.3 | %     
|         |                     | RevPAR                    |  | $         | 178.63             |   |  | $          | 159.19    |   |      |  | 12.2  | %         |  | $ | 107.89 |   |  | $    | 97.96  |   |      |  | 10.1 | %      |  | $ | 72.50  |   |  | $ | 63.73  |   |  |  | 13.8 | %     
|         | Crowne Plaza        |                           |  |           |                    |   |  |            |           |   |      |  |       |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|         |                     | Occupancy                 |  |           | 72.4               | % |  |            | 66.1      | % |      |  | 6.3   | % pts.    |  |   | 75.4   | % |  |      | 74.5   | % |      |  | 1.0  | % pts. |  |   | 62.7   | % |  |   | 61.5   | % |  |  | 1.2  | % pts.
|         |                     | Average daily rate        |  | $         | 85.24              |   |  | $          | 73.41     |   |      |  | 16.1 | %         |  | $ | 135.26 |   |  | $    | 120.07 |   |      |  | 12.7 | %      |  | $ | 106.38 |   |  | $ | 98.39  |   |  |  | 8.1  | %     
|         |                     | RevPAR                    |  | $         | 61.75              |   |  | $          | 48.52     |   |      |  | 27.3  | %         |  | $ | 102.05 |   |  | $    | 89.42  |   |      |  | 14.1 | %      |  | $ | 66.74  |   |  | $ | 60.53  |   |  |  | 10.3 | %     
|         | Holiday Inn         |                           |  |           |                    |   |  |            |           |   |      |  |       |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|         |                     | Occupancy                 |  |           | 69.2               | % |  |            | 70.6      | % |      |  | 1.4   | % pts.    |  |   | 67.7   | % |  |      | 69.0   | % |      |  | 1.3 | % pts. |  |   | 62.5   | % |  |   | 61.9   | % |  |  | 0.6  | % pts.
|         |                     | Average daily rate        |  | $         | 93.67              |   |  | $          | 89.72     |   |      |  | 4.4   | %         |  | $ | 98.56  |   |  | $    | 92.33  |   |      |  | 6.7  | %      |  | $ | 90.86  |   |  | $ | 85.20  |   |  |  | 6.6  | %     
|         |                     | RevPAR                    |  | $         | 64.79              |   |  | $          | 63.33     |   |      |  | 2.3   | %         |  | $ | 66.76  |   |  | $    | 63.76  |   |      |  | 4.7  | %      |  | $ | 56.77  |   |  | $ | 52.75  |   |  |  | 7.6  | %     
|         | Holiday Inn Express |                           |  |           |                    |   |  |            |           |   |      |  |       |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|         |                     | Occupancy                 |  |           |                   |   |  |            |          |   |      |  |      |           |  |   | 74.8   | % |  |      | 75.1   | % |      |  | 0.3 | % pts. |  |   | 68.0   | % |  |   | 66.7   | % |  |  | 1.4  | % pts.
|         |                     | Average daily rate        |  |           |                   |   |  |            |          |   |      |  |      |           |  | $ | 133.55 |   |  | $    | 119.12 |   |      |  | 12.1 | %      |  | $ | 87.36  |   |  | $ | 80.52  |   |  |  | 8.5  | %     
|         |                     | RevPAR                    |  |           |                   |   |  |            |          |   |      |  |      |           |  | $ | 99.91  |   |  | $    | 89.51  |   |      |  | 11.6 | %      |  | $ | 59.44  |   |  | $ | 53.68  |   |  |  | 10.7 | %     
|         | Staybridge Suites   |                           |  |           |                    |   |  |            |           |   |      |  |       |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|         |                     | Occupancy                 |  |           | 66.7               | % |  |            | 73.7      | % |      |  | 7.0  | % pts.    |  |   | 76.4   | % |  |      | 76.8   | % |      |  | 0.5 | % pts. |  |   | 72.9   | % |  |   | 73.2   | % |  |  | 0.4 | % pts.
|         |                     | Average daily rate        |  | $         | 91.53              |   |  | $          | 73.18     |   |      |  | 25.1 | %         |  | $ | 104.22 |   |  | $    | 95.25  |   |      |  | 9.4  | %      |  | $ | 97.34  |   |  | $ | 91.23  |   |  |  | 6.7  | %     
|         |                     | RevPAR                    |  | $         | 61.06              |   |  | $          | 53.93     |   |      |  | 13.2  | %         |  | $ | 79.59  |   |  | $    | 73.17  |   |      |  | 8.8  | %      |  | $ | 70.92  |   |  | $ | 66.80  |   |  |  | 6.2  | %     
|         | Candlewood Suites   |                           |  |           |                    |   |  |            |           |   |      |  |       |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|         |                     | Occupancy                 |  |           |                   |   |  |            |          |   |      |  |      |           |  |   | 75.7   | % |  |      | 75.0   | % |      |  | 0.7  | % pts. |  |   | 66.1   | % |  |   | 69.5   | % |  |  | 3.4 | % pts.
|         |                     | Average daily rate        |  |           |                   |   |  |            |          |   |      |  |      |           |  | $ | 66.50  |   |  | $    | 61.03  |   |      |  | 8.9  | %      |  | $ | 69.22  |   |  | $ | 64.45  |   |  |  | 7.4  | %     
|         |                     | RevPAR                    |  |           |                   |   |  |            |          |   |      |  |      |           |  | $ | 50.31  |   |  | $    | 45.76  |   |      |  | 9.9  | %      |  | $ | 45.72  |   |  | $ | 44.77  |   |  |  | 2.1  | %     
|         | Hotel Indigo        |                           |  |           |                    |   |  |            |           |   |      |  |       |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|         |                     | Occupancy                 |  |           |                   |   |  |            |          |   |      |  |      |           |  |   | 69.0   | % |  |      | 55.9   | % |      |  | 13.2 | % pts. |  |   | 39.2   | % |  |   | 42.4   | % |  |  | 3.3 | % pts.
|         |                     | Average daily rate        |  |           |                   |   |  |            |          |   |      |  |      |           |  | $ | 127.05 |   |  | $    | 115.19 |   |      |  | 10.3 | %      |  | $ | 86.02  |   |  | $ | 84.44  |   |  |  | 1.9  | %     
|         |                     | RevPAR                    |  |           |                   |   |  |            |          |   |      |  |      |           |  | $ | 87.70  |   |  | $    | 64.35  |   |      |  | 36.3 | %      |  | $ | 33.70  |   |  | $ | 35.85  |   |  |  | 6.0 | %     

43



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##### 



|     |                     |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |      |       
|---- | ------------------- | ------------------------- |  | --------- | ------------------ | - |  | ---------- | --------- | - | ---- |  | ---- | --------- |  | - | ------ | - |  | ---- | ------ | - | ---- |  | ---- | ------ |  | - | ------ | - |  | - | ------ | - |  |  | ---- | ------
|     |                     | Owned & leased comparable |  |           | Managed comparable |   |  | Franchised |          
|     |                     |                           |  |           |                    |   |  |            |          
|     |                     |                           |  | Change vs |                    |   |  |            | Change vs |   |      |  |      | Change vs | 
|     |                     | 2006                      |  |           | 2005               |   |  | 2005       |           |   | 2006 |  |      | 2005      |  |   | 2005   |   |  | 2006 |        |   | 2005 |  |      | 2005   | 
|     |                     |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        | 
|EMEA |                     |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  | 
|     | InterContinental    |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|     |                     | Occupancy                 |  |           | 70.6               | % |  |            | 69.9      | % |      |  | 0.7  | % pts.    |  |   | 65.4   | % |  |      | 60.9   | % |      |  | 4.5  | % pts. |  |   | 71.3   | % |  |   | 68.5   | % |  |  | 2.8  | % pts.
|     |                     | Average daily rate        |  | $         | 269.15             |   |  | $          | 223.15    |   |      |  | 20.6 | %         |  | $ | 155.76 |   |  | $    | 145.66 |   |      |  | 6.9  | %      |  | $ | 173.14 |   |  | $ | 141.33 |   |  |  | 22.5 | %     
|     |                     | RevPAR                    |  | $         | 190.08             |   |  | $          | 156.08    |   |      |  | 21.8 | %         |  | $ | 101.92 |   |  | $    | 88.71  |   |      |  | 14.9 | %      |  | $ | 123.46 |   |  | $ | 96.87  |   |  |  | 27.4 | %     
|     | Crown Plaza         |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|     |                     | Occupancy                 |  |           | 70.4               | % |  |            | 68.8      | % |      |  | 1.6  | % pts.    |  |   | 75.2   | % |  |      | 73.7   | % |      |  | 1.5  | % pts. |  |   | 67.3   | % |  |   | 64.5   | % |  |  | 2.8  | % pts.
|     |                     | Average daily rate        |  | $         | 111.64             |   |  | $          | 104.66    |   |      |  | 6.7  | %         |  | $ | 140.25 |   |  | $    | 129.91 |   |      |  | 8.0  | %      |  | $ | 126.50 |   |  | $ | 119.16 |   |  |  | 6.2  | %     
|     |                     | RevPAR                    |  | $         | 78.59              |   |  | $          | 71.99     |   |      |  | 9.2  | %         |  | $ | 105.53 |   |  | $    | 95.74  |   |      |  | 10.2 | %      |  | $ | 85.13  |   |  | $ | 76.84  |   |  |  | 10.8 | %     
|     | Holiday Inn         |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|     |                     | Occupancy                 |  |           | 70.7               | % |  |            | 66.2      | % |      |  | 4.5  | % pts.    |  |   | 73.6   | % |  |      | 71.2   | % |      |  | 2.4  | % pts. |  |   | 65.6   | % |  |   | 64.5   | % |  |  | 1.1  | % pts.
|     |                     | Average daily rate        |  | $         | 92.86              |   |  | $          | 94.18     |   |      |  | 1.4 | %         |  | $ | 111.58 |   |  | $    | 106.62 |   |      |  | 4.7  | %      |  | $ | 103.50 |   |  | $ | 92.46  |   |  |  | 11.9 | %     
|     |                     | RevPAR                    |  | $         | 65.66              |   |  | $          | 62.37     |   |      |  | 5.3  | %         |  | $ | 82.12  |   |  | $    | 75.90  |   |      |  | 8.2  | %      |  | $ | 67.87  |   |  | $ | 59.64  |   |  |  | 13.8 | %     
|     | Holiday Inn Express |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|     |                     | Occupancy                 |  |           | 70.1               | % |  |            | 63.9      | % |      |  | 6.3  | % pts.    |  |   | 63.8   | % |  |      | 56.6   | % |      |  | 7.2  | % pts. |  |   | 70.8   | % |  |   | 68.8   | % |  |  | 2.0  | % pts.
|     |                     | Average daily rate        |  | $         | 78.12              |   |  | $          | 79.01     |   |      |  | 1.1 | %         |  | $ | 76.04  |   |  | $    | 71.68  |   |      |  | 6.1  | %      |  | $ | 92.62  |   |  | $ | 88.39  |   |  |  | 4.8  | %     
|     |                     | RevPAR                    |  | $         | 54.79              |   |  | $          | 50.45     |   |      |  | 8.6  | %         |  | $ | 48.49  |   |  | $    | 40.56  |   |      |  | 19.5 | %      |  | $ | 65.59  |   |  | $ | 60.85  |   |  |  | 7.8  | %     

|             |                     |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |      |       
|------------ | ------------------- | ------------------------- |  | --------- | ------------------ | - |  | ---------- | --------- | - | ---- |  | ---- | --------- |  | - | ------ | - |  | ---- | ------ | - | ---- |  | ---- | ------ |  | - | ------ | - |  | - | ------ | - |  |  | ---- | ------
|             |                     | Owned & leased comparable |  |           | Managed comparable |   |  | Franchised |          
|             |                     |                           |  |           |                    |   |  |            |          
|             |                     |                           |  | Change vs |                    |   |  |            | Change vs |   |      |  |      | Change vs | 
|             |                     | 2006                      |  |           | 2005               |   |  | 2005       |           |   | 2006 |  |      | 2005      |  |   | 2005   |   |  | 2006 |        |   | 2005 |  |      | 2005   | 
|             |                     |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        | 
|Asia Pacific |                     |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  | 
|             | InterContinental    |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|             |                     | Occupancy                 |  |           | 72.5               | % |  |            | 65.9      | % |      |  | 6.6  | % pts.    |  |   | 71.1   | % |  |      | 71.0   | % |      |  | 0.1  | % pts. |  |   | 70.8   | % |  |   | 68.0   | % |  |  | 2.8  | % pts.
|             |                     | Average daily rate        |  | $         | 340.73             |   |  | $          | 284.50    |   |      |  | 19.8 | %         |  | $ | 146.55 |   |  | $    | 140.56 |   |      |  | 4.3  | %      |  | $ | 159.64 |   |  | $ | 135.26 |   |  |  | 18.0 | %     
|             |                     | RevPAR                    |  | $         | 247.07             |   |  | $          | 187.39    |   |      |  | 31.8 | %         |  | $ | 104.23 |   |  | $    | 99.80  |   |      |  | 4.4  | %      |  | $ | 113.03 |   |  | $ | 92.01  |   |  |  | 22.8 | %     
|             | Crowne Plaza        |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|             |                     | Occupancy                 |  |           |                   |   |  |            |          |   |      |  |     |           |  |   | 78.6   | % |  |      | 76.8   | % |      |  | 1.8  | % pts. |  |   | 77.7   | % |  |   | 74.6   | % |  |  | 31.1 | % pts.
|             |                     | Average daily rate        |  |           |                   |   |  |            |          |   |      |  |     |           |  | $ | 94.52  |   |  | $    | 87.95  |   |      |  | 7.5  | %      |  | $ | 98.31  |   |  | $ | 91.29  |   |  |  | 7.7  | %     
|             |                     | RevPAR                    |  |           |                   |   |  |            |          |   |      |  |     |           |  | $ | 74.27  |   |  | $    | 67.56  |   |      |  | 9.9  | %      |  | $ | 76.41  |   |  | $ | 68.13  |   |  |  | 12.2 | %     
|             | Holiday Inn         |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|             |                     | Occupancy                 |  |           | 78.6               | % |  |            | 76.9      | % |      |  | 1.7  | % pts.    |  |   | 76.6   | % |  |      | 75.8   | % |      |  | 0.8  | % pts. |  |   | 69.5   | % |  |   | 71.3   | % |  |  | 1.8 | % pts.
|             |                     | Average daily rate        |  | $         | 104.63             |   |  | $          | 92.06     |   |      |  | 13.7 | %         |  | $ | 75.35  |   |  | $    | 69.25  |   |      |  | 8.8  | %      |  | $ | 66.17  |   |  | $ | 63.98  |   |  |  | 3.4  | %     
|             |                     | RevPAR                    |  | $         | 82.24              |   |  | $          | 70.76     |   |      |  | 16.2 | %         |  | $ | 57.72  |   |  | $    | 52.47  |   |      |  | 10.0 | %      |  | $ | 45.97  |   |  | $ | 45.62  |   |  |  | 0.8  | %     
|             | Holiday Inn Express |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|             |                     | Occupancy                 |  |           |                   |   |  |            |          |   |      |  |     |           |  |   | 77.2   | % |  |      | 77.8   | % |      |  | 0.6 | % pts. |  |   | 65.4   | % |  |   | 67.3   | % |  |  | 1.9 | % pts.
|             |                     | Average daily rate        |  |           |                   |   |  |            |          |   |      |  |     |           |  | $ | 39.38  |   |  | $    | 37.44  |   |      |  | 5.2  | %      |  | $ | 53.81  |   |  | $ | 52.20  |   |  |  | 3.1  | %     
|             |                     | RevPAR                    |  |           |                   |   |  |            |          |   |      |  |     |           |  | $ | 30.39  |   |  | $    | 29.11  |   |      |  | 4.4  | %      |  | $ | 35.19  |   |  | $ | 35.13  |   |  |  | 0.2  | %     
|             | Other               |                           |  |           |                    |   |  |            |           |   |      |  |      |           |  |   |        |   |  |      |        |   |      |  |      |        |  |   |        |   |  |   |        |   |  |  |     
|             |                     | Occupancy                 |  |           |                   |   |  |            |          |   |      |  |     |           |  |   | 67.1   | % |  |      | 70.1   | % |      |  | 3.0 | % pts. |  |   |       |   |  |   |       |   |  |  |     |       
|             |                     | Average daily rate        |  |           |                   |   |  |            |          |   |      |  |     |           |  | $ | 74.73  |   |  | $    | 72.21  |   |      |  | 3.5  | %      |  |   |       |   |  |   |       |   |  |  |     |       
|             |                     | RevPAR                    |  |           |                   |   |  |            |          |   |      |  |     |           |  | $ | 50.17  |   |  | $    | 50.64  |   |      |  | 0.9 | %      |  |   |       |   |  |   |       |   |  |  |     |       



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



44



---



##### 






SOFT DRINKS











TRADEMARKS







ORGANIZATIONAL STRUCTURE




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











| |                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------
| | InterContinental Hotels Group Operating Corporation
    (incorporated and operates principally in the United States)




PROPERTY, PLANT AND EQUIPMENT




|                                        |  |                 |     |  |          |  |     |              |  |  |       |  |  |  |     | 
|--------------------------------------- |  | --------------- | --- |  | -------- |  | --- | ------------ |  |  | ----- |  |  |  | --- | 
|                                        |  | Europe,         |     |  |          |  |     |              | 
|Net book value of land and buildings as |  | the Middle East |     |  |          |  |     |              | 
|at December 31, 2006                    |  | and Africa      |     |  | Americas |  |     | Asia Pacific |  |  | Total | 
|                                        |  |                 |     |  |          |  |     |              |  |  |       | 
|                                        |  | (£ million)     |    
|Hotels                                  |  |                 | 278 |  |          |  | 289 |              |  |  | 172   |  |  |  | 739 | 
|                                        |  |                 |     |  |          |  |     |              |  |  |       | 





45



---



##### 



ENVIRONMENT










| |   |                                                                                                 
| | - | ------------------------------------------------------------------------------------------------
| |  | developments in global environmental policy;                                                    
| |  | how we establish management responsibility and accountability
    for environmental performance;
| |  | how we evaluate and manage our hotels environmental
    footprint;                             
| |  | new projects and developments; and                                                              
| |  | performance benchmarking against best practice.                                                 



















46



---



##### 








|         |                          
|-------- | -------------------------
|ITEM 4A. | UNRESOLVED STAFF COMMENTS








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




INTRODUCTION




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







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










CRITICAL ACCOUNTING POLICIES UNDER IFRS AND US GAAP






47



---



##### 







| |                                                                   
| | ------------------------------------------------------------------
| | Goodwill, intangible assets, and property, plant and
    equipment

















| |                    
| | -------------------
| | Sale of real estate





| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | does the Company have a continuing managerial involvement of the
    degree associated with asset ownership;
|
| |  | has the Company transferred the significant risks and rewards
    associated with asset ownership;          
|
| |  | can the Company reliably measure the proceeds; and                                                          

48



---



##### 





| |   |                                                
| | - | -----------------------------------------------
| |  | will the Company actually receive the proceeds.





| |             
| | ------------
| | Income taxes







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





| |                                                 
| | ------------------------------------------------
| | Pensions and other post-employment benefit plans





49



---



##### 






OPERATING RESULTS




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







50



---



##### 





| |                                                                    
| | -------------------------------------------------------------------
| | Year ended December 2006 compared with year ended December
    2005

|                                                                  |                                  |              |     |        |              |  |       |       | 
|----------------------------------------------------------------- | -------------------------------- | ------------ | --- | ------ | ------------ |  | ----- | ----- | 
|                                                                  |                                  | Year ended   |     |        | Year ended   | 
|                                                                  |                                  | December 31, |     |        | December 31, | 
|                                                                  |                                  | 2006         |     |        | 2005         | 
|                                                                  |                                  |              |     |        |              | 
|                                                                  |                                  | (£ million)  |    
|GROUP RESULTS                                                     |                                  |              |     |        |              |  |       |      
|Revenue:                                                          |                                  |              |     |        |              |  |       |      
|Continuing operations                                             |                                  |              |     |        |              |  |       |      
|                                                                  | Hotels                           |              |     | 805    |              |  |       | 713   | 
|Discontinued operations                                           |                                  |              |     |        |              |  |       |      
|                                                                  | Hotels                           |              |     | 155    |              |  |       | 526   | 
|                                                                  | Soft Drinks                      |              |     |       |              |  |       | 671   | 
|                                                                  |                                  |              |     |        |              | 
|Total revenue                                                     |                                  |              | 960 |        |              |  | 1,910 |      
|                                                                  |                                  |              |     |        |              | 
|Operating profit before other operating income and expenses:      |                                  |              |     |        |              |  |       |      
|Continuing operations                                             |                                  |              |     |        |              |  |       |      
|                                                                  | Hotels                           |              |     | 201    |              |  |       | 173   | 
|Discontinued operations                                           |                                  |              |     |        |              |  |       |      
|                                                                  | Hotels                           |              |     | 30     |              |  |       | 96    | 
|                                                                  | Soft Drinks                      |              |     |       |              |  |       | 70    | 
|                                                                  |                                  |              |     |        |              | 
|Total operating profit before other operating income and expenses |                                  |              | 231 |        |              |  | 339   |      
|Other operating income and expenses                               |                                  |              | 27  |        |              |  | (22   | )    
|                                                                  |                                  |              |     |        |              | 
|Operating profit                                                  |                                  |              | 258 |        |              |  | 317   |      
|Interest                                                          |                                  |              | (11 | )      |              |  | (33   | )    
|                                                                  |                                  |              |     |        |              | 
|Profit before tax                                                 |                                  |              | 247 |        |              |  | 284   |      
|Tax                                                               |                                  |              | 41  |        |              |  | (80   | )    
|                                                                  |                                  |              |     |        |              | 
|Profit after tax                                                  |                                  |              | 288 |        |              |  | 204   |      
|Gain on disposal of assets, net of tax                            |                                  |              | 117 |        |              |  | 311   |      
|                                                                  |                                  |              |     |        |              | 
|Profit available for the year                                     |                                  |              | 405 |        |              |  | 515   |      
|                                                                  |                                  |              |     |        |              | 
|Earnings per ordinary share:                                      |                                  |              |     |        |              |  |       |      
|                                                                  | Basic                            |              |     | 104.1p |              |  |       | 95.2p | 
|                                                                  | Adjusted                         |              |     | 42.9p  |              |  |       | 38.2p | 
|                                                                  | Adjusted - continuing operations |              |     | 37.5p  |              |  |       | 22.5p | 
|                                                                  |                                  |              |     |        |              | 



Other operating income and
expenses






51



---



##### 





Net Financing Costs




Taxation








Gain on Disposal of Assets




Earnings




52



---



##### 





| |                                                    
| | ---------------------------------------------------
| | Highlights for the year ended December 31,
    2006





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

|                                                             |              |              |     |     |              |  |     |        |   |  |      |      | 
|------------------------------------------------------------ | ------------ | ------------ | --- | --- | ------------ |  | --- | ------ | - |  | ---- | ---- | 
|                                                             |              | Year ended   |     |     | Year ended   |  |     |       
|                                                             |              | December 31, |     |     | December 31, |  |     |       
|                                                             |              | 2006         |     |     | 2005         |  |     | Change |  
|                                                             |              |              |     |     |              |  |     |        |  
|                                                             |              |              |     | %   |             
|                                                             |              | (£ million)  |     |     |             
|Revenue:                                                     |              |              |     |     |              |  |     |        |   |  |      |     
|                                                             | Americas     |              |     | 433 |              |  |     | 384    |   |  |      | 12.8 | 
|                                                             | EMEA         |              |     | 206 |              |  |     | 200    |   |  |      | 3.0  | 
|                                                             | Asia Pacific |              |     | 111 |              |  |     | 87     |   |  |      | 27.6 | 
|                                                             | Central      |              |     | 55  |              |  |     | 42     |   |  |      | 31.0 | 
|                                                             |              |              |     |     |              |  |     |        |  
|                                                             |              |              | 805 |     |              |  | 713 |        |   |  | 12.9 |     
|                                                             |              |              |     |     |              |  |     |        |  
|Operating profit before other operating income and expenses: |              |              |     |     |              |  |     |        |   |  |      |     
|                                                             | Americas     |              |     | 217 |              |  |     | 186    |   |  |      | 16.7 | 
|                                                             | EMEA         |              |     | 36  |              |  |     | 31     |   |  |      | 16.1 | 
|                                                             | Asia Pacific |              |     | 29  |              |  |     | 21     |   |  |      | 38.1 | 
|                                                             | Central      |              |     | (81 | )            |  |     | (65    | ) |  |      | 24.6 | 
|                                                             |              |              |     |     |              |  |     |        |  
|                                                             |              |              | 201 |     |              |  | 173 |        |   |  | 16.2 |     
|                                                             |              |              |     |     |              |  |     |        |  

Revenue.


Operating profit.


53



---



##### 





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



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

|                                                             |                  |              |     |     |              |  |     |        |  |  |      |      | 
|------------------------------------------------------------ | ---------------- | ------------ | --- | --- | ------------ |  | --- | ------ |  |  | ---- | ---- | 
|                                                             |                  | Year ended   |     |     | Year ended   |  |     |       
|                                                             |                  | December 31, |     |     | December 31, |  |     |       
|                                                             |                  | 2006         |     |     | 2005         |  |     | Change | 
|                                                             |                  |              |     |     |              |  |     |        | 
|                                                             |                  |              |     | %   |             
|                                                             |                  | ($ million)  |     |     |             
|Revenue:                                                     |                  |              |     |     |              |  |     |        |  |  |      |     
|                                                             | Owned and leased |              |     | 211 |              |  |     | 195    |  |  |      | 8.2  | 
|                                                             | Managed          |              |     | 143 |              |  |     | 118    |  |  |      | 21.2 | 
|                                                             | Franchised       |              |     | 443 |              |  |     | 389    |  |  |      | 13.9 | 
|                                                             |                  |              |     |     |              |  |     |        | 
|                                                             |                  |              | 797 |     |              |  | 702 |        |  |  | 13.5 |     
|                                                             |                  |              |     |     |              |  |     |        | 
|Operating profit before other operating income and expenses: |                  |              |     |     |              |  |     |        |  |  |      |     
|                                                             | Owned and leased |              |     | 26  |              |  |     | 25     |  |  |      | 4.0  | 
|                                                             | Managed          |              |     | 50  |              |  |     | 36     |  |  |      | 38.9 | 
|                                                             | Franchised       |              |     | 382 |              |  |     | 340    |  |  |      | 12.4 | 
|                                                             |                  |              |     |     |              |  |     |        | 
|                                                             |                  |              | 458 |     |              |  | 401 |        |  |  | 14.2 |     
|Regional overheads                                           |                  |              | (59 | )   |              |  | (62 | )      |  |  | (4.8 | )   
|                                                             |                  |              |     |     |              |  |     |        | 
|Total $ million                                              |                  |              | 399 |     |              |  | 339 |        |  |  | 17.7 |     
|                                                             |                  |              |     |     |              |  |     |        | 
|Sterling equivalent £
    million(i)                         |                  |              | 217 |     |              |  | 186 |        |  |  | 16.7 |     
|                                                             |                  |              |     |     |              |  |     |        | 






|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | The results have been translated into pounds sterling at
    weighted average rates of exchange for the year. The translation
    rates are fiscal 2006: £1 = $1.84 (2005:
    £1 = $1.83).









54



---



##### 





Group-funded








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

Continuing
EMEA Results


|                                                             |                  |              |     |     |              |  |     |        |   |  |      |      |  
|------------------------------------------------------------ | ---------------- | ------------ | --- | --- | ------------ |  | --- | ------ | - |  | ---- | ---- | -
|                                                             |                  | Year ended   |     |     | Year ended   |  |     |       
|                                                             |                  | December 31, |     |     | December 31, |  |     |       
|                                                             |                  | 2006         |     |     | 2005         |  |     | Change |  
|                                                             |                  |              |     |     |              |  |     |        |  
|                                                             |                  | (£ million)  |    
|                                                             |                  |              |     | %   |             
|Revenue:                                                     |                  |              |     |     |              |  |     |        |   |  |      |     
|                                                             | Owned and leased |              |     | 100 |              |  |     | 110    |   |  |      | (9.1 | )
|                                                             | Managed          |              |     | 71  |              |  |     | 55     |   |  |      | 29.1 |  
|                                                             | Franchised       |              |     | 35  |              |  |     | 35     |   |  |      |     |  
|                                                             |                  |              |     |     |              |  |     |        |  
|                                                             |                  |              | 206 |     |              |  | 200 |        |   |  | 3.0  |     
|                                                             |                  |              |     |     |              |  |     |        |  
|Operating profit before other operating income and expenses: |                  |              |     |     |              |  |     |        |   |  |      |     
|                                                             | Owned and leased |              |     | (5  | )            |  |     | (5     | ) |  |      |     |  
|                                                             | Managed          |              |     | 37  |              |  |     | 31     |   |  |      | 19.4 |  
|                                                             | Franchised       |              |     | 24  |              |  |     | 26     |   |  |      | (7.7 | )
|                                                             |                  |              |     |     |              |  |     |        |  
|                                                             |                  |              | 56  |     |              |  | 52  |        |   |  | 7.7  |     
|Regional overheads                                           |                  |              | (20 | )   |              |  | (21 | )      |   |  | (4.8 | )   
|                                                             |                  |              |     |     |              |  |     |        |  
|Total £ million                                              |                  |              | 36  |     |              |  | 31  |        |   |  | 16.1 |     
|                                                             |                  |              |     |     |              |  |     |        |  
|Dollar equivalent
    $ million(i)                           |                  |              | 67  |     |              |  | 56  |        |   |  | 19.6 |     
|                                                             |                  |              |     |     |              |  |     |        |  






|    |                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | The results have been translated into US dollars at weighted
    average rates of exchange for the year. The translation rates
    are 2006: $1 = £0.54 (2005:
    $1 = £0.55).



55



---



##### 













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

Continuing
Asia Pacific Results


|                                                             |                  |              |     |     |              |  |     |        |  |  |      |      | 
|------------------------------------------------------------ | ---------------- | ------------ | --- | --- | ------------ |  | --- | ------ |  |  | ---- | ---- | 
|                                                             |                  | Year ended   |     |     | Year ended   |  |     |       
|                                                             |                  | December 31, |     |     | December 31, |  |     |       
|                                                             |                  | 2006         |     |     | 2005         |  |     | Change | 
|                                                             |                  |              |     |     |              |  |     |        | 
|                                                             |                  | ($ million)  |    
|                                                             |                  |              |     | %   |             
|Revenue:                                                     |                  |              |     |     |              |  |     |        |  |  |      |     
|                                                             | Owned and leased |              |     | 131 |              |  |     | 108    |  |  |      | 21.3 | 
|                                                             | Managed          |              |     | 65  |              |  |     | 45     |  |  |      | 44.4 | 
|                                                             | Franchised       |              |     | 8   |              |  |     | 6      |  |  |      | 33.3 | 
|                                                             |                  |              |     |     |              |  |     |        | 
|                                                             |                  |              | 204 |     |              |  | 159 |        |  |  | 28.3 |     
|                                                             |                  |              |     |     |              |  |     |        | 
|Operating profit before other operating income and expenses: |                  |              |     |     |              |  |     |        |  |  |      |     
|                                                             | Owned and leased |              |     | 31  |              |  |     | 20     |  |  |      | 55.0 | 
|                                                             | Managed          |              |     | 39  |              |  |     | 29     |  |  |      | 34.5 | 
|                                                             | Franchised       |              |     | 5   |              |  |     | 5      |  |  |      |     | 
|                                                             |                  |              |     |     |              |  |     |        | 
|                                                             |                  |              | 75  |     |              |  | 54  |        |  |  | 38.9 |     
|Regional overheads                                           |                  |              | (23 | )   |              |  | (15 | )      |  |  | 53.3 |     
|                                                             |                  |              |     |     |              |  |     |        | 
|Total $ million                                              |                  |              | 52  |     |              |  | 39  |        |  |  | 33.3 |     
|                                                             |                  |              |     |     |              |  |     |        | 
|Sterling equivalent £
    million(i)                         |                  |              | 29  |     |              |  | 21  |        |  |  | 38.1 |     
|                                                             |                  |              |     |     |              |  |     |        | 






|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | The results have been translated into pounds sterling at
    weighted average rates of exchange for the year. The translation
    rates are fiscal 2006: £1 = $1.84 (2005:
    £1 = $1.83).



56



---



##### 















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

|                                   |  |              |      |   |              |  |      |        |  |  |      | 
|---------------------------------- |  | ------------ | ---- | - | ------------ |  | ---- | ------ |  |  | ---- | 
|                                   |  | Year ended   |      |   | Year ended   |  |      |       
|                                   |  | December 31, |      |   | December 31, |  |      |       
|                                   |  | 2006         |      |   | 2005         |  |      | Change | 
|                                   |  |              |      |   |              |  |      |        | 
|                                   |  |              |      | % |             
|                                   |  | (£ million)  |      |   |             
|Revenue                            |  |              | 55   |   |              |  | 42   |        |  |  | 31.0 | 
|Gross central costs                |  |              | (136 | ) |              |  | (107 | )      |  |  | 27.1 | 
|                                   |  |              |      |   |              |  |      |        | 
|Net central costs £ million        |  |              | (81  | ) |              |  | (65  | )      |  |  | 24.6 | 
|                                   |  |              |      |   |              |  |      |        | 
|Dollar equivalent
    $ million(i) |  |              | (149 | ) |              |  | (118 | )      |  |  | 26.3 | 
|                                   |  |              |      |   |              |  |      |        | 






|    |                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | The results have been translated into US dollars at weighted
    average rates of exchange for the year. The translation rates
    are 2006: $1 = £0.54 (2005: $1 = £0.55).





| |                        
| | -----------------------
| | Discontinued Operations







| |                                                         
| | --------------------------------------------------------
| | Highlights for the 12 months ended December 31,
    2005





57



---



##### 





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



















| |     
| | ----
| | EMEA







58



---



##### 















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















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



59



---



##### 







| |                        
| | -----------------------
| | Discontinued Operations








LIQUIDITY AND CAPITAL RESOURCES




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















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







| |                               
| | ------------------------------
| | Cash From Investing Activities



60



---



##### 





| |                                  
| | ---------------------------------
| | Cash Used in Financing Activities







| |                               
| | ------------------------------
| | Off-Balance Sheet Arrangements





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



|                                    |  |               |       |  |           |  |    |           |  |  |           |       |  |         |    |  |  |  |       | 
|----------------------------------- |  | ------------- | ----- |  | --------- |  | -- | --------- |  |  | --------- | ----- |  | ------- | -- |  |  |  | ----- | 
|                                    |  | Total amounts |       |  | Less than |  |    |           |  |  |           | After | 
|                                    |  | committed     |       |  | 1 year    |  |    | 1-3 years |  |  | 3-5 years |       |  | 5 years |   
|                                    |  |               |       |  |           |  |    |           |  |  |           |       |  |         |   
|                                    |  | (£ million)   |      
|Long-term debt                      |  |               | 216   |  |           |  | 7  |           |  |  | 209       |       |  |         |   |  |  |  |      | 
|Finance lease
    obligations(i)    |  |               | 1,781 |  |           |  | 3  |           |  |  | 16        |       |  |         | 17 |  |  |  | 1,745 | 
|Operating lease obligations         |  |               | 190   |  |           |  | 27 |           |  |  | 40        |       |  |         | 23 |  |  |  | 100   | 
|Agreed pension scheme contributions |  |               | 47    |  |           |  | 27 |           |  |  | 20        |       |  |         |   |  |  |  |      | 
|Capital contracts placed            |  |               | 24    |  |           |  | 24 |           |  |  |          |       |  |         |   |  |  |  |      | 
|                                    |  |               |       |  |           |  |    |           |  |  |           |       |  |         |   
|                                    |  |               | 2,258 |  |           |  | 88 |           |  |  | 285       |       |  |         | 40 |  |  |  | 1,845 | 
|                                    |  |               |       |  |           |  |    |           |  |  |           |       |  |         |   






|    |                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------
|(i) | Represents the minimum lease payments related to the 99 year
    lease on the InterContinental Boston.











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



61



---



##### 














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




DIRECTORS AND SENIOR MANAGEMENT








| |          
| | ---------
| | Directors

|                         |  |                                          |  |              |      |  |                  |  |      | 
|------------------------ |  | ---------------------------------------- |  | ------------ | ---- |  | ---------------- |  | ---- | 
|                         |  |                                          |  | Initially    |      |  | Date of next     | 
|                         |  |                                          |  | appointed to |      |  | reappointment    | 
|Name                     |  | Title                                    |  | the board    |      |  | by shareholders* | 
|                         |  |                                          |  |              |      |  |                  | 
|Andrew Cosslett          |  | Director and Chief Executive             |  |              | 2005 |  |                  |  | 2008 | 
|Richard
    Hartman(2)   |  | Director and President, EMEA             |  |              | 2003 |  |                  |  | N/A  | 
|David
    Kappler(1)     |  | Director and Senior Independent Director |  |              | 2004 |  |                  |  | 2008 | 
|Ralph
    Kugler(1)      |  | Director                                 |  |              | 2003 |  |                  |  | 2008 | 
|Jennifer
    Laing(1)    |  | Director                                 |  |              | 2005 |  |                  |  | 2009 | 
|Robert C.
    Larson(1)  |  | Director                                 |  |              | 2003 |  |                  |  | 2007 | 
|Jonathan
    Linen(1)    |  | Director                                 |  |              | 2005 |  |                  |  | 2009 | 
|Stevan Porter            |  | Director and President, The Americas     |  |              | 2003 |  |                  |  | 2009 | 
|Sir David
    Prosser(1) |  | Director                                 |  |              | 2003 |  |                  |  | 2007 | 
|Richard Solomons         |  | Director and Finance Director            |  |              | 2003 |  |                  |  | 2007 | 
|David Webster            |  | Chairman                                 |  |              | 2003 |  |                  |  | 2007 | 






|    |                                                 
|--- | ------------------------------------------------
|(1) | Non-executive independent director.             
|   
|(2) | Richard Hartman due to retire in September 2007.



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Robert C. Larson, being over the age of 70, is required to
    retire and stand for re-election at each Annual General Meeting,
    if he wishes to continue to serve as a director. Sir David
    Prosser and David Webster are required, under the Companys
    articles of association, to stand for
    re-election at the 2007
    Annual General Meeting. Richard Solomons is also standing for
    re-election at the 2007 meeting on a voluntary basis. Andrew
    Cosslett, David Kappler and Ralph Kugler will be required to
    stand for re-election at the 2008 Annual General Meeting. Any
    further appointments at the 2008 meeting would be on a voluntary
    basis.

62



---



##### 





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

|                   |  |                                                  |  |                     |      | 
|------------------ |  | ------------------------------------------------ |  | ------------------- | ---- | 
|Name               |  | Title                                            |  | Initially appointed |     
|                   |  |                                                  |  |                     |     
|Tom Conophy        |  | Executive Vice President and Chief               |  |                     | 2006 | 
|                   |  | Information Officer                              |  |                     |      | 
|Peter Gowers       |  | Executive Vice President and Chief Marketing     |  |                     | 2003 | 
|                   |  | Officer                                          |  |                     |      | 
|Patrick Imbardelli |  | President, Asia Pacific                          |  |                     | 2003 | 
|Tracy Robbins      |  | Executive Vice President, Global Human Resources |  |                     | 2005 | 
|Richard Winter     |  | Executive Vice President, Corporate Services,    |  |                     | 2003 | 
|                   |  | General Counsel and Company Secretary            |  |                     |      | 



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





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

Tom Conophy




Andrew Cosslett




Peter Gowers




Richard Hartman




Patrick Imbardelli




63



---



##### 





David Kappler




Ralph Kugler




Jennifer Laing




Robert C Larson




Jonathan Linen




Stevan Porter




Sir David Prosser




64



---



##### 



Tracy Robbins




Richard Solomons




David Webster




Richard Winter











COMPENSATION






Share Plans




Executive Share Option Plan




65



---



##### 









Short Term Deferred Incentive
Plan




Performance Restricted Share
Plan




Sharesave Plan




66



---



##### 





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

F-41.





BOARD PRACTICES




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













| |                     
| | --------------------
| | Directors Contracts

|                 |  |          |         |  |                 |  |            |  
|---------------- |  | -------- | ------- |  | --------------- |  | ---------- | -
|                 |  | Contract |         |  | Unexpired term/ | 
|Directors        |  | date     |         |  | notice period   | 
|                 |  |          |         |  |                 | 
|Andrew Cosslett  |  |          | 2.3.05  |  |                 |  | 12 months  |  
|Richard Hartman  |  |          | 4.15.03 |  |                 |  | 6 months(1 | )
|Stevan Porter    |  |          | 4.15.03 |  |                 |  | 12 months  |  
|Richard Solomons |  |          | 4.15.03 |  |                 |  | 12 months  |  






|    |                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Richard Hartman is due to retire in September 2007. Having given
    contractual notice, his unexpired term of office as at the date
    of this report is six months.









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





67



---



##### 





| |           
| | ----------
| | Committees



Executive Committee




Audit Committee








| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | review the Groups public statements on internal control
    and corporate governance compliance prior to their consideration
    by the Board;                                                                                                    
|
| |  | review the Groups processes for detecting and addressing
    fraud, misconduct and control weaknesses and to consider the
    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;                                                                              
|
| |  | assuming responsibility for the appointment, compensation,
    resignation, dismissal and the oversight 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 the Groups Code of Ethics and Business Conduct and
    oversight of associated procedures for monitoring adherence.                                                                                                                         





68



---



##### 



Remuneration Committee




Nomination Committee




Disclosure Committee




General Purposes Committee









EMPLOYEES


full-time part-time


69



---



##### 





|                              |  |                |        |                 |            |  |       |               |  |  |              |  |  |       |       |  |  |  |        | 
|----------------------------- |  | -------------- | ------ | --------------- | ---------- |  | ----- | ------------- |  |  | ------------ |  |  | ----- | ----- |  |  |  | ------ | 
|                              |  |                |        | Rest of Europe, |            |  |       |               |  |  |             
|                              |  |                |        | the Middle East |            |  |       |               |  |  |             
|                              |  | United Kingdom |        |                 | and Africa |  |       | United States |  |  | Asia Pacific |  |  | Total |      
|                              |  |                |        |                 |            |  |       |               |  |  |              |  |  |       |      
|2006                          |  |                | 960    |                 |            |  | 3,763 |               |  |  | 4,268        |  |  |       | 2,465 |  |  |  | 11,456 | 
|                              |  |                |        |                 |            |  |       |               |  |  |              |  |  |       |      
|2005:                         |  |                |        |                 |            |  |       |               |  |  |              |  |  |       |       |  |  |  |        | 
|Hotels                        |  |                | 4,610  |                 |            |  | 6,145 |               |  |  | 6,329        |  |  |       | 1,911 |  |  |  | 18,995 | 
|Soft
    Drinks(i)            |  |                | 2,991  |                 |            |  |      |               |  |  |             |  |  |       |      |  |  |  | 2,991  | 
|                              |  |                |        |                 |            |  |       |               |  |  |              |  |  |       |      
|InterContinental Hotels Group |  |                | 7,601  |                 |            |  | 6,145 |               |  |  | 6,329        |  |  |       | 1,911 |  |  |  | 21,986 | 
|                              |  |                |        |                 |            |  |       |               |  |  |              |  |  |       |      
|2004:                         |  |                |        |                 |            |  |       |               |  |  |              |  |  |       |       |  |  |  |        | 
|Hotels                        |  |                | 9,676  |                 |            |  | 6,601 |               |  |  | 8,241        |  |  |       | 2,317 |  |  |  | 26,835 | 
|Soft
    Drinks(i)            |  |                | 2,824  |                 |            |  |      |               |  |  |             |  |  |       |      |  |  |  | 2,824  | 
|                              |  |                |        |                 |            |  |       |               |  |  |              |  |  |       |      
|InterContinental Hotels Group |  |                | 12,500 |                 |            |  | 6,601 |               |  |  | 8,241        |  |  |       | 2,317 |  |  |  | 29,659 | 
|                              |  |                |        |                 |            |  |       |               |  |  |              |  |  |       |      






|    |                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------
|(i) | With effect from December 14, 2005, the Group no longer
    employed any individuals in the Soft Drinks Sector.









70



---



##### 






SHARE OWNERSHIP




|                   |  |                 |         |     |             |  |      | 
|------------------ |  | --------------- | ------- | --- | ----------- |  | ---- | 
|                   |  | Ordinary shares |         |     | % of shares | 
|                   |  | of 113/7 pence  |         |     | outstanding | 
|                   |  |                 |         |     |             | 
|Directors          |  |                 |         |     |             |  |      | 
|Andrew Cosslett    |  |                 | 111,243 |     |             |  | 0.03 | 
|Richard Hartman    |  |                 | 84,114  |     |             |  | 0.02 | 
|David Kappler      |  |                 | 1,669   |     |             |  | N/A  | 
|Ralph Kugler       |  |                 | 1,393   |     |             |  | N/A  | 
|Jennifer Laing     |  |                 | 1,673   |     |             |  | N/A  | 
|Robert C. Larson   |  |                 | 6,874   | (1) |             |  | N/A  | 
|Jonathan Linen     |  |                 | 8,750   | (1) |             |  | N/A  | 
|Stevan Porter      |  |                 | 200,364 |     |             |  | 0.06 | 
|Sir David Prosser  |  |                 | 2,863   |     |             |  | N/A  | 
|Richard Solomons   |  |                 | 186,838 |     |             |  | 0.05 | 
|David Webster      |  |                 | 31,975  |     |             |  | 0.01 | 
|Officers           |  |                 |         |     |             |  |      | 
|Tom Conophy        |  |                 | Nil     |     |             |  | N/A  | 
|Peter Gowers       |  |                 | 93,990  |     |             |  | 0.03 | 
|Patrick Imbardelli |  |                 | 101,723 |     |             |  | 0.03 | 
|Tracy Robbins      |  |                 | 11,740  |     |             |  | N/A  | 
|Richard Winter     |  |                 | 105,637 |     |             |  | 0.03 | 






|    |                                                 
|--- | ------------------------------------------------
|(1) | Held in the form of American Depositary Receipts














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




MAJOR SHAREHOLDERS




|                             |  |             |            |     |            |  |       |             |  |  |            |     |  |             |       |     |          |  |            |     |  |  |       |    
|---------------------------- |  | ----------- | ---------- | --- | ---------- |  | ----- | ----------- |  |  | ---------- | --- |  | ----------- | ----- | --- | -------- |  | ---------- | --- |  |  | ----- | ---
|                             |  | March 2007  |            |     | March 2006 |  |       | April 2005  | 
|                             |  |             |            |     |            |  |       |             | 
|                             |  | 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 | 
|                             |  |             |            |     |            |  |       |             |  |  |            |     |  |             |       |     |          | 
|Ellerman Corporation Limited |  |             | 25,286,950 |     |            |  | 7.13% |             |  |  |            | (1) |  |             |       | (1) |          |  |            | (1) |  |  |       | (1)
|Lloyds TSB Group Plc         |  |             | 13,619,563 |     |            |  | 3.84% |             |  |  | 19,534,651 |     |  |             | 4.51% |     |          |  | 26,773,575 |     |  |  | 4.44% |    
|Legal & General Group Plc    |  |             | 11,927,715 |     |            |  | 3.37% |             |  |  | 13,753,588 |     |  |             | 3.17% |     |          |  | 24,233,225 |     |  |  | 4.02% |    
|Barclays PLC                 |  |             |            | (1) |            |  |       | (1)         |  |  |            | (1) |  |             |       | (1) |          |  | 20,246,584 |     |  |  | 3.36% |    
|AXA SA                       |  |             |            | (1) |            |  |       | (1)         |  |  |            | (1) |  |             |       | (1) |          |  | 18,121,201 |     |  |  | 3.00% |    






|    |                                                      
|--- | -----------------------------------------------------
|(1) | No notification of an above 3% shareholding received.

71



---



##### 












RELATED PARTY TRANSACTIONS









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




CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION




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





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





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






SIGNIFICANT CHANGES









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





72



---



##### 





|                        |  |                |      |  |           |  |      |      |  |  |       |  |  |  |      | 
|----------------------- |  | -------------- | ---- |  | --------- |  | ---- | ---- |  |  | ----- |  |  |  | ---- | 
|                        |  | £ per          |      |  |          
|                        |  | ordinary share |      |  | $ per ADS | 
|                        |  |                |      |  |           | 
|Year ended September 30 |  | High           |      |  | Low       |  |      | High |  |  | Low   | 
|                        |  |                |      |  |           |  |      |      |  |  |       | 
|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  | 
|2005                                        |  |                | 8.42 |  |           |  | 6.12 |      |  |  | 14.53 |  |  |  | 11.49 | 

|                                       |  |                |       |  |           |  |       |      |  |  |       |  |  |  |       | 
|-------------------------------------- |  | -------------- | ----- |  | --------- |  | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|                                       |  | £ per          |       |  |          
|                                       |  | ordinary share |       |  | $ per ADS | 
|                                       |  |                |       |  |           | 
|Year ended December 31                 |  | High           |       |  | Low       |  |       | High |  |  | Low   | 
|                                       |  |                |       |  |           |  |       |      |  |  |       | 
|2005                                   |  |                |       |  |           |  |       |      |  |  |       |  |  |  |       | 
|First quarter                          |  |                | 6.97  |  |           |  | 6.17  |      |  |  | 13.06 |  |  |  | 11.65 | 
|Second quarter                         |  |                | 7.06  |  |           |  | 6.12  |      |  |  | 12.99 |  |  |  | 11.49 | 
|Third quarter                          |  |                | 7.57  |  |           |  | 7.01  |      |  |  | 13.81 |  |  |  | 12.44 | 
|Fourth quarter                         |  |                | 8.42  |  |           |  | 6.88  |      |  |  | 14.53 |  |  |  | 12.04 | 
|2006                                   |  |                |       |  |           |  |       |      |  |  |       |  |  |  |       | 
|First quarter                          |  |                | 9.01  |  |           |  | 8.07  |      |  |  | 15.83 |  |  |  | 14.40 | 
|Second
    quarter(1)                  |  |                | 10.00 |  |           |  | 8.98  |      |  |  | 21.21 |  |  |  | 16.54 | 
|Third quarter                          |  |                | 9.56  |  |           |  | 8.37  |      |  |  | 17.91 |  |  |  | 15.99 | 
|Fourth quarter                         |  |                | 12.65 |  |           |  | 9.31  |      |  |  | 26.27 |  |  |  | 17.64 | 
|2007                                   |  |                |       |  |           |  |       |      |  |  |       |  |  |  |       | 
|First quarter (through March 16, 2007) |  |                | 13.15 |  |           |  | 11.82 |      |  |  | 25.86 |  |  |  | 22.80 | 






|    |                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Prices adjusted for the share consolidation effective
    June 12, 2006. Unadjusted prices for the quarter were
    £10.01 and £8.98 and $18.56 and $15.06, respectively.

|                                       |  |                |       |  |           |  |       |      |  |  |       |  |  |  |       | 
|-------------------------------------- |  | -------------- | ----- |  | --------- |  | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|                                       |  | £ per          |       |  |          
|                                       |  | ordinary share |       |  | $ per ADS | 
|                                       |  |                |       |  |           | 
|Month ended                            |  | High           |       |  | Low       |  |       | High |  |  | Low   | 
|                                       |  |                |       |  |           |  |       |      |  |  |       | 
|September 2006                         |  |                | 9.47  |  |           |  | 9.15  |      |  |  | 17.91 |  |  |  | 17.35 | 
|October 2006                           |  |                | 10.19 |  |           |  | 9.31  |      |  |  | 19.50 |  |  |  | 17.64 | 
|November 2006                          |  |                | 10.66 |  |           |  | 10.02 |      |  |  | 20.44 |  |  |  | 19.29 | 
|December 2006                          |  |                | 12.65 |  |           |  | 10.18 |      |  |  | 26.27 |  |  |  | 20.37 | 
|January 2007                           |  |                | 13.08 |  |           |  | 11.84 |      |  |  | 25.79 |  |  |  | 23.12 | 
|February 2007                          |  |                | 13.15 |  |           |  | 12.00 |      |  |  | 25.86 |  |  |  | 22.97 | 
|March 2007 (through to March 16, 2007) |  |                | 12.43 |  |           |  | 11.82 |      |  |  | 24.03 |  |  |  | 22.80 | 



73



---



##### 






PLAN OF DISTRIBUTION







SELLING SHAREHOLDERS







DILUTION







EXPENSES OF THE ISSUE









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




MEMORANDUM AND ARTICLES OF ASSOCIATION


S-8 333-126139)








| |                  
| | -----------------
| | Principal Objects





| |          
| | ---------
| | Directors



74



---



##### 









| |                           
| | --------------------------
| | Rights Attaching to Shares









| |              
| | -------------
| | Voting Rights

3 7




| |   |                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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                                                                                            

75



---



##### 





| |   |                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.













| |                    
| | -------------------
| | 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



76



---



##### 






MATERIAL CONTRACTS






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











| |                                         
| | ----------------------------------------
| | Disposal to Hospitality Properties Trust







77



---



##### 





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









| |                              
| | -----------------------------
| | Australasian Hotels Disposals







| |                        
| | -----------------------
| | Disposal to Dabicam SAS






| |                               
| | ------------------------------
| | Britvic Underwriting Agreement



78



---



##### 





| |                       
| | ----------------------
| | Disposal to Westbridge



  








| |                                             
| | --------------------------------------------
| | Disposal to Morgan Stanley Real Estate Funds











EXCHANGE CONTROLS











TAXATION






| |   |                                
| | - | -------------------------------
| |  | certain financial institutions;
|
| |  | insurance companies;           

79



---



##### 





| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | dealers and traders in securities or foreign currencies;                                                                         
|
| |  | persons holding ordinary shares or ADSs as part of a hedge,
    straddle, conversion transaction or other integrated transaction;
|
| |  | persons whose functional currency for U.S. federal income tax
    purposes is not the U.S. dollar;                               
|
| |  | partnerships or other entities classified as partnerships for
    U.S. federal income tax purposes;                              
|
| |  | persons liable for the alternative minimum tax;                                                                                  
|
| |  | tax-exempt organizations;                                                                                                        
|
| |  | persons who acquired our ADSs or shares pursuant to the exercise
    of any employee stock option or otherwise as compensation.  











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



80



---



##### 





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



dividends-received








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



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







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



81



---



##### 







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





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

United Kingdom Inheritance
Tax




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








82



---



##### 










DOCUMENTS ON DISPLAY


20-F







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

Exchange and Interest Rate Risk, and Financial Instruments




Treasury Risk
Management




Credit Risk




Interest Rate Risk




 


83



---



##### 



Currency Risk








Quantitative Information about Market Risk




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



At December 31, 2006


|                                   |  |                                        |     |   |      |  |     |      |  |  |      |   |  |      |     |   |            |  |     |       |  |  |               |   |  |  |     |   |  |  |     | 
|---------------------------------- |  | -------------------------------------- | --- | - | ---- |  | --- | ---- |  |  | ---- | - |  | ---- | --- | - | ---------- |  | --- | ----- |  |  | ------------- | - |  |  | --- | - |  |  | --- | 
|                                   |  | Expected to mature before December 31, |     |   |      |  |    
|                                   |  |                                        |     |   |      |  |    
|                                   |  | 2007                                   |     |   | 2008 |  |     | 2009 |  |  | 2010 |   |  | 2011 |     |   | Thereafter |  |     | Total |  |  | Fair value(i) |  
|                                   |  |                                        |     |   |      |  |     |      |  |  |      |   |  |      |     |   |            |  |     |       |  |  |               |  
|                                   |  | (£ million, except percentages)        |    
|Long-Term Debt:                    |  |                                        |     |   |      |  |     |      |  |  |      |   |  |      |     |   |            |  |     |       |  |  |               |   |  |  |     |   |  |  |     | 
|Fixed Rate lease debt (US dollar)  |  |                                        | 3   |   |      |  | 7   |      |  |  | 6    |   |  |      | 6   |   |            |  | 5   |       |  |  | 70            |   |  |  | 97  |   |  |  | 97  | 
|Average dollar interest rate       |  |                                        | 9.7 | % |      |  | 9.7 | %    |  |  | 9.7  | % |  |      | 9.7 | % |            |  | 9.7 | %     |  |  | 9.7           | % |  |  | 9.7 | % |  |  |     | 
|Variable Rate (various currencies) |  |                                        | 7   |   |      |  |    |      |  |  | 209  |   |  |      |    |   |            |  |    |       |  |  |              |   |  |  | 216 |   |  |  | 216 | 
|Average interest rate              |  |                                        | 7.5 | % |      |  |     |      |  |  | 5.3  | % |  |      |     |   |            |  |     |       |  |  |               |   |  |  | 5.3 | % |  |  |     | 

|                                                 |  |                                              |   |  |      |  |     |      |  |  |      |  |  |      |   |  |            |  |   |       |  |  |               |  |  |  |     |   |  |  |   | 
|------------------------------------------------ |  | -------------------------------------------- | - |  | ---- |  | --- | ---- |  |  | ---- |  |  | ---- | - |  | ---------- |  | - | ----- |  |  | ------------- |  |  |  | --- | - |  |  | - | 
|                                                 |  | Expected to mature before December 31,       |   |  |      |  |    
|                                                 |  |                                              |   |  |      |  |    
|                                                 |  | 2007                                         |   |  | 2008 |  |     | 2009 |  |  | 2010 |  |  | 2011 |   |  | Thereafter |  |   | Total |  |  | Fair value(i) | 
|                                                 |  |                                              |   |  |      |  |     |      |  |  |      |  |  |      |   |  |            |  |   |       |  |  |               | 
|                                                 |  | (local currency million, except percentages) |  
|Interest Rate Swaps and Forward rate agreements: |  |                                              |   |  |      |  |     |      |  |  |      |  |  |      |   |  |            |  |   |       |  |  |               |  |  |  |     |   |  |  |   | 
|Principal (US dollar)                            |  |                                              |  |  |      |  | 100 |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 100 |   |  |  |  | 
|Fixed rate payable                               |  |                                              |   |  |      |  | 4.5 | %    |  |  |      |  |  |      |   |  |            |  |   |       |  |  |               |  |  |  | 4.5 | % |  |  |   | 
|Variable rate receivable                         |  |                                              |   |  |      |  | 5.7 | %    |  |  |      |  |  |      |   |  |            |  |   |       |  |  |               |  |  |  | 5.7 | % |  |  |   | 
|Principal (euro)                                 |  |                                              |  |  |      |  | 80  |      |  |  |     |  |  |      |  |  |            |  |  |       |  |  |              |  |  |  | 80  |   |  |  |  | 
|Fixed rate payable                               |  |                                              |   |  |      |  | 3.0 | %    |  |  |      |  |  |      |   |  |            |  |   |       |  |  |               |  |  |  | 3.0 | % |  |  |   | 
|Variable rate receivable                         |  |                                              |   |  |      |  | 4.0 | %    |  |  |      |  |  |      |   |  |            |  |   |       |  |  |               |  |  |  | 4.0 | % |  |  |   | 






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

84



---



##### 





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



|                                           |  |                 |      |             |  |  |     | 
|------------------------------------------ |  | --------------- | ---- | ----------- |  |  | --- | 
|                                           |  | Pay             |      | Receive    
|                                           |  | 2006            |      | 2006       
|                                           |  |                 |      |            
|                                           |  | (local currency |      | (£ million)
|                                           |  | million)        |      |            
|Sale of US dollars against sterling        |  |                 | (251 | )           |  |  | 130 | 
|Sale of euros against sterling             |  |                 | (70  | )           |  |  | 47  | 
|Sale of Hong Kong dollars against sterling |  |                 | (690 | )           |  |  | 47  | 






|         |                                                           
|-------- | ----------------------------------------------------------
|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



| |                                   
| | ----------------------------------
| | Disclosure Controls and Procedures

13a-15(c)




| |                                                                     
| | --------------------------------------------------------------------
| | Managements Report on Internal Control Over
    Financial Reporting

13a-15(f) 15d-15(f)


F-1


F-2


85



---



##### 





| |                                                         
| | --------------------------------------------------------
| | Changes in Internal Control Over Financial
    Reporting

20-F







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






|          |                                 
|--------- | --------------------------------
|ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT






ITEM 16B.CODE OF
ETHICS







ITEM 16C.PRINCIPAL
ACCOUNTANT FEES AND SERVICES




|                   |  |              |     |  |              |  |     | 
|------------------ |  | ------------ | --- |  | ------------ |  | --- | 
|                   |  | Year ended   |     |  | Year ended   | 
|                   |  | December 31, |     |  | December 31, | 
|                   |  | 2006         |     |  | 2005         | 
|                   |  |              |     |  |              | 
|                   |  | (£ million)  |    
|Audit Fees         |  |              | 2.4 |  |              |  | 3.9 | 
|Audit Related Fees |  |              | 2.1 |  |              |  | 2.7 | 
|Tax Fees           |  |              | 0.7 |  |              |  | 0.6 | 
|                   |  |              |     |  |              | 
|Total              |  |              | 5.2 |  |              |  | 7.2 | 
|                   |  |              |     |  |              | 







86



---



##### 








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








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

|                                      |  |                  |           |             |            |                  |                  |                     |                    |                      |                        |  |  |  |               | 
|------------------------------------- |  | ---------------- | --------- | ----------- | ---------- | ---------------- | ---------------- | ------------------- | ------------------ | -------------------- | ---------------------- |  |  |  | ------------- | 
|                                      |  |                  |           |             |            |                  |                  | (d) Maximum         |                   
|                                      |  |                  |           |             |            | (c) Total number |                  |                     | number (or         |                     
|                                      |  |                  |           |             |            | of shares (or    |                  |                     | approximate dollar |                     
|                                      |  |                  |           | (b) Average |            |                  | units) purchased |                     |                    | value) of shares (or |                       
|                                      |  | (a) Total number |           |             | price paid |                  |                  | as part of publicly |                    |                      | units) that may yet be | 
|                                      |  | of shares (or    |           |             | per share  |                  |                  | announced plans     |                    |                      | purchased under the    | 
|Period of fiscal year                 |  | units) purchased |           |             | (or unit)  |                  |                  | or programs         |                    |                      | plans or programs      | 
|                                      |  |                  |           |             |            |                  |                  |                     |                    |                      |                        | 
|Month 1 (no purchases in this month)  |  |                  | 0         |             |            |                  | 0.00             |                     |                    |                      | 0                      |  |  |  | 55,178,065.00 | 
|Month 2 (no purchases in this month)  |  |                  | 0         |             |            |                  | 0.00             |                     |                    |                      | 0                      |  |  |  | 55,178,065.00 | 
|Month 3 (03.03.06  03.28.06)         |  |                  | 3,195,000 |             |            |                  | 8.68             |                     |                    |                      | 3,195,000              |  |  |  | 51,983,065.00 | 
|Month 4 (04.03.06  04.25.06)         |  |                  | 3,327,752 |             |            |                  | 9.41             |                     |                    |                      | 3,327,752              |  |  |  | 48,655,313.00 | 
|Month 5 (05.19.06  05.25.06)         |  |                  | 4,500,000 |             |            |                  | 9.18             |                     |                    |                      | 4,500,000              |  |  |  | 44,155,313.00 | 
|Month 6 (06.05.06  06.03.06)         |  |                  | 1,645,001 |             |            |                  | 9.19             |                     |                    |                      | 1,645,001              |  |  |  | 53,805,720.00 | 
|Month 7 (07.03.06  07.31.06)         |  |                  | 6,522,000 |             |            |                  | 9.12             |                     |                    |                      | 6,522,000              |  |  |  | 47,283,720.00 | 
|Month 8 (08.01.06  08.31.06)         |  |                  | 5,710,000 |             |            |                  | 8.62             |                     |                    |                      | 5,710,000              |  |  |  | 41,573,720.00 | 
|Month 9 (09.04.06  09.29.06)         |  |                  | 1,763,000 |             |            |                  | 9.29             |                     |                    |                      | 1,763,000              |  |  |  | 39,810,720.00 | 
|Month 10 (10.03.06  10.13.06)        |  |                  | 815,000   |             |            |                  | 9.53             |                     |                    |                      | 815,000                |  |  |  | 38,995,720.00 | 
|Month 11 (no purchases in this month) |  |                  | 0         |             |            |                  | 0.00             |                     |                    |                      | 0                      |  |  |  | 38,995,720.00 | 
|Month 12 (12.05.06  12.11.06)        |  |                  | 932,000   |             |            |                  | 10.73            |                     |                    |                      | 932,000                |  |  |  | 38,063,720.00 | 












PART III







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



87



---



##### 








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



|                                                                                                                      |  |      |      | 
|--------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | 
|                                                                                                                      |  | Page |     
|                                                                                                                      |  |      |     
|Managements Report on Internal
    Control over Financial Reporting                                                  |  |      | F-1  | 
|Report of Independent Registered Public
    Accounting Firm on Internal Control over Financial Reporting              |  |      | F-2  | 
|Report and Consent of Independent
    Registered Public Accounting Firm                                               |  |      | F-3  | 
|Financial Statements                                                                                                  |  |      |      | 
|Consolidated Income Statement for the years
    ended December 31, 2006, 2005 and 2004                                |  |      | F-5  | 
|Consolidated Statement of Recognized Income
    and Expense for the years ended December 31, 2006,
    2005 and 2004  |  |      | F-6  | 
|Consolidated Balance Sheet for the years
    ended December 31, 2006 and 2005                                         |  |      | F-7  | 
|Consolidated Statement of Changes in
    Shareholders Funds for the years ended
    December 31, 2006, 2005 and 2004 |  |      | F-8  | 
|Consolidated Cash Flow Statement for the
    years ended December 31, 2006, 2005 and 2004                             |  |      | F-10 | 
|Notes to the Financial Statements                                                                                     |  |      | F-11 | 
|Schedule for the years ended December 31, 2006, 2005 and
    2004                                                     |  |      |      | 
|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. 333-126139)
    filed with the SEC on June 27, 2005)                                                                                                                                                                                                                                            
|                 
|Exhibit 4(a)(i)   |  | £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 (incorporated by reference to Exhibit 4(ii)
    of InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File
    No 1-10409) dated May 3, 2005)          
|                 
|Exhibit 4(b)(i)   |  | 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 (incorporated by
    reference to Exhibit 4(b)(ii) of InterContinental Hotels
    Group PLC Annual Report on
    Form 20-F (File
    No. 1-10409) dated
    May 3, 2005)
|                 
|Exhibit 4(b)(ii)  |  | Amended and Restated Stock Purchase Agreement dated
    February 9, 2005 between Six Continents International
    Holdings, B.V. and HPT IHG-2 (incorporated by reference to
    Exhibit 4(b)(v) of InterContinental Hotels Group PLC Annual
    Report on
    Form 20-F
    (File No. 1-10409)
    dated May 3, 2005)                                                                                                                                                       
|                 
|Exhibit 4(b)(iii) |  | Share Purchase Agreement dated March 10, 2005 between IHC
    London (Holdings) Limited, and LGR Acquisition (currently LRG
    Acquisition) and LGR Holdings Limited (currently LRG Holdings
    Limited) (incorporated by reference to Exhibit 4(b)(iv) of
    InterContinental Hotels Group PLC Annual Report on
    Form 20-F
    (File No. 1-10409)
    dated May 3, 2005)                                                                                              

88



---



##### 





|                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 4(b)(iv)   |  | New Zealand Share Sale Deed dated September 1, 2005 between
    Hale International Limited, Six Continents Limited, HANZ
    Holdings (New Zealand) Limited and Eureka Funds Management
    Limited (incorporated by reference to Exhibit 4(b)(v) of
    the InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File No. 1-10409) dated March 31, 2006)                                                                                                                         
|                  
|Exhibit 4(b)(v)    |  | Australia Share and Unit Sale Deed dated September 1, 2005
    between Holiday Inns Holdings (Australia) Pty Limited, SPHC
    Group Pty Limited, HIA(T) Pty Ltd, Six Continents Limited, HANZ
    (Australia) Pty Limited and Eureka Funds Management Limited
    (incorporated by reference to Exhibit 4(b)(vi) of the
    InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File No. 1-10409) dated March 31, 2006)                                                         
|                  
|Exhibit 4(b)(vi)   |  | Sale and Purchase Agreement dated September 8, 2005 between
    BHR Holdings BV and DABICAM SAS relating to the sale of the
    InterContinental Hotel, Paris.                                                                                                                                                                                                                                                                                                                                 
|                  
|Exhibit 4(b)(vii)  |  | Britvic Underwriting Agreement dated November 25, 2005
    between, inter alia, Britvic, IHG, the directors of Britvic,
    Citigroup and Deutsche Bank AG (as joint sponsors) and
    Citigroup, Deutsche Bank AG, Lehman Brothers International
    (Europe) and Merrill Lynch International (as joint Underwriters)
    (incorporated by reference to Exhibit 4(b)(vii) of the
    InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File No. 1-10409) dated March 31, 2006)
|                  
|Exhibit 4(b)(viii) |  | Sale and Purchase Agreement dated March 10, 2006 among BHR
    Luxembourg S.à.r.l., Others, Cooperatie Westbridge Europe
    I.U.A., Others and Westbridge Hospitality Fund L.P.
    relating to a portfolio of certain companies and businesses in
    continental Europe (incorporated by reference to
    Exhibit 4(b)(viii) of the InterContinental Hotels Group PLC
    Annual Report on Form 20-F (File No. 1-10409) dated
    March 31, 2006)                                           
|                  
|Exhibit 4(b)(ix)   |  | Sale and Purchase Agreement dated July 13, 2006 between BHR
    Holdings BV and MSREF VI Danube BV relating to the sale of
    certain companies and businesses in continental Europe and Side
    Letter dated September 5, 2006.                                                                                                                                                                                                                                                             
|                  
|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 Hartmans letter of appointment dated April 2005,
    effective from June 27, 2005 on completion of the Scheme of
    Arrangement and the introduction of the new parent company to
    the Group (incorporated by reference to Exhibit 4(c)(ii) of
    the InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File No. 1-10409) dated March 31, 2006)                                                                                                                  
|                  
|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)   |  | Stevan Porters letter of appointment dated April 2005,
    effective from June 27, 2005 on completion of the Scheme of
    Arrangement and the introduction of the new parent company to
    the Group (incorporated by reference to Exhibit 4(c)(iv) of
    the InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File No. 1-10409) dated March 31, 2006)                                                                                                                    
|                  
|Exhibit 4(c)(v)    |  | 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)                                                                                                                                                                                                                                                          

89



---



##### 





|                   |  |                                                                                                                                                                                                                                                                                                                                                                                        
|------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 4(c)(vi)   |  | Richard Solomons letter of appointment dated April 2005,
    effective from June 27, 2005 on completion of the Scheme of
    Arrangement and the introduction of the new parent company to
    the Group (incorporated by reference to Exhibit 4(c)(vi) of
    the InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File
    No. 1-10409) dated
    March 31, 2006)  
|                  
|Exhibit 4(c)(vii)  |  | Andrew Cossletts service contract dated December 13,
    2004 (incorporated by reference to Exhibit 4(c)(v) of
    InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File
    No. 1-10409) dated
    May 3, 2005)                                                                                                                                                     
|                  
|Exhibit 4(c)(viii) |  | Andrew Cossletts letter of appointment dated April 2005,
    effective from June 27, 2005 on completion of the Scheme of
    Arrangement and the introduction of the new parent company to
    the Group (incorporated by reference to Exhibit 4(c)(viii)
    of the InterContinental Hotels Group PLC Annual Report on
    Form 20-F (File
    No. 1-10409) dated
    March 31, 2006)
|                  
|Exhibit 8          |  | List of Subsidiaries                                                                                                                                                                                                                                                                                                                                                                   
|                  
|Exhibit 12(a)      |  | Certification of Andrew Cosslett filed pursuant to 17
    CFR 240.13a-14(a)                                                                                                                                                                                                                                                                                                            
|                  
|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 15(a)      |  | Consent of Ernst & Young LLP (included on page F-4)                                                                                                                                                                                                                                                                                                                                    

90



---



##### 



MANAGEMENTS REPORT ON


INTERNAL CONTROL OVER FINANCIAL REPORTING














F-1



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


ON INTERNAL CONTROL OVER FINANCIAL REPORTING


















| |                  
| | -----------------
| | Ernst & Young LLP
|
| | London, England  



F-2



---



##### 





INTERCONTINENTAL HOTELS GROUP PLC


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















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







F-3



---



##### 



CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


F-3 333-108084 S-8 20-F)




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







F-4



---



##### 



INTERCONTINENTAL HOTELS GROUP PLC


CONSOLIDATED INCOME STATEMENT


|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |      |       |  |  |        |       |  |  |        |       | 
|----------------------------------------------------------------------------------------------------------------- | ----------------------------------- | ----------------------- | ---- | ----- | ----------------------- | ---------------------------------------------- | ---- | ----------------------- |  | ---------- | ---------- | ------ | ------------ | ---------- | ---- | ----- | ----- | ---------- | ----- | ---------- | ------------ |  | ---------- | ----- |  | ----- | ---- | ----- |  |  | ------ | ----- |  |  | ------ | ----- | 
|                                                                                                                  |                                     | Year ended December 31, |      |       | Year ended December 31, |                                                |      | Year ended December 31, | 
|                                                                                                                  |                                     | 2006                    |      |       | 2005                    |                                                |      | 2004                    | 
|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         | 
|                                                                                                                  |                                     | Continuing              |      |       | Discontinued            |                                                |      |                         |  | Continuing |            |        | Discontinued |            |      |       |       | Continuing |       |            | Discontinued |  |            |      
|                                                                                                                  |                                     | operations              |      |       | operations              |                                                |      | Total                   |  |            | operations |        |              | operations |      |       | Total |            |       | operations |              |  | operations |       |  | Total |     
|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |     
|                                                                                                                  |                                     |                         |      |       |                         | (£ million, except per ordinary share amounts) |      |                         |  |            |           
|Revenue(Note 2)                                                                                                   |                                     |                         | 805  |       |                         |                                                | 155  |                         |  |            | 960        |        |              |            | 713  |       |       |            | 1,197 |            |              |  | 1,910      |       |  |       | 606  |       |  |  | 1,598  |       |  |  | 2,204  |      
|Cost of sales                                                                                                     |                                     |                         | (364 | )     |                         |                                                | (121 | )                       |  |            | (485       | )      |              |            | (333 | )     |       |            | (884  | )          |              |  | (1,217     | )     |  |       | (300 | )     |  |  | (1,177 | )     |  |  | (1,477 | )    
|Administrative expenses                                                                                           |                                     |                         | (180 | )     |                         |                                                |     |                         |  |            | (180       | )      |              |            | (150 | )     |       |            | (74   | )          |              |  | (224       | )     |  |       | (140 | )     |  |  | (68    | )     |  |  | (208   | )    
|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |     
|                                                                                                                  |                                     |                         | 261  |       |                         |                                                | 34   |                         |  |            | 295        |        |              |            | 230  |       |       |            | 239   |            |              |  | 469        |       |  |       | 166  |       |  |  | 353    |       |  |  | 519    |      
|Depreciation and amortization (Note 2)                                                                            |                                     |                         | (60  | )     |                         |                                                | (4   | )                       |  |            | (64        | )      |              |            | (57  | )     |       |            | (73   | )          |              |  | (130       | )     |  |       | (46  | )     |  |  | (127   | )     |  |  | (173   | )    
|Other operating income and expenses (Note 5)                                                                      |                                     |                         | 27   |       |                         |                                                |     |                         |  |            | 27         |        |              |            | (22  | )     |       |            |      |            |              |  | (22        | )     |  |       | (49  | )     |  |  |       |       |  |  | (49    | )    
|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |     
|Operating profit(Note 2)                                                                                          |                                     |                         | 228  |       |                         |                                                | 30   |                         |  |            | 258        |        |              |            | 151  |       |       |            | 166   |            |              |  | 317        |       |  |       | 71   |       |  |  | 226    |       |  |  | 297    |      
|Financial income (Note 6)                                                                                         |                                     |                         | 26   |       |                         |                                                |     |                         |  |            | 26         |        |              |            | 30   |       |       |            |      |            |              |  | 30         |       |  |       | 70   |       |  |  |       |       |  |  | 70     |      
|Financial expenses (Note 6)                                                                                       |                                     |                         | (37  | )     |                         |                                                |     |                         |  |            | (37        | )      |              |            | (54  | )     |       |            | (9    | )          |              |  | (63        | )     |  |       | (103 | )     |  |  |       |       |  |  | (103   | )    
|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |     
|Profit before tax                                                                                                 |                                     |                         | 217  |       |                         |                                                | 30   |                         |  |            | 247        |        |              |            | 127  |       |       |            | 157   |            |              |  | 284        |       |  |       | 38   |       |  |  | 226    |       |  |  | 264    |      
|Tax (Note 7)                                                                                                      |                                     |                         | 50   |       |                         |                                                | (9   | )                       |  |            | 41         |        |              |            | (24  | )     |       |            | (56   | )          |              |  | (80        | )     |  |       | 196  |       |  |  | (69    | )     |  |  | 127    |      
|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |     
|Profit after tax                                                                                                  |                                     |                         | 267  |       |                         |                                                | 21   |                         |  |            | 288        |        |              |            | 103  |       |       |            | 101   |            |              |  | 204        |       |  |       | 234  |       |  |  | 157    |       |  |  | 391    |      
|Gain on disposal of assets, net of tax charge of
    £6 million (2005 £38 million: 2004 credit of
    £4 million) |                                     |                         |     |       |                         |                                                | 117  |                         |  |            | 117        |        |              |            |     |       |       |            | 311   |            |              |  | 311        |       |  |       |     |       |  |  | 19     |       |  |  | 19     |      
|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |     
|Profit for the year                                                                                               |                                     |                         | 267  |       |                         |                                                | 138  |                         |  |            | 405        |        |              |            | 103  |       |       |            | 412   |            |              |  | 515        |       |  |       | 234  |       |  |  | 176    |       |  |  | 410    |      
|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |     
|Attributable to:                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |      |       |  |  |        |       |  |  |        |      
|                                                                                                                  | Equity holders of the
    parent(i) |                         |      | 267   |                         |                                                |      | 138                     |  |            |            | 405    |              |            |      | 103   |       |            |       | 393        |              |  |            | 496   |  |       |      | 234   |  |  |        | 149   |  |  |        | 383   | 
|                                                                                                                  | Minority equity interest            |                         |      |      |                         |                                                |      |                        |  |            |            |       |              |            |      |      |       |            |       | 19         |              |  |            | 19    |  |       |      |      |  |  |        | 27    |  |  |        | 27    | 
|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |     
|Profit for the year                                                                                               |                                     |                         | 267  |       |                         |                                                | 138  |                         |  |            | 405        |        |              |            | 103  |       |       |            | 412   |            |              |  | 515        |       |  |       | 234  |       |  |  | 176    |       |  |  | 410    |      
|                                                                                                                  |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |     
|Earnings per ordinary share:(Note 9)                                                                              |                                     |                         |      |       |                         |                                                |      |                         |  |            |            |        |              |            |      |       |       |            |       |            |              |  |            |       |  |       |      |       |  |  |        |       |  |  |        |      
|                                                                                                                  | Basic                               |                         |      | 68.6p |                         |                                                |      | 35.5p                   |  |            |            | 104.1p |              |            |      | 19.8p |       |            |       | 75.4p      |              |  |            | 95.2p |  |       |      | 32.9p |  |  |        | 21.0p |  |  |        | 53.9p | 
|                                                                                                                  | Diluted                             |                         |      | 66.9p |                         |                                                |      | 34.6p                   |  |            |            | 101.5p |              |            |      | 19.3p |       |            |       | 73.8p      |              |  |            | 93.1p |  |       |      | 32.6p |  |  |        | 20.7p |  |  |        | 53.3p | 






|    |                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | A summary of the significant adjustments to profit available for
    IHG equity holders of the parent that would be required had
    United States generally accepted accounting principles been
    applied instead of International Financial Reporting Standards
    as adopted by the European Union is set out in Note 32 of
    Notes to the Consolidated Financial Statements.



F-5



---



##### 



INTERCONTINENTAL HOTELS GROUP PLC





CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSE


|                                                                        |                              |              |     |     |              |  |     |              |  |  |     |     | 
|----------------------------------------------------------------------- | ---------------------------- | ------------ | --- | --- | ------------ |  | --- | ------------ |  |  | --- | --- | 
|                                                                        |                              | Year ended   |     |     | Year ended   |  |     | Year ended   | 
|                                                                        |                              | December 31, |     |     | December 31, |  |     | December 31, | 
|                                                                        |                              | 2006         |     |     | 2005         |  |     | 2004         | 
|                                                                        |                              |              |     |     |              |  |     |              | 
|                                                                        |                              | (£ million)  |    
|Income and expense recognized directly in equity                        |                              |              |     |     |              |  |     |              |  |  |     |    
|Gains on valuation of available-for-sale assets                         |                              |              | 16  |     |              |  | 31  |              |  |  |    |    
|Gains on cash flow hedges                                               |                              |              | 1   |     |              |  | 1   |              |  |  |    |    
|Exchange differences on retranslation of foreign operations             |                              |              | (30 | )   |              |  | 29  |              |  |  | (12 | )  
|Actuarial losses on defined benefit pension plans                       |                              |              | (2  | )   |              |  | (23 | )            |  |  | (51 | )  
|Deficit transferred in respect of previous acquisition                  |                              |              |    |     |              |  |    |              |  |  | (6  | )  
|                                                                        |                              |              |     |     |              |  |     |              | 
|                                                                        |                              |              | (15 | )   |              |  | 38  |              |  |  | (69 | )  
|                                                                        |                              |              |     |     |              |  |     |              | 
|Transfers to the income statement                                       |                              |              |     |     |              |  |     |              |  |  |     |    
|On cash flow hedges                                                     |                              |              | (1  | )   |              |  | (6  | )            |  |  |    |    
|On disposal of foreign operations                                       |                              |              | 4   |     |              |  | 2   |              |  |  |    |    
|On disposal of available-for-sale assets                                |                              |              | (14 | )   |              |  |    |              |  |  |    |    
|                                                                        |                              |              |     |     |              |  |     |              | 
|                                                                        |                              |              | (11 | )   |              |  | (4  | )            |  |  |    |    
|                                                                        |                              |              |     |     |              |  |     |              | 
|Tax                                                                     |                              |              |     |     |              |  |     |              |  |  |     |    
|Tax on items above taken directly to or transferred from equity         |                              |              | 4   |     |              |  | (1  | )            |  |  | 14  |    
|Deferred tax related to share schemes recognized directly in
    equity |                              |              | 26  |     |              |  | 8   |              |  |  |    |    
|                                                                        |                              |              |     |     |              |  |     |              | 
|                                                                        |                              |              | 30  |     |              |  | 7   |              |  |  | 14  |    
|                                                                        |                              |              |     |     |              |  |     |              | 
|Net income/(expense) recognized directly in equity                      |                              |              | 4   |     |              |  | 41  |              |  |  | (55 | )  
|Profit for the year                                                     |                              |              | 405 |     |              |  | 515 |              |  |  | 410 |    
|                                                                        |                              |              |     |     |              |  |     |              | 
|Total recognized income and expense for the
    year(i)                 |                              |              | 409 |     |              |  | 556 |              |  |  | 355 |    
|                                                                        |                              |              |     |     |              |  |     |              | 
|Attributable to:                                                        |                              |              |     |     |              |  |     |              |  |  |     |    
|                                                                        | Equity holders of the parent |              |     | 409 |              |  |     | 541          |  |  |     | 338 | 
|                                                                        | Minority equity interest     |              |     |    |              |  |     | 15           |  |  |     | 17  | 
|                                                                        |                              |              |     |     |              |  |     |              | 
|                                                                        |                              |              | 409 |     |              |  | 556 |              |  |  | 355 |    
|                                                                        |                              |              |     |     |              |  |     |              | 
|Effects of changes in accounting policy                                 |                              |              |     |     |              |  |     |              |  |  |     |    
|Losses on valuation of available-for-sale assets                        |                              |              |    |     |              |  | (10 | )            |  |  |    |    
|Gains on cash flow hedges                                               |                              |              |    |     |              |  | 6   |              |  |  |    |    
|                                                                        |                              |              |     |     |              |  |     |              | 
|                                                                        |                              |              |    |     |              |  | (4  | )            |  |  |    |    
|                                                                        |                              |              |     |     |              |  |     |              | 






|    |  |                                                                                                                                                                                             
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) |  | The statement of comprehensive income required under United
    States generally accepted accounting principles is set out in
    Note 32 of Notes to the Consolidated Financial Statements.



F-6



---



##### 



INTERCONTINENTAL HOTELS GROUP PLC





CONSOLIDATED BALANCE SHEET


|                                                               |  |              |        |   |              |  |        |  
|-------------------------------------------------------------- |  | ------------ | ------ | - | ------------ |  | ------ | -
|                                                               |  | December 31, |        |   | December 31, | 
|                                                               |  | 2006         |        |   | 2005         | 
|                                                               |  |              |        |   |              | 
|                                                               |  | (£ million)  |       
|ASSETS                                                         |  |              |        |   |              |  |        |  
|Property, plant and equipment  (Note 10)                      |  |              | 997    |   |              |  | 1,356  |  
|Goodwill  (Note 12)                                           |  |              | 109    |   |              |  | 118    |  
|Intangible assets  (Note 13)                                  |  |              | 154    |   |              |  | 120    |  
|Investment in associates  (Note 14)                           |  |              | 32     |   |              |  | 42     |  
|Other financial assets  (Note 15)                             |  |              | 96     |   |              |  | 113    |  
|                                                               |  |              |        |   |              | 
|Total non-current assets                                       |  |              | 1,388  |   |              |  | 1,749  |  
|                                                               |  |              |        |   |              | 
|Inventories  (Note 16)                                        |  |              | 3      |   |              |  | 3      |  
|Trade and other receivables  (Note 17)                        |  |              | 237    |   |              |  | 252    |  
|Current tax receivable                                         |  |              | 23     |   |              |  | 22     |  
|Cash and cash equivalents  (Note 18)                          |  |              | 179    |   |              |  | 324    |  
|Other financial assets  (Note 15)                             |  |              | 13     |   |              |  | 106    |  
|                                                               |  |              |        |   |              | 
|Total current assets                                           |  |              | 455    |   |              |  | 707    |  
|Non-current assets classified as held for sale 
    (Note 11) |  |              | 50     |   |              |  | 279    |  
|                                                               |  |              |        |   |              | 
|Total assets                                                   |  |              | 1,893  |   |              |  | 2,735  |  
|                                                               |  |              |        |   |              | 
|LIABILITIES                                                    |  |              |        |   |              |  |        |  
|Loans and other borrowings  (Note 20)                         |  |              | (10    | ) |              |  | (2     | )
|Trade and other payables  (Note 19)                           |  |              | (402   | ) |              |  | (468   | )
|Current tax payable                                            |  |              | (231   | ) |              |  | (324   | )
|                                                               |  |              |        |   |              | 
|Total current liabilities                                      |  |              | (643   | ) |              |  | (794   | )
|                                                               |  |              |        |   |              | 
|Loans and other borrowings  (Note 20)                         |  |              | (303   | ) |              |  | (410   | )
|Employee benefits  (Note 3)                                   |  |              | (71    | ) |              |  | (76    | )
|Trade and other payables  (Note 19)                           |  |              | (109   | ) |              |  | (107   | )
|Deferred tax payable  (Note 25)                               |  |              | (79    | ) |              |  | (210   | )
|                                                               |  |              |        |   |              | 
|Total non-current liabilities                                  |  |              | (562   | ) |              |  | (803   | )
|Liabilities classified as held for sale 
    (Note 11)        |  |              | (2     | ) |              |  | (34    | )
|                                                               |  |              |        |   |              | 
|Total liabilities                                              |  |              | (1,207 | ) |              |  | (1,631 | )
|                                                               |  |              |        |   |              | 
|Net assets                                                     |  |              | 686    |   |              |  | 1,104  |  
|                                                               |  |              |        |   |              | 
|EQUITY                                                         |  |              |        |   |              |  |        |  
|Equity share capital                                           |  |              | 66     |   |              |  | 49     |  
|Capital redemption reserve                                     |  |              | 4      |   |              |  | 1      |  
|Shares held by employee share trusts                           |  |              | (17    | ) |              |  | (22    | )
|Other reserves                                                 |  |              | (1,528 | ) |              |  | (1,528 | )
|Unrealized gains and losses reserve                            |  |              | 27     |   |              |  | 23     |  
|Currency translation reserve                                   |  |              | (3     | ) |              |  | 19     |  
|Retained earnings                                              |  |              | 2,129  |   |              |  | 2,542  |  
|                                                               |  |              |        |   |              | 
|IHG shareholders
    equity(i)                                |  |              | 678    |   |              |  | 1,084  |  
|Minority equity interest (Note 26)                            |  |              | 8      |   |              |  | 20     |  
|                                                               |  |              |        |   |              | 
|Total equity                                                   |  |              | 686    |   |              |  | 1,104  |  
|                                                               |  |              |        |   |              | 






|    |                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | A summary of the significant adjustments to IHG
    shareholders equity that would be required had United
    States generally accepted accounting principles been applied
    instead of International Financial Reporting Standards as
    adopted by the European Union is set out in Note 32 of
    Notes to the Consolidated Financial Statements.



F-7



---



##### 



INTERCONTINENTAL HOTELS GROUP PLC





CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS
FUNDS


|                                                 |                       |                                                |      |   |                                      |         |      |             |         |  |             |   |  |               |     |   |            |  |        |           |  |  |             |     |           |          |    |   |               |  |     |   |  |  |       |   |  |  |       |     |  
|------------------------------------------------ | --------------------- | ---------------------------------------------- | ---- | - | ------------------------------------ | ------- | ---- | ----------- | ------- |  | ----------- | - |  | ------------- | --- | - | ---------- |  | ------ | --------- |  |  | ----------- | --- | --------- | -------- | -- | - | ------------- |  | --- | - |  |  | ----- | - |  |  | ----- | --- | -
|                                                 |                       | Share Capital                                  |      |   | Retained earnings and other reserves |        
|                                                 |                       |                                                |      |   |                                      |        
|                                                 |                       |                                                |      |   |                                      | Shares  |      |             |        
|                                                 |                       |                                                |      |   |                                      | held by |      |             |        
|                                                 |                       | Number of                                      |      |   |                                      |         |      |             | Capital |  |             |   |  | employee      |     |   | Unrealized |  |        | Currency  |  |  |             |     | Total IHG |         
|                                                 |                       | ordinary                                       |      |   | Ordinary                             |         |      | Share       |         |  | redemption  |   |  | Other         |     |   | share      |  |        | gains and |  |  | translation |     |           | Retained |    |   | shareholders | 
|                                                 |                       | shares(i)                                      |      |   | shares(i)                            |         |      | premium(ii) |         |  | reserve(ii) |   |  | reserves(iii) |     |   | trusts(iv) |  |        | losses(v) |  |  | reserve(vi) |     |           | earnings |    |   | equity        | 
|                                                 |                       |                                                |      |   |                                      |         |      |             |         |  |             |   |  |               |     |   |            |  |        |           |  |  |             |     |           |          |    |   |               | 
|                                                 |                       | (£ million, except per ordinary share amounts) |     
|At January 1, 2004                               |                       |                                                | 739  |   |                                      |         | 739  |             |         |  | 14          |   |  |               |    |   |            |  | 1,462  |           |  |  | (11         | )   |           |          |   |   |               |  |    |   |  |  | 119   |   |  |  | 2,323 |    
|Total recognized income and expense for the year |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  | (12 | ) |  |  | 350   |   |  |  | 338   |    
|Share capital consolidation                      |                       |                                                | (75  | ) |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  |      |   |  |  |      |    
|Issue of ordinary shares                         |                       |                                                | 4    |   |                                      |         | 4    |             |         |  | 12          |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  |      |   |  |  | 16    |    
|Repurchase of 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    |    
|Equity-settled share-based cost                  |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | 18    |   |  |  | 18    |    
|Equity dividends paid                            |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | (600  | ) |  |  | (600  | )  
|                                                 |                       |                                                |      |   |                                      |         |      |             |         |  |             |   |  |               |     |   |            |  |        |           |  |  |             |     |           |          |    |   |               | 
|At December 31, 2004                             |                       |                                                | 622  |   |                                      |         | 697  |             |         |  | 26          |   |  |               | 46  |   |            |  | 1,462  |           |  |  | (22         | )   |           |          |   |   |               |  | (12 | ) |  |  | (376  | ) |  |  | 1,821 |    
|Effect of implementing IAS 32/39                 |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          | 3  |   |               |  |    |   |  |  | (7    | ) |  |  | (4    | )  
|                                                 |                       |                                                |      |   |                                      |         |      |             |         |  |             |   |  |               |     |   |            |  |        |           |  |  |             |     |           |          |    |   |               | 
|At January 1, 2005                               |                       |                                                | 622  |   |                                      |         | 697  |             |         |  | 26          |   |  |               | 46  |   |            |  | 1,462  |           |  |  | (22         | )   |           |          | 3  |   |               |  | (12 | ) |  |  | (383  | ) |  |  | 1,817 |    
|Total recognized income and expense for the year |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          | 20 |   |               |  | 31  |   |  |  | 490   |   |  |  | 541   |    
|Issue of ordinary shares                         |                       |                                                | 1    |   |                                      |         | 1    |             |         |  | 3           |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  |      |   |  |  | 4     |    
|Repurchase of shares                             |                       |                                                | (19  | ) |                                      |         | (22  | )           |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | (102  | ) |  |  | (124  | )  
|Transfer to capital redemption reserve           |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               | 22  |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | (22   | ) |  |  |      |    
|Capital reorganization                           |                       |                                                | (161 | ) |                                      |         | (632 | )           |         |  | (29         | ) |  |               | (68 | ) |            |  | (2,990 | )         |  |  |            |     |           |          |   |   |               |  |    |   |  |  | 2,723 |   |  |  | (996  | )  
|Proceeds from capital reorganization             |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  | 4           |     |           |          |   |   |               |  |    |   |  |  |      |   |  |  | 4     |    
|Issue of ordinary shares                         |                       |                                                | 1    |   |                                      |         |     |             |         |  | 6           |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  |      |   |  |  | 6     |    
|Repurchase of shares                             |                       |                                                | (11  | ) |                                      |         | (1   | )           |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | (82   | ) |  |  | (83   | )  
|Transfer to capital redemption reserve           |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               | 1   |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | (1    | ) |  |  |      |    
|Purchase of own shares by                        |                       |                                                |      |   |                                      |         |      |             |         |  |             |   |  |               |     |   |            |  |        |           |  |  |             |     |           |          |    |   |               |  |     |   |  |  |       |   |  |  |       |    
|                                                 | employee share trusts |                                                |      |  |                                      |         |      |            |         |  |             |  |  |               |     |  |            |  |        |          |  |  |             | (29 | )         |          |    |  |               |  |     |  |  |  |       |  |  |  |       | (29 | )
|Release of own shares by employee share trusts   |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  | 25          |     |           |          |   |   |               |  |    |   |  |  | (17   | ) |  |  | 8     |    
|Equity-settled share-based cost                  |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | 17    |   |  |  | 17    |    
|Equity dividends paid                            |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | (81   | ) |  |  | (81   | )  
|                                                 |                       |                                                |      |   |                                      |         |      |             |         |  |             |   |  |               |     |   |            |  |        |           |  |  |             |     |           |          |    |   |               | 
|At December 31, 2005                             |                       |                                                | 433  |   |                                      |         | 43   |             |         |  | 6           |   |  |               | 1   |   |            |  | (1,528 | )         |  |  | (22         | )   |           |          | 23 |   |               |  | 19  |   |  |  | 2,542 |   |  |  | 1,084 |    
|Total recognized income and expense for the year |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          | 4  |   |               |  | (22 | ) |  |  | 427   |   |  |  | 409   |    
|Issue of ordinary shares                         |                       |                                                | 4    |   |                                      |         | 1    |             |         |  | 19          |   |  |               |     |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  |      |   |  |  | 20    |    
|Repurchase of shares                             |                       |                                                | (28  | ) |                                      |         | (3   | )           |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | (257  | ) |  |  | (260  | )  
|Share capital consolidation                      |                       |                                                | (53  | ) |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  |      |   |  |  |      |    
|Transfer to capital redemption reserve           |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               | 3   |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | (3    | ) |  |  |      |    
|Purchase of own shares by                        |                       |                                                |      |   |                                      |         |      |             |         |  |             |   |  |               |     |   |            |  |        |           |  |  |             |     |           |          |    |   |               |  |     |   |  |  |       |   |  |  |       |    
|                                                 | employee share trusts |                                                |      |  |                                      |         |      |            |         |  |             |  |  |               |     |  |            |  |        |          |  |  |             | (47 | )         |          |    |  |               |  |     |  |  |  |       |  |  |  |       | (47 | )
|Release of own shares by employee share trusts   |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  | 52          |     |           |          |   |   |               |  |    |   |  |  | (37   | ) |  |  | 15    |    
|Equity-settled share-based cost                  |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | 18    |   |  |  | 18    |    
|Equity dividends paid                            |                       |                                                |     |   |                                      |         |     |             |         |  |            |   |  |               |    |   |            |  |       |           |  |  |            |     |           |          |   |   |               |  |    |   |  |  | (561  | ) |  |  | (561  | )  
|                                                 |                       |                                                |      |   |                                      |         |      |             |         |  |             |   |  |               |     |   |            |  |        |           |  |  |             |     |           |          |    |   |               | 
|At December 31, 2006                             |                       |                                                | 356  |   |                                      |         | 41   |             |         |  | 25          |   |  |               | 4   |   |            |  | (1,528 | )         |  |  | (17         | )   |           |          | 27 |   |               |  | (3  | ) |  |  | 2,129 |   |  |  | 678   |    
|                                                 |                       |                                                |      |   |                                      |         |      |             |         |  |             |   |  |               |     |   |            |  |        |           |  |  |             |     |           |          |    |   |               | 








F-8



---



##### 





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | The Company was incorporated and registered in England and Wales
    with registered number 5134420 on May 21, 2004 as a limited
    company under the Companies Act 1985 with the name Hackremco
    (No. 2154) Limited. On March 24, 2005 Hackremco
    (No. 2154) Limited changed its name to New InterContinental
    Hotels Group Limited. On April 27, 2005 New
    InterContinental Hotels Group Limited re-registered as a public
    limited company and changed its name to New InterContinental
    Hotels Group PLC. On June 27, 2005 New InterContinental
    Hotels Group PLC changed its name to InterContinental Hotels
    Group PLC.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On May 21, 2004 the Company had an authorized share capital
    of £100, divided into 100 ordinary shares of £1
    each, of which one ordinary share was allotted, called up and
    fully paid on incorporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | On December 10, 2004 shareholders approved a share
    capital consolidation on the basis of 25 new ordinary
    shares for every 28 existing ordinary shares. This provided
    for all the authorized ordinary shares of £1 each (whether
    issued or unissued) to be consolidated into new ordinary shares
    of 112 pence each. The share capital consolidation became
    effective on December 13, 2004. The consolidation had no
    impact on the authorized redeemable preference share.                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | On April 21, 2005 the authorized share capital was
    increased to £50,100 by the creation of 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 May 20, 2005 the authorized share capital of the Company
    was increased from £50,100 to £10,000,050,000 by the
    creation of 9,999,999,900 ordinary shares of £1 each.
    On May 20, 2005 all of the ordinary shares of £1 each
    were consolidated into ordinary shares of £6.25 each.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | On June 27, 2005 the capital reorganization (by means of a
    scheme of arrangement under Section 425 of the Companies
    Act 1985) was completed. Under the arrangement, shareholders
    received 11 new ordinary shares and £24.75 cash in
    exchange for every 15 existing ordinary shares held on
    June 24, 2005. The entire issued share capital of
    InterContinental Hotels Group PLC was transferred to New
    InterContinental Hotels Group PLC at fair market value, in
    exchange for the issue of 443 million fully paid ordinary
    shares of 10 pence 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 443 million shares are
    recorded only at nominal value.
|
| | On June 30, 2005 £6.15 on every £6.25 ordinary
    share was canceled, thereby reducing the nominal value of each
    ordinary share to 10 pence.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | On September 8, 2005 the redeemable preference share was
    redeemed at par value. The redeemable preference share did not
    carry any right to receive dividends nor to participate in the
    profits of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | During 2004 and 2005, the Company undertook to return funds of
    up to £750 million to shareholders by way of three
    consecutive £250 million share repurchase program, the
    third of which is expected to be completed in the first half of
    2007. During the year, 28,409,753 (2005 30,600,010; 2004
    46,385,981) ordinary shares were repurchased and canceled under
    the authorities granted by shareholders at general meetings held
    during 2003, 2004, 2005 and 2006. Of these, 11,122,753 were
    10 pence shares in the capital of InterContinental Hotels
    Group PLC and 17,287,000 were
    113/7 pence
    shares in the capital of InterContinental Hotels Group PLC.                                                                                                                                                                                                       
|
| | On June 1, 2006, shareholders approved a share capital
    consolidation on the basis of seven new ordinary shares for
    every eight existing ordinary shares. This provided for all the
    authorized ordinary shares of 10 pence each (whether issued
    or unissued) to be consolidated into new ordinary shares of
    113/7 pence
    each. The share capital consolidation became effective on
    June 12, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | Whilst the authorized share capital includes one redeemable
    preference share of £50,000, following its redemption in
    September 2005, this redeemable preference share has not been
    re-issued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | The authority given to the Company at the Annual General Meeting
    on June 1, 2006 to purchase its own shares was still valid
    at December 31, 2006. A resolution to renew the authority
    will be put to shareholders at the Annual General Meeting on
    June 1, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | At December 31, 2006 the authorized share capital was
    £160,050,000, comprising 1,400,000,000 ordinary shares
    of
    113/7 pence
    each and one redeemable preference share of £50,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii)  | The share premium account and capital redemption reserve are not
    distributable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     
|(iii) | Other reserves comprises the revaluation reserve previously
    recognized under UK GAAP and a merger reserve.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     
|(iv)  | The shares held by employee share trusts comprises
    £16.8 million (2005 £21.7 million, 2004
    £21.8 million) in respect of 1.7 million (2005
    2.9 million; 2004 3.1 million) InterContinental Hotels
    Group PLC ordinary shares held by employee share trusts, with a
    market value at December 31, 2006 of £21 million
    (2005 £25 million, 2004 £20 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     
|(v)   | The net unrealized gains and losses reserve records movements
    for available-for-sale financial assets to fair value and the
    effective portion of the cumulative net change in the fair value
    of the cash flow hedging instruments related to hedged
    transactions that have not yet occurred. The fair value of
    cashflow hedging instruments outstanding at December 31,
    2006 was a £1 million asset (2005
    £1 million, 2004 £nil).                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     
|(vi)  | The currency translation reserve records the movement in
    exchange differences arising from the translation of the
    financial statements of foreign operations and exchange
    differences on foreign currency borrowings and derivative
    instruments that provide a hedge against net investments in
    foreign operations. On adoption of IFRS, cumulative exchange
    differences were deemed to be zero as permitted by IFRS 1.
    During the year ended December 31, 2006, the impact of
    hedging net investments in foreign operations was to reduce the
    amount recorded in the currency translation reserve by
    £32 million (2005 £9 million, 2004
    £54 million). The fair value of derivative instruments
    designated as hedges of net investments in foreign operations
    outstanding at December 31, 2006 was a £3 million
    asset (2005 £5 million net liability, 2004 £nil
    million).



F-9



---



##### 



INTERCONTINENTAL HOTELS GROUP PLC





CONSOLIDATED CASH FLOW STATEMENT


|                                                                                       |                                                  |              |        |      |              |  |        |              |   |  |      |      |  
|-------------------------------------------------------------------------------------- | ------------------------------------------------ | ------------ | ------ | ---- | ------------ |  | ------ | ------------ | - |  | ---- | ---- | -
|                                                                                       |                                                  | Year ended   |        |      | Year ended   |  |        | Year ended   |  
|                                                                                       |                                                  | December 31, |        |      | December 31, |  |        | December 31, |  
|                                                                                       |                                                  | 2006         |        |      | 2005         |  |        | 2004         |  
|                                                                                       |                                                  |              |        |      |              |  |        |              |  
|                                                                                       |                                                  | (£ million)  |       
|Profit for the year                                                                    |                                                  |              | 405    |      |              |  | 515    |              |   |  | 410  |     
|Adjustments for:                                                                       |                                                  |              |        |      |              |  |        |              |   |  |      |     
|                                                                                       | Net financial expense                            |              |        | 11   |              |  |        | 33           |   |  |      | 33   |  
|                                                                                       | Income tax (credit)/charge                       |              |        | (41  | )            |  |        | 80           |   |  |      | (127 | )
|                                                                                       | Gain on disposal of assets, net of tax           |              |        | (117 | )            |  |        | (311         | ) |  |      | (19  | )
|                                                                                       | Other operating income and expenses              |              |        | (27  | )            |  |        | 22           |   |  |      | 49   |  
|                                                                                       | Depreciation and amortization                    |              |        | 64   |              |  |        | 130          |   |  |      | 173  |  
|                                                                                       | Equity settled share-based cost, net of payments |              |        | 14   |              |  |        | 12           |   |  |      | 12   |  
|                                                                                       | Other gains and losses                           |              |        |     |              |  |        |             |   |  |      | 4    |  
|                                                                                       |                                                  |              |        |      |              |  |        |              |  
|Operating cash flow before movements in working capital                                |                                                  |              | 309    |      |              |  | 481    |              |   |  | 535  |     
|Decrease in inventories                                                                |                                                  |              |       |      |              |  |       |              |   |  | 1    |     
|Increase in receivables                                                                |                                                  |              | (31    | )    |              |  |       |              |   |  | (13  | )   
|Increase/(decrease) in provisions and other payables                                   |                                                  |              | 10     |      |              |  | (32    | )            |   |  | 50   |     
|Employee benefit contributions, net of cost                                            |                                                  |              |       |      |              |  | (26    | )            |   |  | (58  | )   
|                                                                                       |                                                  |              |        |      |              |  |        |              |  
|Cash flow from operations                                                              |                                                  |              | 288    |      |              |  | 423    |              |   |  | 515  |     
|Interest paid                                                                          |                                                  |              | (33    | )    |              |  | (59    | )            |   |  | (91  | )   
|Interest received                                                                      |                                                  |              | 24     |      |              |  | 29     |              |   |  | 72   |     
|Tax paid                                                                               |                                                  |              | (49    | )    |              |  | (91    | )            |   |  | (35  | )   
|                                                                                       |                                                  |              |        |      |              |  |        |              |  
|Net cash from operating activities                                                     |                                                  |              | 230    |      |              |  | 302    |              |   |  | 461  |     
|                                                                                       |                                                  |              |        |      |              |  |        |              |  
|Cash flow from investing activities                                                    |                                                  |              |        |      |              |  |        |              |   |  |      |     
|Purchases of property, plant and equipment  Hotels                                    |                                                  |              | (87    | )    |              |  | (107   | )            |   |  | (143 | )   
|Purchases of intangible assets  Hotels                                                |                                                  |              | (23    | )    |              |  | (19    | )            |   |  | (33  | )   
|Purchases of other financial assets  Hotels                                           |                                                  |              | (8     | )    |              |  | (10    | )            |   |  | (11  | )   
|Acquisition of subsidiary, net of cash acquired                                        |                                                  |              | (6     | )    |              |  |       |              |   |  |     |     
|Disposal of assets, net of cash disposed of  Hotels                                   |                                                  |              | 620    |      |              |  | 1,816  |              |   |  | 101  |     
|Proceeds from other financial assets  Hotels                                          |                                                  |              | 124    |      |              |  | 10     |              |   |  | 5    |     
|Purchases of property, plant and equipment  Soft
    Drinks                           |                                                  |              |       |      |              |  | (47    | )            |   |  | (70  | )   
|Disposal of business, net of cash disposed of  Soft
    Drinks                        |                                                  |              |       |      |              |  | 220    |              |   |  |     |     
|                                                                                       |                                                  |              |        |      |              |  |        |              |  
|Net cash from investing activities                                                     |                                                  |              | 620    |      |              |  | 1,863  |              |   |  | (151 | )   
|                                                                                       |                                                  |              |        |      |              |  |        |              |  
|Cash flow from financing activities                                                    |                                                  |              |        |      |              |  |        |              |   |  |      |     
|Proceeds from the issue of share capital                                               |                                                  |              | 20     |      |              |  | 10     |              |   |  | 16   |     
|Purchase of own shares                                                                 |                                                  |              | (260   | )    |              |  | (207   | )            |   |  | (257 | )   
|Payment to shareholders as a result of the capital
    reorganisation on June 27, 2005 |                                                  |              |       |      |              |  | (996   | )            |   |  |     |     
|Purchase of own shares by employee share trusts                                        |                                                  |              | (47    | )    |              |  | (29    | )            |   |  | (33  | )   
|Proceeds on release of own shares by employee share trusts                             |                                                  |              | 19     |      |              |  | 16     |              |   |  | 16   |     
|Dividends paid to shareholders                                                         |                                                  |              | (561   | )    |              |  | (81    | )            |   |  | (600 | )   
|Dividends paid to minority interests                                                   |                                                  |              | (1     | )    |              |  | (177   | )            |   |  | (26  | )   
|(Decrease)/increase in borrowings                                                      |                                                  |              | (172   | )    |              |  | (442   | )            |   |  | 258  |     
|Costs associated with new facilities                                                   |                                                  |              |       |      |              |  |       |              |   |  | (5   | )   
|Financial expense on early settlement of debt                                          |                                                  |              |       |      |              |  |       |              |   |  | (17  | )   
|                                                                                       |                                                  |              |        |      |              |  |        |              |  
|Net cash from financing activities                                                     |                                                  |              | (1,002 | )    |              |  | (1,906 | )            |   |  | (648 | )   
|                                                                                       |                                                  |              |        |      |              |  |        |              |  
|Net movement in cash and cash equivalents in the year                                  |                                                  |              | (152   | )    |              |  | 259    |              |   |  | (338 | )   
|Cash and cash equivalents at beginning of the year                                     |                                                  |              | 324    |      |              |  | 72     |              |   |  | 411  |     
|Exchange rate effects                                                                  |                                                  |              | 7      |      |              |  | (7     | )            |   |  | (1   | )   
|                                                                                       |                                                  |              |        |      |              |  |        |              |  
|Cash and cash equivalents at end of the year                                           |                                                  |              | 179    |      |              |  | 324    |              |   |  | 72   |     
|                                                                                       |                                                  |              |        |      |              |  |        |              |  








F-10



---



##### 



Note 1  Corporate Information and Accounting
Policies




| |                      
| | ---------------------
| | Corporate information





| |                                           
| | ------------------------------------------
| | Summary of significant accounting policies

Basis of preparation






| |                        
| | -----------------------
| | Statement of compliance









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







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







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



F-11



---



##### 











| |                              
| | -----------------------------
| | Property, plant and equipment







|                                 |  |                                                
|-------------------------------- |  | -----------------------------------------------
|Buildings                        |  | lesser of 50 years and unexpired term of lease;
|Fixtures, fittings and equipment |  | 3-25 years; and                                
|Plant and machinery              |  | 4-20 years.                                    







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







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

Software




Management contracts




F-12



---



##### 



Other intangible assets










| |           
| | ----------
| | Associates







| |                 
| | ----------------
| | Financial assets







| |                      
| | ---------------------
| | Financial liabilities





| |            
| | -----------
| | Inventories





| |                  
| | -----------------
| | Trade receivables





| |                          
| | -------------------------
| | Cash and cash equivalents







F-13



---



##### 





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









| |               
| | --------------
| | Trade payables





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







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





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





| |                          
| | -------------------------
| | Bank and other borrowings







| |                  
| | -----------------
| | Employee benefits

Defined contribution plans




Defined benefit plans






F-14



---



##### 











| |      
| | -----
| | Taxes



| |            
| | -----------
| | Current tax





| |             
| | ------------
| | Deferred tax









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











F-15



---



##### 





| |                     
| | --------------------
| | Share-based payments







Share-based




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







| |                               
| | ------------------------------
| | Disposal of non-current assets





| |   |                                                                                           
| | - | ------------------------------------------------------------------------------------------
| |  | has a continuing managerial involvement to the degree associated
    with asset ownership;
|
| |  | has transferred significant risks and rewards associated with
    asset ownership; and    
|
| |  | can reliably measure and will actually receive the proceeds.                              



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





| |              
| | -------------
| | Special items



F-16



---



##### 





| |                                          
| | -----------------------------------------
| | Use of accounting estimates and judgments







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Impairment  the Company determines whether goodwill
    is impaired on an annual basis or more frequently if there are
    indicators of impairment. Other non-current assets, including
    property, plant and equipment, are tested for impairment if
    there are indicators of impairment. Impairment testing requires
    an estimate of future cash flows and the choice of a suitable
    discount rate and, in the case of hotels, an assessment of
    recoverable amount based on comparable market transactions.                                                 
|
| |  | Pension and other post-employment benefits  the cost
    of defined benefit pension plans and other post-employment
    benefits is determined using actuarial valuations. The actuarial
    valuation involves making assumptions about discount rates,
    expected rates of return on assets, future salary increases,
    mortality rates and future pension increases.                                                                                                                                                                                                   
|
| |  | Tax  provisions for tax accruals require judgments on
    the interpretation of tax legislation, developments in tax case
    law and the potential outcomes of tax audits and appeals. In
    addition, deferred tax assets are recognized for unused tax
    attributes to the extent that it is probable that taxable profit
    will be available against which they can be utilized. Judgment
    is required as to the amount that can be recognized based on the
    likely amount and timing of future taxable profits, taking into
    account expected tax planning.
|
| |  | Loyalty program  the future redemption liability
    included in trade and other payables is estimated using
    actuarial methods based on statistical formulae that project the
    timing of future point redemptions based on historical levels to
    give eventual redemption rates and points values.                                                                                                                                                                                                                                                                  
|
| |  | Trade receivables  an allowance for doubtful amounts
    of trade receivables is made on the basis of historical
    experience and other factors considered relevant by management.                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Other  the Company also makes estimates and judgments
    in the valuation of management and franchise agreements acquired
    on asset disposals, the valuation of financial assets classified
    as available-for-sale, the outcome of legal proceedings and
    claims and in the valuation of share-based payment costs.                                                                                                                                                                                                                                                 



| |                                  
| | ---------------------------------
| | New standards and interpretations



|         |  |                                                                               
|-------- |  | ------------------------------------------------------------------------------
|IFRS 7   |  | Financial Instruments: Disclosures
    Effective from January 1, 2007         
|IFRS 8   |  | Operating Segments
    Effective from January 1, 2009                         
|IFRIC 10 |  | Interim Financial Reporting and Impairment
    Effective from November 1, 2006
|IFRIC 11 |  | Group and Treasury Share Transactions
    Effective from March 1, 2007        



F-17



---



##### 





|         |                      
|-------- | ---------------------
|Note 2  | Segmental Information

Exchange Rates


  


  


Hotels
















| |           
| | ----------
| | Franchised





| |        
| | -------
| | Managed





| |                 
| | ----------------
| | Owned and leased





Soft Drinks




F-18



---



##### 



Segmental Information




| |                             
| | ----------------------------
| | Year ended December 31, 2006

Revenue


|       |                                            |             |     |     |      |      |     |         |  |  |         |     |  |       |    |    |  |  |     |     | 
|------ | ------------------------------------------ | ----------- | --- | --- | ---- | ---- | --- | ------- |  |  | ------- | --- |  | ----- | -- | -- |  |  | --- | --- | 
|       |                                            |             |     |     |      | Asia |     |         |  |  | Total   |    
|       |                                            | Americas    |     |     | EMEA |      |     | Pacific |  |  | Central |     |  | Group |   
|       |                                            |             |     |     |      |      |     |         |  |  |         |     |  |       |   
|       |                                            | (£ million) |    
|Hotels |                                            |             |     |     |      |      |     |         |  |  |         |     |  |       |    |    |  |  |     |    
|       | Owned and leased                           |             |     | 115 |      |      |     | 100     |  |  |         | 71  |  |       |    |   |  |  |     | 286 | 
|       | Managed                                    |             |     | 77  |      |      |     | 71      |  |  |         | 36  |  |       |    |   |  |  |     | 184 | 
|       | Franchised                                 |             |     | 241 |      |      |     | 35      |  |  |         | 4   |  |       |    |   |  |  |     | 280 | 
|       | Central                                    |             |     |    |      |      |     |        |  |  |         |    |  |       |    | 55 |  |  |     | 55  | 
|       |                                            |             |     |     |      |      |     |         |  |  |         |     |  |       |   
|       | Continuing operations                      |             |     | 433 |      |      |     | 206     |  |  |         | 111 |  |       |    | 55 |  |  |     | 805 | 
|       | Discontinued operations  owned and leased |             |     | 30  |      |      |     | 125     |  |  |         |    |  |       |    |   |  |  |     | 155 | 
|       |                                            |             |     |     |      |      |     |         |  |  |         |     |  |       |   
|       |                                            |             | 463 |     |      |      | 331 |         |  |  | 111     |     |  |       | 55 |    |  |  | 960 |    
|       |                                            |             |     |     |      |      |     |         |  |  |         |     |  |       |   



| |                 
| | ----------------
| | Segmental result

|       |                                            |             |     |     |      |  |    |              |   |       |         |     |   |       |     |     |   |  |     |      |  
|------ | ------------------------------------------ | ----------- | --- | --- | ---- |  | -- | ------------ | - | ----- | ------- | --- | - | ----- | --- | --- | - |  | --- | ---- | -
|       |                                            |             |     |     |      |  |    |              |   | Total |        
|       |                                            | Americas    |     |     | EMEA |  |    | Asia Pacific |   |       | Central |     |   | Group |    
|       |                                            |             |     |     |      |  |    |              |   |       |         |     |   |       |    
|       |                                            | (£ million) |    
|Hotels |                                            |             |     |     |      |  |    |              |   |       |         |     |   |       |     |     |   |  |     |     
|       | Owned and leased                           |             |     | 14  |      |  |    | (5           | ) |       |         | 17  |   |       |     |    |   |  |     | 26   |  
|       | Managed                                    |             |     | 27  |      |  |    | 37           |   |       |         | 21  |   |       |     |    |   |  |     | 85   |  
|       | Franchised                                 |             |     | 208 |      |  |    | 24           |   |       |         | 3   |   |       |     |    |   |  |     | 235  |  
|       | Regional and central                       |             |     | (32 | )    |  |    | (20          | ) |       |         | (12 | ) |       |     | (81 | ) |  |     | (145 | )
|       |                                            |             |     |     |      |  |    |              |   |       |         |     |   |       |    
|       | Continuing operations                      |             |     | 217 |      |  |    | 36           |   |       |         | 29  |   |       |     | (81 | ) |  |     | 201  |  
|       | Discontinued operations  owned and leased |             |     | 4   |      |  |    | 26           |   |       |         |    |   |       |     |    |   |  |     | 30   |  
|       |                                            |             |     |     |      |  |    |              |   |       |         |     |   |       |    
|       |                                            |             | 221 |     |      |  | 62 |              |   |       | 29      |     |   |       | (81 | )   |   |  | 231 |     
|       |                                            |             |     |     |      |  |    |              |   |       |         |     |   |       |    



| |                             
| | ----------------------------
| | Year ended December 31, 2006

|                                       |        |             |     |     |              |  |     |       |  |  |     |     | 
|-------------------------------------- | ------ | ----------- | --- | --- | ------------ |  | --- | ----- |  |  | --- | --- | 
|                                       |        | Continuing  |     |     | Discontinued |  |     | Group | 
|                                       |        |             |     |     |              |  |     |       | 
|                                       |        | (£ million) |    
|Group                                  |        |             |     |     |              |  |     |       |  |  |     |    
|                                       | Hotels |             |     | 201 |              |  |     | 30    |  |  |     | 231 | 
|Other operating income and expenses    |        |             | 27  |     |              |  |    |       |  |  | 27  |    
|                                       |        |             |     |     |              |  |     |       | 
|Operating profit                       |        |             | 228 |     |              |  | 30  |       |  |  | 258 |    
|Net finance costs                      |        |             | (11 | )   |              |  |    |       |  |  | (11 | )  
|                                       |        |             |     |     |              |  |     |       | 
|Profit before tax                      |        |             | 217 |     |              |  | 30  |       |  |  | 247 |    
|Tax                                    |        |             | 50  |     |              |  | (9  | )     |  |  | 41  |    
|                                       |        |             |     |     |              |  |     |       | 
|Profit after tax                       |        |             | 267 |     |              |  | 21  |       |  |  | 288 |    
|Gain on disposal of assets, net of tax |        |             |    |     |              |  | 117 |       |  |  | 117 |    
|                                       |        |             |     |     |              |  |     |       | 
|Profit for the year                    |        |             | 267 |     |              |  | 138 |       |  |  | 405 |    
|                                       |        |             |     |     |              |  |     |       | 

F-19



---



##### 





| |                       
| | ----------------------
| | Assets and liabilities

|                                               |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |    |  |  |  |       |     | 
|---------------------------------------------- | -------------------------- | ----------- | --- |  | ---- | ---- | --- | ------- |  |  | ------- |  |  | ----- | -- |  |  |  | ----- | --- | 
|                                               |                            |             |     |  |      | Asia |     |         |  |  | Total   | 
|                                               |                            | Americas    |     |  | EMEA |      |     | Pacific |  |  | Central |  |  | Group |   
|                                               |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |   
|                                               |                            | (£ million) |    
|Segment assets                                 |                            |             | 647 |  |      |      | 583 |         |  |  | 338     |  |  |       | 73 |  |  |  | 1,641 |    
|Non-current assets classified as held for sale |                            |             | 40  |  |      |      | 10  |         |  |  |        |  |  |       |   |  |  |  | 50    |    
|                                               |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |   
|                                               |                            |             | 687 |  |      |      | 593 |         |  |  | 338     |  |  |       | 73 |  |  |  | 1,691 |    
|                                               |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |   
|Unallocated assets:                            |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |    |  |  |  |       |    
|                                               | Current tax receivable     |             |     |  |      |      |     |         |  |  |         |  |  |       |    |  |  |  |       | 23  | 
|                                               | Cash and cash equivalents  |             |     |  |      |      |     |         |  |  |         |  |  |       |    |  |  |  |       | 179 | 
|                                               |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |   
|Total assets                                   |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |    |  |  |  | 1,893 |    
|                                               |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |   
|                                              
|Segment liabilities                            |                            |             | 295 |  |      |      | 234 |         |  |  | 53      |  |  |       |   |  |  |  | 582   |    
|Liabilities classified as held for sale        |                            |             | 2   |  |      |      |    |         |  |  |        |  |  |       |   |  |  |  | 2     |    
|                                               |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |   
|                                               |                            |             | 297 |  |      |      | 234 |         |  |  | 53      |  |  |       |   |  |  |  | 584   |    
|                                               |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |   
|Unallocated liabilities:                       |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |    |  |  |  |       |    
|                                               | Current tax payable        |             |     |  |      |      |     |         |  |  |         |  |  |       |    |  |  |  |       | 231 | 
|                                               | Deferred tax payable       |             |     |  |      |      |     |         |  |  |         |  |  |       |    |  |  |  |       | 79  | 
|                                               | Loans and other borrowings |             |     |  |      |      |     |         |  |  |         |  |  |       |    |  |  |  |       | 313 | 
|                                               |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |   
|Total liabilities                              |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |    |  |  |  | 1,207 |    
|                                               |                            |             |     |  |      |      |     |         |  |  |         |  |  |       |   



| |                             
| | ----------------------------
| | Year ended December 31, 2006



| |                            
| | ---------------------------
| | Other segmental information

|                         |                                            |                               |  |    |      |      |  |         |    |  |         |    |   |       |  |    |    |  |  |     |     | 
|------------------------ | ------------------------------------------ | ----------------------------- |  | -- | ---- | ---- |  | ------- | -- |  | ------- | -- | - | ----- |  | -- | -- |  |  | --- | --- | 
|                         |                                            |                               |  |    |      | Asia |  |         |    |  | Total   |   
|                         |                                            | Americas                      |  |    | EMEA |      |  | Pacific |    |  | Central |    |   | Group | 
|                         |                                            |                               |  |    |      |      |  |         |    |  |         |    |   |       | 
|                         |                                            | (£ million)                   | 
|Continuing operations:   |                                            |                               |  |    |      |      |  |         |    |  |         |    |   |       |  |    |    |  |  |    
|                         | Capital
    expenditure(i)                 |                               |  | 34 |      |      |  | 50      |    |  |         | 17 |   |       |  | 15 |    |  |  | 116 |    
|                         | Additions to:                              |                               |  |    |      |      |  |         |    |  |         |    |   |       |  |    |    |  |  |     |    
|                         |                                            | Property, plant and equipment |  |    | 116  |      |  |         | 53 |  |         |    | 9 |       |  |    | 4  |  |  |     | 182 | 
|                         |                                            | Intangible assets             |  |    | 10   |      |  |         | 31 |  |         |    | 1 |       |  |    | 11 |  |  |     | 53  | 
|                         | Depreciation and
    amortization(ii)      |                               |  | 18 |      |      |  | 19      |    |  |         | 10 |   |       |  | 13 |    |  |  | 60  |    
|                         | Reversal of previously recorded impairment |                               |  |   |      |      |  | (2      | )  |  |         |   |   |       |  |   |    |  |  | (2  | )  
|Discontinued operations: |                                            |                               |  |    |      |      |  |         |    |  |         |    |   |       |  |    |    |  |  |    
|                         | Capital
    expenditure(i)                 |                               |  | 1  |      |      |  | 7       |    |  |         |   |   |       |  |   |    |  |  | 8   |    
|                         | Additions to property, plant and equipment |                               |  |   |      |      |  | 4       |    |  |         |   |   |       |  |   |    |  |  | 4   |    
|                         | Depreciation and
    amortization(ii)      |                               |  | 1  |      |      |  | 3       |    |  |         |   |   |       |  |   |    |  |  | 4   |    
|                         | Impairment of assets held for sale         |                               |  | 3  |      |      |  |        |    |  |         |   |   |       |  |   |    |  |  | 3   |    






|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Comprises purchases of property, plant and equipment, intangible
    assets and other financial assets and acquisitions of
    subsidiaries as included in the cash flow statement.



|     |                                                                                                                                                                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii) | Included in the £64 million of depreciation and
    amortization is £21 million relating to administrative
    expenses and £43 million relating to cost of sales.

F-20



---



##### 





| |                              
| | -----------------------------
| | Year ended December 31, 2005*

Revenue


|       |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |    |    |  |  |       |     | 
|------ | ------------------------------------------ | ----------- | --- | --- | ---- | ---- | --- | ------- |  |  | ------- | -- |  | ------ | -- | -- |  |  | ----- | --- | 
|       |                                            |             |     |     |      | Asia |     |         |  |  | Total   |   
|       |                                            | Americas    |     |     | EMEA |      |     | Pacific |  |  | Central |    |  | Hotels |   
|       |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |   
|       |                                            | (£ million) |    
|Hotels |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |    |    |  |  |       |    
|       | Owned and leased                           |             |     | 106 |      |      |     | 110     |  |  |         | 59 |  |        |    |   |  |  |       | 275 | 
|       | Managed                                    |             |     | 65  |      |      |     | 55      |  |  |         | 25 |  |        |    |   |  |  |       | 145 | 
|       | Franchised                                 |             |     | 213 |      |      |     | 35      |  |  |         | 3  |  |        |    |   |  |  |       | 251 | 
|       | Central                                    |             |     |    |      |      |     |        |  |  |         |   |  |        |    | 42 |  |  |       | 42  | 
|       |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |   
|       | Continuing operations                      |             |     | 384 |      |      |     | 200     |  |  |         | 87 |  |        |    | 42 |  |  |       | 713 | 
|       | Discontinued operations  owned and leased |             |     | 61  |      |      |     | 411     |  |  |         | 54 |  |        |    |   |  |  |       | 526 | 
|       |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |   
|       |                                            |             | 445 |     |      |      | 611 |         |  |  | 141     |    |  |        | 42 |    |  |  | 1,239 |    
|       |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |   

|              |             |             |     |     |              |  |       |       |  |  |       |       | 
|------------- | ----------- | ----------- | --- | --- | ------------ |  | ----- | ----- |  |  | ----- | ----- | 
|              |             | Continuing  |     |     | Discontinued |  |       | Group | 
|              |             |             |     |     |              |  |       |       | 
|              |             | (£ million) |    
|Group         |             |             |     |     |              |  |       |       |  |  |       |      
|              | Hotels      |             |     | 713 |              |  |       | 526   |  |  |       | 1,239 | 
|              | Soft Drinks |             |     |    |              |  |       | 671   |  |  |       | 671   | 
|              |             |             |     |     |              |  |       |       | 
|Total revenue |             |             | 713 |     |              |  | 1,197 |       |  |  | 1,910 |      
|              |             |             |     |     |              |  |       |       | 



| |                              
| | -----------------------------
| | Year ended December 31, 2005*



| |                 
| | ----------------
| | Segmental result

|       |                                            |             |     |     |      |  |     |              |   |       |         |    |   |        |     |     |   |  |     |      |  
|------ | ------------------------------------------ | ----------- | --- | --- | ---- |  | --- | ------------ | - | ----- | ------- | -- | - | ------ | --- | --- | - |  | --- | ---- | -
|       |                                            |             |     |     |      |  |     |              |   | Total |        
|       |                                            | Americas    |     |     | EMEA |  |     | Asia Pacific |   |       | Central |    |   | Hotels |    
|       |                                            |             |     |     |      |  |     |              |   |       |         |    |   |        |    
|       |                                            | (£ million) |    
|Hotels |                                            |             |     |     |      |  |     |              |   |       |         |    |   |        |     |     |   |  |     |     
|       | Owned and leased                           |             |     | 14  |      |  |     | (5           | ) |       |         | 11 |   |        |     |    |   |  |     | 20   |  
|       | Managed                                    |             |     | 20  |      |  |     | 31           |   |       |         | 16 |   |        |     |    |   |  |     | 67   |  
|       | Franchised                                 |             |     | 186 |      |  |     | 26           |   |       |         | 2  |   |        |     |    |   |  |     | 214  |  
|       | Regional and central                       |             |     | (34 | )    |  |     | (21          | ) |       |         | (8 | ) |        |     | (65 | ) |  |     | (128 | )
|       |                                            |             |     |     |      |  |     |              |   |       |         |    |   |        |    
|       | Continuing operations                      |             |     | 186 |      |  |     | 31           |   |       |         | 21 |   |        |     | (65 | ) |  |     | 173  |  
|       | Discontinued operations  owned and leased |             |     | 12  |      |  |     | 73           |   |       |         | 11 |   |        |     |    |   |  |     | 96   |  
|       |                                            |             |     |     |      |  |     |              |   |       |         |    |   |        |    
|       |                                            |             | 198 |     |      |  | 104 |              |   |       | 32      |    |   |        | (65 | )   |   |  | 269 |     
|       |                                            |             |     |     |      |  |     |              |   |       |         |    |   |        |    

F-21



---



##### 



|                                       |             |             |     |     |              |  |     |       |  |  |     |     | 
|-------------------------------------- | ----------- | ----------- | --- | --- | ------------ |  | --- | ----- |  |  | --- | --- | 
|                                       |             | Continuing  |     |     | Discontinued |  |     | Group | 
|                                       |             |             |     |     |              |  |     |       | 
|                                       |             | (£ million) |    
|Group                                  |             |             |     |     |              |  |     |       |  |  |     |    
|                                       | Hotels      |             |     | 173 |              |  |     | 96    |  |  |     | 269 | 
|                                       | Soft Drinks |             |     |    |              |  |     | 70    |  |  |     | 70  | 
|                                       |             |             |     |     |              |  |     |       | 
|                                       |             |             | 173 |     |              |  | 166 |       |  |  | 339 |    
|Other operating income and expenses    |             |             | (22 | )   |              |  |    |       |  |  | (22 | )  
|                                       |             |             |     |     |              |  |     |       | 
|Operating profit                       |             |             | 151 |     |              |  | 166 |       |  |  | 317 |    
|Net finance costs                      |             |             | (24 | )   |              |  | (9  | )     |  |  | (33 | )  
|                                       |             |             |     |     |              |  |     |       | 
|Profit before tax                      |             |             | 127 |     |              |  | 157 |       |  |  | 284 |    
|Tax                                    |             |             | (24 | )   |              |  | (56 | )     |  |  | (80 | )  
|                                       |             |             |     |     |              |  |     |       | 
|Profit after tax                       |             |             | 103 |     |              |  | 101 |       |  |  | 204 |    
|Gain on disposal of assets, net of tax |             |             |    |     |              |  | 311 |       |  |  | 311 |    
|                                       |             |             |     |     |              |  |     |       | 
|Profit for the year                    |             |             | 103 |     |              |  | 412 |       |  |  | 515 |    
|                                       |             |             |     |     |              |  |     |       | 






|  |                                                                                             
|- | --------------------------------------------------------------------------------------------
|* | Other than for Soft Drinks which reflects the 50 weeks and
    three days ended December 14.



| |                              
| | -----------------------------
| | Year ended December 31, 2005*



| |                       
| | ----------------------
| | Assets and liabilities

|                                               |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       |  |  |   |   |  |  |       |     | 
|---------------------------------------------- | -------------------------- | ----------- | --- |  | ---- | ---- | ----- | ------- |  |  | ------- |  |  | ------ | -- |  | ------ |  | ----- | ----- |  |  | - | - |  |  | ----- | --- | 
|                                               |                            |             |     |  |      | Asia |       |         |  |  | Total   |  |  | Soft   |    |  | Total  | 
|                                               |                            | Americas    |     |  | EMEA |      |       | Pacific |  |  | Central |  |  | Hotels |    |  | Drinks |  |       | Group | 
|                                               |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|                                               |                            | (£ million) |    
|Segment assets                                 |                            |             | 689 |  |      |      | 987   |         |  |  | 346     |  |  |        | 88 |  |        |  | 2,110 |       |  |  |  |   |  |  | 2,110 |    
|Non-current assets classified as held for sale |                            |             | 21  |  |      |      | 258   |         |  |  |        |  |  |        |   |  |        |  | 279   |       |  |  |  |   |  |  | 279   |    
|                                               |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|                                               |                            |             | 710 |  |      |      | 1,245 |         |  |  | 346     |  |  |        | 88 |  |        |  | 2,389 |       |  |  |  |   |  |  | 2,389 |    
|                                               |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|Unallocated assets:                            |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       |  |  |   |   |  |  |       |    
|                                               | Current tax receivable     |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       | 22    |  |  |   |  |  |  |       | 22  | 
|                                               | Cash and cash equivalents  |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       | 324   |  |  |   |  |  |  |       | 324 | 
|                                               |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|Total assets                                   |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  | 2,735 |       |  |  |  |   |  |  | 2,735 |    
|                                               |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|                                              
|Segment liabilities                            |                            |             | 340 |  |      |      | 261   |         |  |  | 50      |  |  |        |   |  |        |  | 651   |       |  |  |  |   |  |  | 651   |    
|Liabilities classified as held for sale        |                            |             | 1   |  |      |      | 33    |         |  |  |        |  |  |        |   |  |        |  | 34    |       |  |  |  |   |  |  | 34    |    
|                                               |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|                                               |                            |             | 341 |  |      |      | 294   |         |  |  | 50      |  |  |        |   |  |        |  | 685   |       |  |  |  |   |  |  | 685   |    
|                                               |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|Unallocated liabilities:                       |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       |  |  |   |   |  |  |       |    
|                                               | Current tax payable        |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       | 324   |  |  |   |  |  |  |       | 324 | 
|                                               | Deferred tax payable       |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       | 210   |  |  |   |  |  |  |       | 210 | 
|                                               | Loans and other borrowings |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       | 412   |  |  |   |  |  |  |       | 412 | 
|                                               |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|Total liabilities                              |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  | 1,631 |       |  |  |  |   |  |  | 1,631 |    
|                                               |                            |             |     |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 

F-22



---



##### 





| |                            
| | ---------------------------
| | Other segmental information

|                         |                                             |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |    |  |  |    |    |  |  |     |    | 
|------------------------ | ------------------------------------------- | ----------------------------- |  | -- | ---- | ---- |  | ------- | -- |  | ------- | -- | -- | ------ |  | -- | ------ |  |  | ----- | -- |  |  | -- | -- |  |  | --- | -- | 
|                         |                                             |                               |  |    |      | Asia |  |         |    |  | Total   |    |    | Soft   |  |    | Total  | 
|                         |                                             | Americas                      |  |    | EMEA |      |  | Pacific |    |  | Central |    |    | Hotels |  |    | Drinks |  |  | Group |   
|                         |                                             |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |   
|                         |                                             | (£ million)                   | 
|Continuing operations:   |                                             |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |    |  |  |    |    |  |  |    
|                         | Capital
    expenditure(i)                  |                               |  | 22 |      |      |  | 19      |    |  |         | 28 |    |        |  | 13 |        |  |  | 82    |    |  |  |   |    |  |  | 82  |   
|                         | Additions to:                               |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |    |  |  |    |    |  |  |     |   
|                         |                                             | Property, plant and equipment |  |    | 12   |      |  |         | 15 |  |         |    | 30 |        |  |    | 6      |  |  |       | 63 |  |  |    |   |  |  |     | 63 | 
|                         |                                             | Intangible assets             |  |    | 27   |      |  |         | 51 |  |         |    | 9  |        |  |    | 7      |  |  |       | 94 |  |  |    |   |  |  |     | 94 | 
|                         | Depreciation and
    amortization(ii)       |                               |  | 19 |      |      |  | 15      |    |  |         | 8  |    |        |  | 15 |        |  |  | 57    |    |  |  |   |    |  |  | 57  |   
|                         | Impairment of property, plant and equipment |                               |  |   |      |      |  | 7       |    |  |         |   |    |        |  |   |        |  |  | 7     |    |  |  |   |    |  |  | 7   |   
|Discontinued operations: |                                             |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |    |  |  |    |    |  |  |    
|                         | Capital
    expenditure(i)                  |                               |  | 6  |      |      |  | 44      |    |  |         | 4  |    |        |  |   |        |  |  | 54    |    |  |  | 47 |    |  |  | 101 |   
|                         | Additions to:                               |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |    |  |  |    |    |  |  |     |   
|                         |                                             | Property, plant and equipment |  |    | 4    |      |  |         | 33 |  |         |    | 4  |        |  |    |       |  |  |       | 41 |  |  |    | 36 |  |  |     | 77 | 
|                         |                                             | Intangible assets             |  |    |     |      |  |         |   |  |         |    |   |        |  |    |       |  |  |       |   |  |  |    | 7  |  |  |     | 7  | 
|                         | Depreciation and
    amortization(ii)       |                               |  | 1  |      |      |  | 24      |    |  |         | 3  |    |        |  |   |        |  |  | 28    |    |  |  | 45 |    |  |  | 73  |   






|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Other than for Soft Drinks which reflects the 50 weeks and
    three days ended December 14.                                                                                       
|   
|(i) | Comprises purchases of property, plant and equipment, intangible
    assets and other financial assets and acquisitions of
    subsidiaries as included in the cash flow statement.



|     |                                                                                                                                                                     
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii) | Included in the £130 million of depreciation and
    amortization is £23 million relating to administrative
    expenses and £107 million relating to cost of sales.



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



| |        
| | -------
| | Revenue

|       |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |    |    |  |  |       |     | 
|------ | ------------------------------------------ | ----------- | --- | --- | ---- | ---- | --- | ------- |  |  | ------- | -- |  | ------ | -- | -- |  |  | ----- | --- | 
|       |                                            |             |     |     |      | Asia |     |         |  |  | Total   |   
|       |                                            | Americas    |     |     | EMEA |      |     | Pacific |  |  | Central |    |  | Hotels |   
|       |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |   
|       |                                            | (£ million) |    
|Hotels |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |    |    |  |  |       |    
|       | Owned and leased                           |             |     | 80  |      |      |     | 116     |  |  |         | 50 |  |        |    |   |  |  |       | 246 | 
|       | Managed                                    |             |     | 30  |      |      |     | 43      |  |  |         | 21 |  |        |    |   |  |  |       | 94  | 
|       | Franchised                                 |             |     | 196 |      |      |     | 27      |  |  |         | 3  |  |        |    |   |  |  |       | 226 | 
|       | Central                                    |             |     |    |      |      |     |        |  |  |         |   |  |        |    | 40 |  |  |       | 40  | 
|       |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |   
|       | Continuing operations                      |             |     | 306 |      |      |     | 186     |  |  |         | 74 |  |        |    | 40 |  |  |       | 606 | 
|       | Discontinued operations  owned and leased |             |     | 189 |      |      |     | 643     |  |  |         | 60 |  |        |    |   |  |  |       | 892 | 
|       |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |   
|       |                                            |             | 495 |     |      |      | 829 |         |  |  | 134     |    |  |        | 40 |    |  |  | 1,498 |    
|       |                                            |             |     |     |      |      |     |         |  |  |         |    |  |        |   

|              |             |             |     |     |              |  |       |       |  |  |       |       | 
|------------- | ----------- | ----------- | --- | --- | ------------ |  | ----- | ----- |  |  | ----- | ----- | 
|              |             | Continuing  |     |     | Discontinued |  |       | Group | 
|              |             |             |     |     |              |  |       |       | 
|              |             | (£ million) |    
|Group         |             |             |     |     |              |  |       |       |  |  |       |      
|              | Hotels      |             |     | 731 |              |  |       | 767   |  |  |       | 1,498 | 
|              | Soft Drinks |             |     |    |              |  |       | 706   |  |  |       | 706   | 
|              |             |             |     |     |              |  |       |       | 
|Total revenue |             |             | 731 |     |              |  | 1,473 |       |  |  | 2,204 |      
|              |             |             |     |     |              |  |       |       | 

F-23



---



##### 



Segmental result


|       |                                            |             |     |     |      |      |     |         |   |  |         |    |   |        |     |     |   |  |     |      |  
|------ | ------------------------------------------ | ----------- | --- | --- | ---- | ---- | --- | ------- | - |  | ------- | -- | - | ------ | --- | --- | - |  | --- | ---- | -
|       |                                            |             |     |     |      | Asia |     |         |   |  | Total   |   
|       |                                            | Americas    |     |     | EMEA |      |     | Pacific |   |  | Central |    |   | Hotels |    
|       |                                            |             |     |     |      |      |     |         |   |  |         |    |   |        |    
|       |                                            | (£ million) |    
|Hotels |                                            |             |     |     |      |      |     |         |   |  |         |    |   |        |     |     |   |  |     |     
|       | Owned and leased                           |             |     | 3   |      |      |     | (11     | ) |  |         | 9  |   |        |     |    |   |  |     | 1    |  
|       | Managed                                    |             |     | 6   |      |      |     | 24      |   |  |         | 14 |   |        |     |    |   |  |     | 44   |  
|       | Franchised                                 |             |     | 167 |      |      |     | 21      |   |  |         | 2  |   |        |     |    |   |  |     | 190  |  
|       | Regional and central                       |             |     | (27 | )    |      |     | (23     | ) |  |         | (8 | ) |        |     | (57 | ) |  |     | (115 | )
|       |                                            |             |     |     |      |      |     |         |   |  |         |    |   |        |    
|       | Continuing operations                      |             |     | 149 |      |      |     | 11      |   |  |         | 17 |   |        |     | (57 | ) |  |     | 120  |  
|       | Discontinued operations  owned and leased |             |     | 24  |      |      |     | 118     |   |  |         | 7  |   |        |     |    |   |  |     | 149  |  
|       |                                            |             |     |     |      |      |     |         |   |  |         |    |   |        |    
|       |                                            |             | 173 |     |      |      | 129 |         |   |  | 24      |    |   |        | (57 | )   |   |  | 269 |     
|       |                                            |             |     |     |      |      |     |         |   |  |         |    |   |        |    



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

|                                       |             |             |     |     |              |  |     |       |  |  |     |     | 
|-------------------------------------- | ----------- | ----------- | --- | --- | ------------ |  | --- | ----- |  |  | --- | --- | 
|                                       |             | Continuing  |     |     | Discontinued |  |     | Group | 
|                                       |             |             |     |     |              |  |     |       | 
|                                       |             | (£ million) |    
|Group                                  |             |             |     |     |              |  |     |       |  |  |     |    
|                                       | Hotels      |             |     | 120 |              |  |     | 149   |  |  |     | 269 | 
|                                       | Soft Drinks |             |     |    |              |  |     | 77    |  |  |     | 77  | 
|                                       |             |             |     |     |              |  |     |       | 
|                                       |             |             | 120 |     |              |  | 226 |       |  |  | 346 |    
|Other operating income and expenses    |             |             | (49 | )   |              |  |    |       |  |  | (49 | )  
|                                       |             |             |     |     |              |  |     |       | 
|Operating profit                       |             |             | 71  |     |              |  | 226 |       |  |  | 297 |    
|Net finance costs                      |             |             | (33 | )   |              |  |    |       |  |  | (33 | )  
|                                       |             |             |     |     |              |  |     |       | 
|Profit before tax                      |             |             | 38  |     |              |  | 226 |       |  |  | 264 |    
|Tax                                    |             |             | 196 |     |              |  | (69 | )     |  |  | 127 |    
|                                       |             |             |     |     |              |  |     |       | 
|Profit after tax                       |             |             | 234 |     |              |  | 157 |       |  |  | 391 |    
|Gain on disposal of assets, net of tax |             |             |    |     |              |  | 19  |       |  |  | 19  |    
|                                       |             |             |     |     |              |  |     |       | 
|Profit available for shareholders      |             |             | 234 |     |              |  | 176 |       |  |  | 410 |    
|                                       |             |             |     |     |              |  |     |       | 






|   |                                                                              
|-- | -----------------------------------------------------------------------------
|** | Other than for Soft Drinks which reflects the 53 weeks
    ended December 25.

F-24



---



##### 



Assets and liabilities


|                                               |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       |  |  |     |     |   |  |       |       | 
|---------------------------------------------- | -------------------------- | ----------- | ----- |  | ---- | ---- | ----- | ------- |  |  | ------- |  |  | ------ | -- |  | ------ |  | ----- | ----- |  |  | --- | --- | - |  | ----- | ----- | 
|                                               |                            |             |       |  |      | Asia |       |         |  |  | Total   |  |  | Soft   |    |  | Total  | 
|                                               |                            | Americas    |       |  | EMEA |      |       | Pacific |  |  | Central |  |  | Hotels |    |  | Drinks |  |       | Group | 
|                                               |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|                                               |                            | (£ million) |      
|Segment assets                                 |                            |             | 583   |  |      |      | 1,202 |         |  |  | 437     |  |  |        | 86 |  |        |  | 2,308 |       |  |  | 458 |     |   |  | 2,766 |      
|Non-current assets classified as held for sale |                            |             | 424   |  |      |      | 1,402 |         |  |  |        |  |  |        |   |  |        |  | 1,826 |       |  |  |    |     |   |  | 1,826 |      
|                                               |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|                                               |                            |             | 1,007 |  |      |      | 2,604 |         |  |  | 437     |  |  |        | 86 |  |        |  | 4,134 |       |  |  | 458 |     |   |  | 4,592 |      
|                                               |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|Unallocated assets:                            |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       |  |  |     |     |   |  |       |      
|                                               | Current tax receivable     |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       | 14    |  |  |     |    |   |  |       | 14    | 
|                                               | Cash and cash equivalents  |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       | 60    |  |  |     | 12  |   |  |       | 72    | 
|                                               |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|Total assets                                   |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  | 4,208 |       |  |  | 470 |     |   |  | 4,678 |      
|                                               |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|Segment liabilities                            |                            |             | 300   |  |      |      | 290   |         |  |  | 28      |  |  |        |   |  |        |  | 618   |       |  |  | 291 |     |   |  | 909   |      
|Liabilities classified as held for sale        |                            |             | 24    |  |      |      | 124   |         |  |  |        |  |  |        |   |  |        |  | 148   |       |  |  |    |     |   |  | 148   |      
|                                               |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|                                               |                            |             | 324   |  |      |      | 414   |         |  |  | 28      |  |  |        |   |  |        |  | 766   |       |  |  | 291 |     |   |  | 1,057 |      
|                                               |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|Unallocated liabilities:                       |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       |  |  |     |     |   |  |       |      
|                                               | Current tax payable        |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       | 248   |  |  |     | 13  |   |  |       | 261   | 
|                                               | Deferred tax payable       |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       | 246   |  |  |     | (12 | ) |  |       | 234   | 
|                                               | Loans and other borrowings |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       | 1,185 |  |  |     | 3   |   |  |       | 1,188 | 
|                                               |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 
|Total liabilities                              |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  | 2,445 |       |  |  | 295 |     |   |  | 2,740 |      
|                                               |                            |             |       |  |      |      |       |         |  |  |         |  |  |        |    |  |        |  |       |       | 



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

Other segmental information


|                         |                                             |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |     |  |  |    |    |  |  |     |     | 
|------------------------ | ------------------------------------------- | ----------------------------- |  | -- | ---- | ---- |  | ------- | -- |  | ------- | -- | -- | ------ |  | -- | ------ |  |  | ----- | --- |  |  | -- | -- |  |  | --- | --- | 
|                         |                                             |                               |  |    |      | Asia |  |         |    |  | Total   |    |    | Soft   |  |    | Total  | 
|                         |                                             | Americas                      |  |    | EMEA |      |  | Pacific |    |  | Central |    |    | Hotels |  |    | Drinks |  |  | Group |    
|                         |                                             |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |    
|                         |                                             | (£ million)                   | 
|Continuing operations:   |                                             |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |     |  |  |    |    |  |  |    
|                         | Capital
    expenditure(i)                  |                               |  | 43 |      |      |  | 14      |    |  |         | 15 |    |        |  | 12 |        |  |  | 84    |     |  |  |   |    |  |  | 84  |    
|                         | Additions to:                               |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |     |  |  |    |    |  |  |     |    
|                         |                                             | Property, plant and equipment |  |    | 32   |      |  |         | 16 |  |         |    | 10 |        |  |    |       |  |  |       | 58  |  |  |    |   |  |  |     | 58  | 
|                         |                                             | Intangible assets             |  |    | 4    |      |  |         |   |  |         |    | 1  |        |  |    | 12     |  |  |       | 17  |  |  |    |   |  |  |     | 17  | 
|                         | Depreciation and
    amortization(ii)       |                               |  | 11 |      |      |  | 14      |    |  |         | 6  |    |        |  | 15 |        |  |  | 46    |     |  |  |   |    |  |  | 46  |    
|                         | Impairment of property, plant and equipment |                               |  | 14 |      |      |  | 30      |    |  |         | 4  |    |        |  |   |        |  |  | 48    |     |  |  |   |    |  |  | 48  |    
|Discontinued operations: |                                             |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |     |  |  |    |    |  |  |    
|                         | Capital
    expenditure(i)                  |                               |  | 17 |      |      |  | 81      |    |  |         | 5  |    |        |  |   |        |  |  | 103   |     |  |  | 70 |    |  |  | 173 |    
|                         | Additions to:                               |                               |  |    |      |      |  |         |    |  |         |    |    |        |  |    |        |  |  |       |     |  |  |    |    |  |  |     |    
|                         |                                             | Property, plant and equipment |  |    | 17   |      |  |         | 81 |  |         |    | 5  |        |  |    |       |  |  |       | 103 |  |  |    | 56 |  |  |     | 159 | 
|                         |                                             | Intangible assets             |  |    |     |      |  |         |   |  |         |    |   |        |  |    |       |  |  |       |    |  |  |    | 16 |  |  |     | 16  | 
|                         | Depreciation and
    amortization(ii)       |                               |  | 18 |      |      |  | 56      |    |  |         | 7  |    |        |  |   |        |  |  | 81    |     |  |  | 46 |    |  |  | 127 |    






|     |                                                                                                                                                                     
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|**   | Other than for Soft Drinks which reflects the 53 weeks
    ended December 25.                                                                                       
|    
|(i)  | Comprises purchases of property, plant and equipment, intangible
    assets and other financial assets of subsidiaries as included in
    the cash flow statement.  
|    
|(ii) | Included in the £173 million of depreciation and
    amortization is £23 million relating to administrative
    expenses and £150 million relating to cost of sales.

F-25



---



##### 





|         |                                      
|-------- | -------------------------------------
|Note 3  | Staff costs and Directors emoluments



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

|                                            |                            |              |     |    |              |  |     |              |  |  |     |    | 
|------------------------------------------- | -------------------------- | ------------ | --- | -- | ------------ |  | --- | ------------ |  |  | --- | -- | 
|                                            |                            | Year ended   |     |    | Year ended   |  |     | Year ended   | 
|                                            |                            | December 31, |     |    | December 31, |  |     | December 31, | 
|                                            |                            | 2006         |     |    | 2005         |  |     | 2004         | 
|                                            |                            |              |     |    |              |  |     |              | 
|                                            |                            | (£ million)  |    
|Wages and salaries                          |                            |              | 301 |    |              |  | 465 |              |  |  | 570 |   
|Social security costs                       |                            |              | 38  |    |              |  | 61  |              |  |  | 66  |   
|Pension and other post-retirement benefits: |                            |              |     |    |              |  |     |              |  |  |     |   
|                                            | Defined benefit plans      |              |     | 6  |              |  |     | 19           |  |  |     | 21 | 
|                                            | Defined contribution plans |              |     | 11 |              |  |     | 15           |  |  |     | 12 | 
|                                            |                            |              |     |    |              |  |     |              | 
|                                            |                            |              | 356 |    |              |  | 560 |              |  |  | 669 |   
|                                            |                            |              |     |    |              |  |     |              | 



| |                 
| | ----------------
| | Employee numbers



|            |  |              |        |  |              |  |        |              |  |  |        | 
|----------- |  | ------------ | ------ |  | ------------ |  | ------ | ------------ |  |  | ------ | 
|            |  | Year ended   |        |  | Year ended   |  |        | Year ended   | 
|            |  | December 31, |        |  | December 31, |  |        | December 31, | 
|            |  | 2006         |        |  | 2005         |  |        | 2004         | 
|            |  |              |        |  |              |  |        |              | 
|            |  | (Number)     |       
|Hotels      |  |              | 11,456 |  |              |  | 18,995 |              |  |  | 26,835 | 
|Soft Drinks |  |              |       |  |              |  | 2,991  |              |  |  | 2,824  | 
|            |  |              |        |  |              |  |        |              | 
|            |  |              | 11,456 |  |              |  | 21,986 |              |  |  | 29,659 | 
|            |  |              |        |  |              |  |        |              | 



| |                  
| | -----------------
| | Employee benefits





F-26



---



##### 





|                                                     |  |               |     |   |       |            |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      |  |  |  |     |   |  |  |     |   |  |  |     |  
|---------------------------------------------------- |  | ------------- | --- | - | ----- | ---------- | --- | -------- |  |  | ----- | - |  | ---- | -- | - | ---- |  | -- | ---- |  |  | ---- | - |  | ---- | - |  | ---- |  | - | ---- |  |  | ---- |  |  |  | --- | - |  |  | --- | - |  |  | --- | -
|                                                     |  | Pension plans |     |   |       |            |     |          |  |  |      
|                                                     |  |               |     |   | Post- |            |     |          |  |  |       |  
|                                                     |  |               |     |   |       | employment |     |          | 
|                                                     |  | UK            |     |   | US    |            |     | benefits |  |  | Total |  
|                                                     |  |               |     |   |       |            |     |          |  |  |       |  
|Recognized in administrative expenses                |  | 2006          |     |   | 2005  |            |     | 2004     |  |  | 2006  |   |  | 2005 |    |   | 2004 |  |    | 2006 |  |  | 2005 |   |  | 2004 |   |  | 2006 |  |   | 2005 |  |  | 2004 | 
|                                                     |  |               |     |   |       |            |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      | 
|                                                     |  | (£ million)   |    
|Current service costs                                |  |               | 5   |   |       |            | 19  |          |  |  | 18    |   |  |      |   |   |      |  |   |      |  |  |     |   |  |      |  |  |      |  |  |      |  |  |     |  |  |  | 5   |   |  |  | 19  |   |  |  | 18  |  
|Past service costs                                   |  |               |    |   |       |            |    |          |  |  | 1     |   |  |      |   |   |      |  |   |      |  |  |     |   |  |      |  |  |      |  |  |      |  |  |     |  |  |  |    |   |  |  |    |   |  |  | 1   |  
|Interest cost on benefit obligation                  |  |               | 13  |   |       |            | 30  |          |  |  | 27    |   |  |      | 5  |   |      |  | 6  |      |  |  | 5    |   |  |      | 1 |  |      |  | 1 |      |  |  | 1    |  |  |  | 19  |   |  |  | 37  |   |  |  | 33  |  
|Expected return on plan assets                       |  |               | (14 | ) |       |            | (32 | )        |  |  | (27   | ) |  |      | (4 | ) |      |  | (5 | )    |  |  | (4   | ) |  |      |  |  |      |  |  |      |  |  |     |  |  |  | (18 | ) |  |  | (37 | ) |  |  | (31 | )
|                                                     |  |               |     |   |       |            |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      | 
|                                                     |  |               | 4   |   |       |            | 17  |          |  |  | 19    |   |  |      | 1  |   |      |  | 1  |      |  |  | 1    |   |  |      | 1 |  |      |  | 1 |      |  |  | 1    |  |  |  | 6   |   |  |  | 19  |   |  |  | 21  |  
|                                                     |  |               |     |   |       |            |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      | 
|Recognized in other operating
    income and expense |  |               |     |   |       |            |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      |  |  |  |     |   |  |  |     |   |  |  |     |  
|                                                     |  |               |     |   |       |            |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      | 
|Plan curtailment                                     |  |               |    |   |       |            | (7  | )        |  |  |      |   |  |      |   |   |      |  |   |      |  |  |     |   |  |      |  |  |      |  |  |      |  |  |     |  |  |  |    |   |  |  | (7  | ) |  |  |    |  
|                                                     |  |               |     |   |       |            |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      | 





|                                                       |  |               |     |   |      |                 |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      |   |  |  |     |   |  |  |     |   |  |  |     |  
|------------------------------------------------------ |  | ------------- | --- | - | ---- | --------------- | --- | -------- |  |  | ----- | - |  | ---- | -- | - | ---- |  | -- | ---- |  |  | ---- | - |  | ---- | - |  | ---- |  | - | ---- |  |  | ---- | - |  |  | --- | - |  |  | --- | - |  |  | --- | -
|                                                       |  | Pension plans |     |   |      |                 |     |          |  |  |       |   |  |      |   
|                                                       |  |               |     |   |      |                 |     |          |  |  |      
|                                                       |  |               |     |   |      | Post-employment |     |          | 
|                                                       |  | UK            |     |   | US   |                 |     | benefits |  |  | Total |  
|                                                       |  |               |     |   |      |                 |     |          |  |  |       |  
|Actuarial gains and losses                             |  | 2006          |     |   | 2005 |                 |     | 2004     |  |  | 2006  |   |  | 2005 |    |   | 2004 |  |    | 2006 |  |  | 2005 |   |  | 2004 |   |  | 2006 |  |   | 2005 |  |  | 2004 |  
|                                                       |  |               |     |   |      |                 |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      |  
|                                                       |  | (£ million)   |    
|Actual return on scheme assets                         |  |               | 21  |   |      |                 | 79  |          |  |  | 41    |   |  |      | 6  |   |      |  | 4  |      |  |  | 5    |   |  |      |  |  |      |  |  |      |  |  |     |   |  |  | 27  |   |  |  | 83  |   |  |  | 46  |  
|Less: expected return on scheme assets                 |  |               | (14 | ) |      |                 | (32 | )        |  |  | (27   | ) |  |      | (4 | ) |      |  | (5 | )    |  |  | (4   | ) |  |      |  |  |      |  |  |      |  |  |     |   |  |  | (18 | ) |  |  | (37 | ) |  |  | (31 | )
|                                                       |  |               |     |   |      |                 |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      |  
|                                                       |  |               | 7   |   |      |                 | 47  |          |  |  | 14    |   |  |      | 2  |   |      |  | (1 | )    |  |  | 1    |   |  |      |  |  |      |  |  |      |  |  |     |   |  |  | 9   |   |  |  | 46  |   |  |  | 15  |  
|Other actuarial gains and losses                       |  |               | (12 | ) |      |                 | (67 | )        |  |  | (60   | ) |  |      |   |   |      |  | (3 | )    |  |  | (5   | ) |  |      | 1 |  |      |  | 1 |      |  |  | (1   | ) |  |  | (11 | ) |  |  | (69 | ) |  |  | (66 | )
|                                                       |  |               |     |   |      |                 |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      |  
|                                                       |  |               | (5  | ) |      |                 | (20 | )        |  |  | (46   | ) |  |      | 2  |   |      |  | (4 | )    |  |  | (4   | ) |  |      | 1 |  |      |  | 1 |      |  |  | (1   | ) |  |  | (2  | ) |  |  | (23 | ) |  |  | (51 | )
|                                                       |  |               |     |   |      |                 |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      |  
|Deficit transferred in respect of previous acquisition |  |               |    |   |      |                 |    |          |  |  | (6    | ) |  |      |   |   |      |  |   |      |  |  |     |   |  |      |  |  |      |  |  |      |  |  |     |   |  |  |    |   |  |  |    |   |  |  | (6  | )
|                                                       |  |               |     |   |      |                 |     |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |      |   |  |      |  |   |      |  |  |      |  



|                                     |                |               |      |     |       |            |      |          |   |  |       |     |   |      |      |     |      |  |    |      |   |  |      |     |   |  |      |     |   |  |      |     |  
|------------------------------------ | -------------- | ------------- | ---- | --- | ----- | ---------- | ---- | -------- | - |  | ----- | --- | - | ---- | ---- | --- | ---- |  | -- | ---- | - |  | ---- | --- | - |  | ---- | --- | - |  | ---- | --- | -
|                                     |                | Pension plans |      |     |       |            |      |          |  
|                                     |                |               |      |     | Post- |            |      |          |   | 
|                                     |                |               |      |     |       | employment |      |          |  
|                                     |                | UK            |      |     | US    |            |      | benefits |   |  | Total |    
|                                     |                |               |      |     |       |            |      |          |   |  |       |    
|                                     |                | 2006          |      |     | 2005  |            |      | 2006     |   |  | 2005  |     |   | 2006 |      |     | 2005 |  |    | 2006 |   |  | 2005 |    
|                                     |                |               |      |     |       |            |      |          |   |  |       |     |   |      |      |     |      |  |    |      |   |  |      |    
|                                     |                | (£ million)   |     
|Fair value of scheme assets          |                |               | 269  |     |       |            | 250  |          |   |  | 56    |     |   |      | 62   |     |      |  |   |      |   |  |     |     |   |  | 325  |     |   |  | 312  |    
|Present value of benefit obligations |                |               | (298 | )   |       |            | (274 | )        |   |  | (89   | )   |   |      | (103 | )   |      |  | (9 | )    |   |  | (11  | )   |   |  | (396 | )   |   |  | (388 | )  
|                                     |                |               |      |     |       |            |      |          |   |  |       |     |   |      |      |     |      |  |    |      |   |  |      |    
|Employee benefits liability          |                |               | (29  | )   |       |            | (24  | )        |   |  | (33   | )   |   |      | (41  | )   |      |  | (9 | )    |   |  | (11  | )   |   |  | (71  | )   |   |  | (76  | )  
|                                     |                |               |      |     |       |            |      |          |   |  |       |     |   |      |      |     |      |  |    |      |   |  |      |    
|Comprising:                          |                |               |      |     |       |            |      |          |   |  |       |     |   |      |      |     |      |  |    |      |   |  |      |     |   |  |      |     |   |  |      |    
|                                     | Funded plans   |               |      | (6  | )     |            |      | (2       | ) |  |       | (9  | ) |      |      | (14 | )    |  |    |     |   |  |      |    |   |  |      | (15 | ) |  |      | (16 | )
|                                     | Unfunded plans |               |      | (23 | )     |            |      | (22      | ) |  |       | (24 | ) |      |      | (27 | )    |  |    | (9   | ) |  |      | (11 | ) |  |      | (56 | ) |  |      | (60 | )
|                                     |                |               |      |     |       |            |      |          |   |  |       |     |   |      |      |     |      |  |    |      |   |  |      |    
|                                     |                |               | (29  | )   |       |            | (24  | )        |   |  | (33   | )   |   |      | (41  | )   |      |  | (9 | )    |   |  | (11  | )   |   |  | (71  | )   |   |  | (76  | )  
|                                     |                |               |      |     |       |            |      |          |   |  |       |     |   |      |      |     |      |  |    |      |   |  |      |    

F-27



---



##### 





|                                                 |  |               |     |  |      |                 |     |          |  |  |      |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      |      |  |  |  |     |  |  |  |     | 
|------------------------------------------------ |  | ------------- | --- |  | ---- | --------------- | --- | -------- |  |  | ---- |  |  | ---- | --- |  | ---- |  | --- | ---- |  |  | ---- |  |  | ---- | ---- |  |  |  | --- |  |  |  | --- | 
|                                                 |  | Pension plans |     |  |      |                 |     |          | 
|                                                 |  |               |     |  |     
|                                                 |  |               |     |  |      | Post-employment |    
|                                                 |  | UK            |     |  | US   |                 |     | benefits | 
|                                                 |  |               |     |  |      |                 |     |          | 
|                                                 |  | 2006          |     |  | 2005 |                 |     | 2004     |  |  | 2006 |  |  | 2005 |     |  | 2004 |  |     | 2006 |  |  | 2005 |  |  | 2004 |     
|                                                 |  |               |     |  |      |                 |     |          |  |  |      |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      |     
|                                                 |  | (%)           |    
|Wages and salaries increases                     |  |               | 4.6 |  |      |                 | 4.3 |          |  |  | 4.3  |  |  |      |    |  |      |  |    |      |  |  |     |  |  |      | 4.0  |  |  |  | 4.0 |  |  |  | 4.0 | 
|Pensions increases                               |  |               | 3.1 |  |      |                 | 2.8 |          |  |  | 2.8  |  |  |      |    |  |      |  |    |      |  |  |     |  |  |      |     |  |  |  |    |  |  |  |    | 
|Discount rate                                    |  |               | 5.0 |  |      |                 | 4.7 |          |  |  | 5.3  |  |  |      | 5.8 |  |      |  | 5.5 |      |  |  | 5.8  |  |  |      | 5.8  |  |  |  | 5.5 |  |  |  | 5.8 | 
|Inflation rate                                   |  |               | 3.1 |  |      |                 | 2.8 |          |  |  | 2.8  |  |  |      |    |  |      |  |    |      |  |  |     |  |  |      |     |  |  |  |    |  |  |  |    | 
|Healthcare cost trend rate assumed for next year |  |               |     |  |      |                 |     |          |  |  |      |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      | 10.0 |  |  |  | 9.0 |  |  |  | 9.5 | 
|Ultimate rate that the cost trend rate trends to |  |               |     |  |      |                 |     |          |  |  |      |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      | 5.0  |  |  |  | 4.5 |  |  |  | 4.5 | 



|                                         |  |               |    |  |      |  |    |      |  |  |      |  |  |      |    |  |      |  |    |  |  |  |    | 
|---------------------------------------- |  | ------------- | -- |  | ---- |  | -- | ---- |  |  | ---- |  |  | ---- | -- |  | ---- |  | -- |  |  |  | -- | 
|                                         |  | Pension plans |   
|                                         |  |               |   
|                                         |  | UK            |    |  | US   | 
|                                         |  |               |    |  |      | 
|Post-retirement mortality (years)        |  | 2006          |    |  | 2005 |  |    | 2004 |  |  | 2006 |  |  | 2005 |    |  | 2004 | 
|                                         |  |               |    |  |      |  |    |      |  |  |      |  |  |      |    |  |      | 
|Current pensioners at 65 
    male(i)   |  |               | 23 |  |      |  | 21 |      |  |  | 21   |  |  |      | 18 |  |      |  | 17 |  |  |  | 17 | 
|Current pensioners at 65 
    female(i) |  |               | 26 |  |      |  | 24 |      |  |  | 24   |  |  |      | 20 |  |      |  | 22 |  |  |  | 22 | 
|Future pensioners at 65 
    male(ii)   |  |               | 24 |  |      |  | 22 |      |  |  | 22   |  |  |      | 18 |  |      |  | 17 |  |  |  | 17 | 
|Future pensioners at 65 
    female(ii) |  |               | 27 |  |      |  | 25 |      |  |  | 25   |  |  |      | 20 |  |      |  | 22 |  |  |  | 22 | 






|    |                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------
|(i) | Relates to assumptions based on longevity (in years) following
    retirement at the balance sheet date.



|     |                                                                                                   
|---- | --------------------------------------------------------------------------------------------------
|(ii) | Relates to assumptions based on longevity (in years) relating to
    an employee retiring in 2026.



|                                                       |  |               |     |   |       |            |      |          |  |  |       |   |  |      |     |   |      |  |    |      |  |  |      |   |  |  |     |   |  |  |      |  
|------------------------------------------------------ |  | ------------- | --- | - | ----- | ---------- | ---- | -------- |  |  | ----- | - |  | ---- | --- | - | ---- |  | -- | ---- |  |  | ---- | - |  |  | --- | - |  |  | ---- | -
|                                                       |  | Pension plans |     |   |       |            |      |          | 
|                                                       |  |               |     |   | Post- |            |      |          |  | 
|                                                       |  |               |     |   |       | employment |      |          | 
|                                                       |  | UK            |     |   | US    |            |      | benefits |  |  | Total |  
|                                                       |  |               |     |   |       |            |      |          |  |  |       |  
|Movement in benefit obligation                         |  | 2006          |     |   | 2005  |            |      | 2006     |  |  | 2005  |   |  | 2006 |     |   | 2005 |  |    | 2006 |  |  | 2005 |  
|                                                       |  |               |     |   |       |            |      |          |  |  |       |   |  |      |     |   |      |  |    |      |  |  |      |  
|                                                       |  | (£ million)   |    
|Benefit obligation at beginning of year                |  |               | 274 |   |       |            | 600  |          |  |  | 103   |   |  |      | 88  |   |      |  | 11 |      |  |  | 11   |   |  |  | 388 |   |  |  | 699  |  
|Current service cost                                   |  |               | 5   |   |       |            | 19   |          |  |  |      |   |  |      |    |   |      |  |   |      |  |  |     |   |  |  | 5   |   |  |  | 19   |  
|Past service cost                                      |  |               |    |   |       |            |     |          |  |  |      |   |  |      |    |   |      |  |   |      |  |  |     |   |  |  |    |   |  |  |     |  
|Members contributions                                 |  |               | 1   |   |       |            | 2    |          |  |  |      |   |  |      |    |   |      |  |    |      |  |  |     |   |  |  | 1   |   |  |  | 2    |  
|Interest expense                                       |  |               | 13  |   |       |            | 30   |          |  |  | 5     |   |  |      | 6   |   |      |  | 1  |      |  |  | 1    |   |  |  | 19  |   |  |  | 37   |  
|Benefits paid                                          |  |               | (7  | ) |       |            | (11  | )        |  |  | (6    | ) |  |      | (6  | ) |      |  | (1 | )    |  |  | (1   | ) |  |  | (14 | ) |  |  | (18  | )
|Plan curtailment                                       |  |               |    |   |       |            | (7   | )        |  |  |      |   |  |      |    |   |      |  |   |      |  |  |     |   |  |  |    |   |  |  | (7   | )
|Deficit transferred in respect of previous acquisition |  |               |    |   |       |            |     |          |  |  |      |   |  |      |    |   |      |  |   |      |  |  |     |   |  |  |    |   |  |  |     |  
|Actuarial loss/(gain) arising in the year              |  |               | 12  |   |       |            | 67   |          |  |  |      |   |  |      | 3   |   |      |  | (1 | )    |  |  | (1   | ) |  |  | 11  |   |  |  | 69   |  
|Separation of Soft Drinks                              |  |               |    |   |       |            | (426 | )        |  |  |      |   |  |      |    |   |      |  |   |      |  |  |     |   |  |  |    |   |  |  | (426 | )
|Exchange adjustments                                   |  |               |    |   |       |            |     |          |  |  | (13   | ) |  |      | 12  |   |      |  | (1 | )    |  |  | 1    |   |  |  | (14 | ) |  |  | 13   |  
|                                                       |  |               |     |   |       |            |      |          |  |  |       |   |  |      |     |   |      |  |    |      |  |  |      |  
|Benefit obligation at end of year                      |  |               | 298 |   |       |            | 274  |          |  |  | 89    |   |  |      | 103 |   |      |  | 9  |      |  |  | 11   |   |  |  | 396 |   |  |  | 388  |  
|                                                       |  |               |     |   |       |            |      |          |  |  |       |   |  |      |     |   |      |  |    |      |  |  |      |  

F-28



---



##### 







|                             |  |           |     |  |             |  |           |          |  |  |             |           |  |          |     |  |             |  |     |  |  |  |     | 
|---------------------------- |  | --------- | --- |  | ----------- |  | --------- | -------- |  |  | ----------- | --------- |  | -------- | --- |  | ----------- |  | --- |  |  |  | --- | 
|                             |  | 2006      |     |  | 2005        |  |           | 2004     | 
|                             |  |           |     |  |             |  |           |          | 
|                             |  | Long-term |     |  |             |  | Long-term |          |  |  |             | Long-term |  |          |    
|                             |  | rate of   |     |  |             |  | rate of   |          |  |  |             | rate of   |  |          |    
|                             |  | return    |     |  |             |  | return    |          |  |  |             | return    |  |          |    
|                             |  | expected  |     |  | Value       |  |           | expected |  |  | Value       |           |  | expected |     |  | Value       | 
|                             |  |           |     |  |             |  |           |          |  |  |             |           |  |          |     |  |             | 
|                             |  | (%)       |     |  | (£ million) |  |           | (%)      |  |  | (£ million) |           |  | (%)      |     |  | (£ million) | 
|UK Schemes                   |  |           |     |  |             |  |           |          |  |  |             |           |  |          |     |  |             |  |     |  |  |  |     | 
|Equities                     |  |           | 7.9 |  |             |  | 128       |          |  |  | 7.5         |           |  |          | 125 |  |             |  | 8.0 |  |  |  | 272 | 
|Bonds                        |  |           | 4.6 |  |             |  | 123       |          |  |  | 4.2         |           |  |          | 110 |  |             |  | 4.9 |  |  |  | 173 | 
|Other                        |  |           | 7.9 |  |             |  | 18        |          |  |  | 7.5         |           |  |          | 15  |  |             |  | 8.0 |  |  |  | 25  | 
|                             |  |           |     |  |             |  |           |          |  |  |             |           |  |          |     |  |             | 
|Total market value of assets |  |           |     |  |             |  | 269       |          |  |  |             |           |  |          | 250 |  |             |  |     |  |  |  | 470 | 
|                             |  |           |     |  |             |  |           |          |  |  |             |           |  |          |     |  |             | 
|US Schemes                   |  |           |     |  |             |  |           |          |  |  |             |           |  |          |     |  |             |  |     |  |  |  |     | 
|Equities                     |  |           | 9.5 |  |             |  | 34        |          |  |  | 9.6         |           |  |          | 38  |  |             |  | 9.6 |  |  |  | 34  | 
|Fixed income                 |  |           | 5.5 |  |             |  | 22        |          |  |  | 5.5         |           |  |          | 24  |  |             |  | 5.5 |  |  |  | 22  | 
|                             |  |           |     |  |             |  |           |          |  |  |             |           |  |          |     |  |             | 
|Total market value of assets |  |           |     |  |             |  | 56        |          |  |  |             |           |  |          | 62  |  |             |  |     |  |  |  | 56  | 
|                             |  |           |     |  |             |  |           |          |  |  |             |           |  |          |     |  |             | 



|                                                      |  |               |     |   |       |            |      |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |   |  |  |     |   |  |  |      |  
|----------------------------------------------------- |  | ------------- | --- | - | ----- | ---------- | ---- | -------- |  |  | ----- | - |  | ---- | -- | - | ---- |  | -- | ---- |  |  | ---- | - |  |  | --- | - |  |  | ---- | -
|                                                      |  | Pension plans |     |   |       |            |      |          | 
|                                                      |  |               |     |   | Post- |            |      |          |  | 
|                                                      |  |               |     |   |       | employment |      |          | 
|                                                      |  | UK            |     |   | US    |            |      | benefits |  |  | Total |  
|                                                      |  |               |     |   |       |            |      |          |  |  |       |  
|Movement in benefit obligation                        |  | 2006          |     |   | 2005  |            |      | 2006     |  |  | 2005  |   |  | 2006 |    |   | 2005 |  |    | 2006 |  |  | 2005 |  
|                                                      |  |               |     |   |       |            |      |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |  
|                                                      |  | (£ million)   |    
|Fair value of plan assets at beginning of year        |  |               | 250 |   |       |            | 470  |          |  |  | 62    |   |  |      | 56 |   |      |  |   |      |  |  |     |   |  |  | 312 |   |  |  | 526  |  
|Company contributions                                 |  |               | 4   |   |       |            | 45   |          |  |  | 1     |   |  |      | 2  |   |      |  | 1  |      |  |  | 1    |   |  |  | 6   |   |  |  | 48   |  
|Members contributions                                |  |               | 1   |   |       |            | 2    |          |  |  |      |   |  |      |   |   |      |  |   |      |  |  |     |   |  |  | 1   |   |  |  | 2    |  
|Assets transferred in respect of previous acquisition |  |               |    |   |       |            |     |          |  |  |      |   |  |      |   |   |      |  |   |      |  |  |     |   |  |  |    |   |  |  |     |  
|Benefits paid                                         |  |               | (7  | ) |       |            | (11  | )        |  |  | (6    | ) |  |      | (6 | ) |      |  | (1 | )    |  |  | (1   | ) |  |  | (14 | ) |  |  | (18  | )
|Expected return on assets                             |  |               | 14  |   |       |            | 32   |          |  |  | 4     |   |  |      | 5  |   |      |  |   |      |  |  |     |   |  |  | 18  |   |  |  | 37   |  
|Actuarial gain/(loss) arising in the year             |  |               | 7   |   |       |            | 47   |          |  |  | 2     |   |  |      | (1 | ) |      |  |   |      |  |  |     |   |  |  | 9   |   |  |  | 46   |  
|Separation of Soft Drinks                             |  |               |    |   |       |            | (335 | )        |  |  |      |   |  |      |   |   |      |  |   |      |  |  |     |   |  |  |    |   |  |  | (335 | )
|Exchange adjustments                                  |  |               |    |   |       |            |     |          |  |  | (7    | ) |  |      | 6  |   |      |  |   |      |  |  |     |   |  |  | (7  | ) |  |  | 6    |  
|                                                      |  |               |     |   |       |            |      |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |  
|Fair value of plan assets at end of year              |  |               | 269 |   |       |            | 250  |          |  |  | 56    |   |  |      | 62 |   |      |  |   |      |  |  |     |   |  |  | 325 |   |  |  | 312  |  
|                                                      |  |               |     |   |       |            |      |          |  |  |       |   |  |      |    |   |      |  |    |      |  |  |      |  



F-29



---



##### 





|                                                   |  |             |      |   |      |  |      |      |  |  |      |   |  |  |      |  
|-------------------------------------------------- |  | ----------- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|UK Pension plans                                   |  | 2006        |      |   | 2005 |  |      | 2004 |  |  | 2003 |  
|                                                   |  |             |      |   |      |  |      |      |  |  |      |  
|                                                   |  | (£ million) |     
|Fair value of scheme assets                        |  |             | 269  |   |      |  | 250  |      |  |  | 470  |   |  |  | 353  |  
|Present value of benefit obligations               |  |             | (298 | ) |      |  | (274 | )    |  |  | (600 | ) |  |  | (477 | )
|                                                   |  |             |      |   |      |  |      |      |  |  |      |  
|Deficit in the scheme                              |  |             | (29  | ) |      |  | (24  | )    |  |  | (130 | ) |  |  | (124 | )
|Experience adjustments arising on plan liabilities |  |             | (12  | ) |      |  | (67  | )    |  |  | (60  | ) |  |  |      |  
|Experience adjustments arising on plan assets      |  |             | 7    |   |      |  | 47   |      |  |  | 14   |   |  |  |      |  

|                                                   |  |             |     |   |      |  |      |      |  |  |      |   |  |  |     |  
|-------------------------------------------------- |  | ----------- | --- | - | ---- |  | ---- | ---- |  |  | ---- | - |  |  | --- | -
|US Pension plans                                   |  | 2006        |     |   | 2005 |  |      | 2004 |  |  | 2003 |  
|                                                   |  |             |     |   |      |  |      |      |  |  |      |  
|                                                   |  | (£ million) |    
|Fair value of scheme assets                        |  |             | 56  |   |      |  | 62   |      |  |  | 56   |   |  |  | 48  |  
|Present value of benefit obligations               |  |             | (89 | ) |      |  | (103 | )    |  |  | (88  | ) |  |  | (91 | )
|                                                   |  |             |     |   |      |  |      |      |  |  |      |  
|Deficit in the scheme                              |  |             | (33 | ) |      |  | (41  | )    |  |  | (32  | ) |  |  | (43 | )
|Experience adjustments arising on plan liabilities |  |             |    |   |      |  | (3   | )    |  |  | (5   | ) |  |  |     |  
|Experience adjustments arising on plan assets      |  |             | 2   |   |      |  | (1   | )    |  |  | 1    |   |  |  |     |  

|                                                   |  |             |    |   |      |  |     |      |  |  |      |   |  |  |     |  
|-------------------------------------------------- |  | ----------- | -- | - | ---- |  | --- | ---- |  |  | ---- | - |  |  | --- | -
|US Post-employment benefits                        |  | 2006        |    |   | 2005 |  |     | 2004 |  |  | 2003 |  
|                                                   |  |             |    |   |      |  |     |      |  |  |      |  
|                                                   |  | (£ million) |   
|Present value of benefit obligations               |  |             | (9 | ) |      |  | (11 | )    |  |  | (11  | ) |  |  | (11 | )
|Experience adjustments arising on plan liabilities |  |             | 1  |   |      |  | 1   |      |  |  | (1   | ) |  |  |     |  





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



F-30



---



##### 





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







Basic salary and benefits


Basic salary








| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | size  turnover, profits and the number of people
    employed;
|
| |  | diversity and complexity of businesses;                        
|
| |  | geographical spread of businesses; and                         
|
| |  | relevance to the hotel industry.                               

Annual Performance Bonus










F-31



---



##### 



Performance Restricted Shares






| |   |                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the increase in IHGs Total Shareholder Return
    (TSR) over the performance period relative to nine*
    identified comparator companies: Accor, Hilton Hotels Corp.,
    Choice, Marriott Hotels, Millennium & Copthorne, NH
    Hotels, Sol Melia, Starwood Hotels and Wyndham Worldwide; and                                
|
| |  | the cumulative annual growth in the number of rooms within the
    IHG system over the performance period relative to eight
    identified comparator companies: Carlson Hospitality Worldwide,
    Choice, Hilton Hotels Corp., Hyatt Hotels & Resorts,
    Marriott Hotels, Sol Melia, Starwood Hotels and Wyndham
    Worldwide.






|  |                                                                           
|- | --------------------------------------------------------------------------
|* | Following the delisting of De Vere Group Plc Shares in
    September 2006.











| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 50% of the award will continue to be based on IHGs TSR
    relative to its peer comparator companies. 10% of the award will
    be released for the achievement of median growth and 50% of the
    award will be released for the achievement of first place only
    (previously first or second place). Vesting between all stated
    points will continue to be on a straight line basis.                                              
|
| |  | The other 50% of the award will depend on growth in adjusted
    earnings per share (EPS) over the period. 10% of the
    award will be released if adjusted EPS growth is 10% per annum
    and 50% of the award will be released if adjusted EPS growth is
    20% per annum or more. There will be no adjustment for any
    increase in the UK Retail Price Index (RPI) because
    this does not significantly affect IHGs results.

Executive Share Options F-40.




F-32



---



##### 



Share Ownership






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







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



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

12-month






b) Directors
contracts


|                 |  |                 |          |  |                 |  |           |  
|---------------- |  | --------------- | -------- |  | --------------- |  | --------- | -
|                 |  | Contract        |          |  | Unexpired term/ | 
|Director         |  | effective date1 |          |  | notice period   | 
|                 |  |                 |          |  |                 | 
|Andrew Cosslett  |  |                 | 02.03.05 |  |                 |  | 12 months |  
|Richard Hartman  |  |                 | 04.15.03 |  |                 |  | 6 months  | 2
|Stevan Porter    |  |                 | 04.15.03 |  |                 |  | 12 months |  
|Richard Solomons |  |                 | 04.15.03 |  |                 |  | 12 months |  






|  |                                                                                                                                                                                                                     
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 | Each of the Executive Directors signed a letter of appointment,
    effective from completion of the June 2005 capital
    reorganisation of the Company on the same terms as their
    original service agreements.
| 
|2 | Richard Hartman is due to retire in September 2007. Having given
    contractual notice, his unexpired term of office as at the date
    of this report is six months.                                              

Policy regarding pensions




F-33



---



##### 











| |                      
| | ---------------------
| | Directors emoluments

|                         |  |          |       |  |             |  |       |                    |  |           |          |  |           |          |       |  |  |  |       | 
|------------------------ |  | -------- | ----- |  | ----------- |  | ----- | ------------------ |  | --------- | -------- |  | --------- | -------- | ----- |  |  |  | ----- | 
|                         |  |          |       |  |             |  |       | Total emoluments   | 
|                         |  |          |       |  |             |  |       | excluding pensions | 
|                         |  | Base     |       |  |             |  |       |                    |  |          
|                         |  | salaries |       |  | Performance |  |       |                    |  | 1.1.06 to |          |  | 1.1.05 to |         
|                         |  | and fees |       |  | payments1   |  |       | Benefits2          |  |           | 12.31.06 |  |           | 12.31.05 |      
|                         |  |          |       |  |             |  |       |                    |  |           |          |  |           |          |      
|                         |  | £000     |       |  | £000        |  |       | £000               |  |           | £000     |  |           | £000     |      
|Executive Directors      |  |          |       |  |             |  |       |                    |  |           |          |  |           |          |       |  |  |  |       | 
|Andrew Cosslett          |  |          | 688   |  |             |  | 549   |                    |  |           | 31       |  |           |          | 1,268 |  |  |  | 663   | 
|Richard Hartman          |  |          | 503   |  |             |  | 203   |                    |  |           | 299      |  |           |          | 1,005 |  |  |  | 798   | 
|Stevan
    Porter3       |  |          | 427   |  |             |  | 290   |                    |  |           | 9        |  |           |          | 726   |  |  |  | 429   | 
|Richard Solomons         |  |          | 440   |  |             |  | 351   |                    |  |           | 15       |  |           |          | 806   |  |  |  | 423   | 
|Non-executive Directors  |  |          |       |  |             |  |       |                    |  |           |          |  |           |          |       |  |  |  |       | 
|David
    Webster4       |  |          | 350   |  |             |  |      |                    |  |           | 4        |  |           |          | 354   |  |  |  | 522   | 
|David
    Kappler5       |  |          | 80    |  |             |  |      |                    |  |           |         |  |           |          | 80    |  |  |  | 80    | 
|Ralph
    Kugler6        |  |          | 50    |  |             |  |      |                    |  |           |         |  |           |          | 50    |  |  |  | 50    | 
|Jennifer
    Laing6      |  |          | 50    |  |             |  |      |                    |  |           |         |  |           |          | 50    |  |  |  | 18    | 
|Robert C.
    Larson6    |  |          | 50    |  |             |  |      |                    |  |           |         |  |           |          | 50    |  |  |  | 50    | 
|Jonathan
    Linen6      |  |          | 50    |  |             |  |      |                    |  |           |         |  |           |          | 50    |  |  |  | 4     | 
|Sir David
    Prosser7   |  |          | 65    |  |             |  |      |                    |  |           |         |  |           |          | 65    |  |  |  | 65    | 
|Sir Howard
    Stringer8 |  |          | 43    |  |             |  |      |                    |  |           |         |  |           |          | 43    |  |  |  | 50    | 
|Former
    directors9    |  |          |      |  |             |  |      |                    |  |           | 1        |  |           |          | 1     |  |  |  | 917   | 
|                         |  |          |       |  |             |  |       |                    |  |           |          |  |           |          |      
|Total                    |  |          | 2,796 |  |             |  | 1,393 |                    |  |           | 359      |  |           |          | 4,548 |  |  |  | 4,069 | 
|                         |  |          |       |  |             |  |       |                    |  |           |          |  |           |          |      






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 | Performance payments include bonus awards in cash in
    respect of participation in the Short Term Incentive
    (STI) Plan and the Short Term Deferred Incentive
    Plan (STDIP) but exclude bonus awards in deferred
    shares and any matching shares, details of which are set out in
    the STDIP table on page F-36.                                                                                                                                       
| 
|2 | Benefits incorporate all tax assessable benefits
    arising from the individuals employment. For Messrs
    Cosslett, Hartman and Solomons, this relates in the main to the
    provision of a fully expensed company car and private healthcare
    cover. In addition, Mr. Hartman received housing, child
    education and other expatriate benefits. For Stevan Porter,
    benefits relate in the main to private healthcare cover and
    financial counselling.
| 
|3 | Emoluments for Stevan Porter include £51,413 that was
    chargeable to UK income tax.                                                                                                                                                                                                                                                                                                                                                                                     
| 
|4 | With effect from January 1, 2007, David Webster is paid an
    annual fee of £390,000.                                                                                                                                                                                                                                                                                                                                                                                     
| 
|5 | With effect from January 1, 2007, David Kappler is paid a
    total annual fee of £95,000, reflecting his roles as Senior
    Independent Director and Chairman of the Audit Committee.                                                                                                                                                                                                                                                                                    
| 
|6 | With effect from January 1, 2007, an annual fee of
    £60,000 is payable to each of Ralph Kugler, Jennifer Laing,
    Robert C. Larson and Jonathan Linen. All fees due to Ralph
    Kugler are paid to Unilever.                                                                                                                                                                                                                                                         
| 
|7 | With effect from January 1, 2007, Sir David Prosser is paid
    a total annual fee of £80,000, reflecting his role as
    Chairman of the Remuneration Committee.                                                                                                                                                                                                                                                                                                          
| 
|8 | Sir Howard Stringer resigned as a Director on November 10,
    2006.                                                                                                                                                                                                                                                                                                                                                                                                       
| 
|9 | Sir Ian Prosser retired as a Director on December 31, 2003.
    However, he had an ongoing healthcare benefit of £1,027
    during the year.                                                                                                                                                                                                                                                                                                                               

F-34



---



##### 





| |                 
| | ----------------
| | Long-term Reward

Short-Term Deferred Incentive
Plan (STDIP)






|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  |         |  |  |  |         |  |  |  |           | 
|---------------- |  | ----------- | ------ | -------------- | -------------- |  | ------- | ----- | ------ | --------- | -------- | ------------- | ---------- | ----------- | ------- | - | ------- | --------- | ------ | -------- |  |  | -------- | ----- |  | ----------- | ------- | ----------- | ------------ |  | ------- | ----------- |  |  | ------- |  |  |  | ------- |  |  |  | --------- | 
|                 |  |             |        | STDIP          |                |  |         |       |        |           | STDIP    |               |            |             |         |   |         |           |        |          |  |  |          | Value | 
|                 |  |             |        | shares awarded |                |  |         |       | Market |           |          | shares vested |            |             |         |   | Market  |           |        |          |  |  |          |       |  | based on    |        
|                 |  | STDIP       |        |                | during the     |  |         |       |        | price per |          |               | during the |             |         |   |         | price per |        |          |  |  | STDIP    |       |  |             |         | share price |             
|                 |  | shares held |        |                | year 1.1.06 to |  |         | Award |        |           | share at |               |            | year 1.1.06 |         |   | Vesting |           |        | share at |  |  | Value at |       |  | shares held |         |             | Planned      |  |         | of 1262.0p  | 
|                 |  | at 1.1.06   |        |                | 12.31.06       |  |         | date  |        |           | award    |               |            | to 12.31.06 |         |   | date    |           |        | vesting  |  |  | vesting  |       |  | at 12.31.06 |         |             | vesting date |  |         | at 12.31.06 | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         | £ |         |           |        |          |  |  | £        |      
|Directors        |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  |         |  |  |  |         |  |  |  |           | 
|Andrew Cosslett  |  |             | 39,916 | 1              |                |  |         |       |        |           | 4.1.05   |               |            |             | 617.5p  |   |         |           | 39,916 |          |  |  | 4.3.06   |       |  |             | 942p    |             |              |  | 376,009 |             |  |  |        |  |  |  |         |  |  |  |           | 
|                 |  |             | 39,916 | 1              |                |  |         |       |        |           | 4.1.05   |               |            |             | 617.5p  |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 39,916  |  |  |  | 4.1.07  |  |  |  | 503,740   | 
|                 |  |             |        |                |                |  | 105,276 | 3,7   |        |           | 3.8.06   |               |            |             | 853.67p |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 32,168  |  |  |  | 3.8.07  |  |  |  | 405,961   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 32,167  |  |  |  | 3.8.08  |  |  |  | 405,948   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 32,168  |  |  |  | 3.8.09  |  |  |  | 405,961   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             | 
|Total            |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 136,419 |  |  |  |         |  |  |  | 1,721,610 | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             | 
|Richard Hartman  |  |             | 29,447 | 2              |                |  |         |       |        |           | 3.16.05  |               |            |             | 654p    |   |         |           | 29,447 |          |  |  | 3.16.06  |       |  |             | 891.58p |             |              |  | 262,544 |             |  |  |        |  |  |  |         |  |  |  |           | 
|                 |  |             | 29,447 | 2              |                |  |         |       |        |           | 3.16.05  |               |            |             | 654p    |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 29,447  |  |  |  | 3.16.07 |  |  |  | 371,622   | 
|                 |  |             | 29,447 | 2              |                |  |         |       |        |           | 3.16.05  |               |            |             | 654p    |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 29,447  |  |  |  | 3.16.08 |  |  |  | 371,622   | 
|                 |  |             |        |                |                |  | 64,518  | 4,7   |        |           | 3.8.06   |               |            |             | 853.67p |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 19,714  |  |  |  | 3.8.07  |  |  |  | 248,791   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 19,714  |  |  |  | 3.8.08  |  |  |  | 248,791   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 19,713  |  |  |  | 3.8.09  |  |  |  | 248,779   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  |         |  |  |  |         |  |  |  |           | 
|Total            |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 118,035 |  |  |  |         |  |  |  | 1,489,605 | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             | 
|Stevan Porter    |  |             | 26,978 | 2              |                |  |         |       |        |           | 3.16.05  |               |            |             | 654p    |   |         |           | 26,978 |          |  |  | 3.16.06  |       |  |             | 891.58p |             |              |  | 240,530 | 8           |  |  |        |  |  |  |         |  |  |  |           | 
|                 |  |             | 26,978 | 2              |                |  |         |       |        |           | 3.16.05  |               |            |             | 654p    |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 26,978  |  |  |  | 3.16.07 |  |  |  | 340,463   | 
|                 |  |             | 26,978 | 2              |                |  |         |       |        |           | 3.16.05  |               |            |             | 654p    |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 26,978  |  |  |  | 3.16.08 |  |  |  | 340,463   | 
|                 |  |             |        |                |                |  | 67,557  | 5,7   |        |           | 3.8.06   |               |            |             | 853.67p |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 20,643  |  |  |  | 3.8.07  |  |  |  | 260,515   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 20,642  |  |  |  | 3.8.08  |  |  |  | 260,503   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 20,642  |  |  |  | 3.8.09  |  |  |  | 260,503   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             | 
|Total            |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 115,883 |  |  |  |         |  |  |  | 1,462,447 | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             | 
|Richard Solomons |  |             | 29,020 | 2              |                |  |         |       |        |           | 3.16.05  |               |            |             | 654p    |   |         |           | 29,020 |          |  |  | 3.16.06  |       |  |             | 891.58p |             |              |  | 258,737 |             |  |  |        |  |  |  |         |  |  |  |           | 
|                 |  |             | 29,020 | 2              |                |  |         |       |        |           | 3.16.05  |               |            |             | 654p    |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 29,020  |  |  |  | 3.16.07 |  |  |  | 366,233   | 
|                 |  |             | 29,021 | 2              |                |  |         |       |        |           | 3.16.05  |               |            |             | 654p    |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 29,021  |  |  |  | 3.16.08 |  |  |  | 366,246   | 
|                 |  |             |        |                |                |  | 67,296  | 6,7   |        |           | 3.8.06   |               |            |             | 853.67p |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 20,563  |  |  |  | 3.8.07  |  |  |  | 259,506   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 20,562  |  |  |  | 3.8.08  |  |  |  | 259,493   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 20,563  |  |  |  | 3.8.09  |  |  |  | 259,506   | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  |         |  |  |  |         |  |  |  |           | 
|Total            |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             |  |  | 119,729 |  |  |  |         |  |  |  | 1,510,984 | 
|                 |  |             |        |                |                |  |         |       |        |           |          |               |            |             |         |   |         |           |        |          |  |  |          |       |  |             |         |             |              |  |         |             | 






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 | This special award was made to Andrew Cosslett as part of his
    overall recruitment terms. The shares vest in equal portions on
    the first and second anniversary of the award date, subject to
    his continued employment until that time. The first half of the
    award vested on April 3, 2006 and the second half of the
    award is due to vest on April 2, 2007.                                                                              
| 
|2 | This award was based on financial year 2004 performance where
    the performance measures were related to earnings per share
    (EPS), earnings before interest and tax
    (EBIT) and personal performance. Total Shares held
    include matching shares.                                                                                                                                                                                             
| 
|3 | This award was based on financial year 2005 performance and the
    bonus target was 50% of base salary. Andrew Cosslett was awarded
    70% of his bonus target for EPS performance, 69.4% of his bonus
    target for Group EBIT performance and 45% of his bonus target
    for his personal performance. Andrew Cossletts total bonus
    was therefore 184.4% of his bonus target. One matching share was
    awarded for every two bonus shares earned.
| 
|4 | This award was based on financial year 2005 performance and the
    bonus target was 50% of base salary. Richard Hartman was awarded
    70% of his bonus target for EPS performance, 46.2% of his bonus
    target for EMEA EBIT performance and 30% of his bonus target for                                                                                                                                                                                 

F-35



---



##### 



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  | his personal performance. Richard
    Hartmans total bonus was therefore 146.2% of his bonus
    target. One matching share was awarded for every two bonus
    shares earned.                                                                                                                                                                                                                                                                                      
| 
|5 | This award was based on financial
    year 2005 performance and the bonus target was 50% of base
    salary. Stevan Porter was awarded 70% of his bonus target for
    EPS performance, 64.4% of his bonus target for The Americas EBIT
    performance and 45% of his bonus target for his personal
    performance. Stevan Porters total bonus was therefore
    179.4% of his bonus target. One matching share was awarded for
    every two bonus shares earned.
| 
|6 | This award was based on financial
    year 2005 performance and the bonus target was 50% of base
    salary. Richard Solomons was awarded 70% of his bonus target for
    EPS performance, 69.4% of his bonus target for Group EBIT
    performance and 45% of his bonus target for his personal
    performance. Richard Solomons total bonus was therefore
    184.4% of his bonus target. One matching share was awarded for
    every two bonus shares earned.  
| 
|7 | These share interests were in
    InterContinental Hotels Group PLC 10p ordinary shares prior
    to the share consolidation effective from June 12, 2006.
    For every eight existing InterContinental Hotels Group PLC
    shares held on June 9, 2006, shareholders received seven
    new ordinary shares of
    113/7p
    each and 118p per existing ordinary share. As a consequence,
    shares held at December 31, 2006 have been reduced
    accordingly.
| 
|8 | The value of Stevan Porters
    shares at vesting includes £17,037 that was chargeable to
    UK income tax.                                                                                                                                                                                                                                                                                                                                                        

F-36



---



##### 



Performance Restricted Share
Plan (PRSP)






|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             |  |  |         |  |  |  |            |  |  |  |           |  
|---------------- |  | ------- | ------- | ------- | --------- |  | ------- | ----- |  | --------- | -------- | ------ | -------- | --------- | ------ | --------- | -------- |  | ------- | -------- | ------- | ------- | ------- | ----------- | -------- | -------- | -------- | - | ---------- | ----------- | ------- | ----------- |  |  | ------- |  |  |  | ---------- |  |  |  | --------- | -
|                 |  |         |         | Maximum |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |        
|                 |  |         |         | PRSP    |           |  |         |       |  |           | PRSP     |        |          |           |        |           |          |  |         |          |         |         |         |            
|                 |  |         |         | shares  |           |  |         |       |  |           | shares   |        |          |           |        |           |          |  |         |          |         | Maximum |         |             | Expected |         
|                 |  | Maximum |         |         | awarded   |  |         |       |  |           |          | vested |          |           |        |           |          |  |         |          | Maximum |         |         | value based |          |          | value    |  
|                 |  | PRSP    |         |         | during    |  |         |       |  | Market    |          |        | during   |           |        | Market    |          |  |         |          | Actual/ |         |         | PRSP        |          |          | on share |   |            | based on    |        
|                 |  | shares  |         |         | the year  |  |         |       |  | price per |          |        | the year |           |        | price per |          |  |         |          | planned |         |         | shares      |          |          | price of |   |            | share price |        
|                 |  | held at |         |         | 1.1.06 to |  |         | Award |  |           | share at |        |          | 1.1.06 to |        |           | share at |  |         | Value at |         |         | vesting |             |          | held at  |          |   | 1262.0p at |             |         | of 1262.0p  | 
|                 |  | 1.1.06  |         |         | 12.31.06  |  |         | date  |  |           | award    |        |          | 12.31.06  |        |           | vesting  |  |         | vesting  |         |         | date    |             |          | 12.31.06 |          |   | 12.31.06   |             |         | at 12.31.06 | 
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          | £         |        |           |          |  |         |          | £       |         |         | £           |         
|Directors        |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             |  |  |         |  |  |  |            |  |  |  |           |  
|Andrew Cosslett  |  |         | 68,216  | 1       |           |  |         |       |  |           | 4.1.05   |        |          |           | 617.5p |           |          |  | 29,196  |          |         |         | 858p    |             |          |          | 250,502  |   |            |             | 3.3.06  |             |  |  |        |  |  |  |            |  |  |  |           |  
|                 |  |         | 136,432 | 2       |           |  |         |       |  |           | 4.1.05   |        |          |           | 617.5p |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.21.07 |             |  |  | 136,432 |  |  |  | 1,721,772  |  |  |  | 1,074,386 | 8
|                 |  |         | 276,200 | 3       |           |  |         |       |  |           | 6.29.05  |        |          |           | 706p   |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.20.08 |             |  |  | 276,200 |  |  |  | 3,485,644  |  |  |  |           |  
|                 |  |         |         |         |           |  | 200,740 | 4     |  |           | 4.3.06   |        |          |           | 941.5p |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.18.09 |             |  |  | 200,740 |  |  |  | 2,533,339  |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Total            |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             |  |  | 613,372 |  |  |  | 7,740,755  |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Richard Hartman  |  |         | 167,900 | 1       |           |  |         |       |  |           | 6.18.03  |        |          |           | 445p   |           |          |  | 71,861  |          |         |         | 858p    |             |          |          | 616,567  |   |            |             | 3.3.06  |             |  |  |        |  |  |  |            |  |  |  |           |  
|                 |  |         | 165,130 | 2       |           |  |         |       |  |           | 6.24.04  |        |          |           | 549.5p |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.21.07 |             |  |  | 165,130 |  |  |  | 2,083,941  |  |  |  | 1,300,380 | 8
|                 |  |         | 214,870 | 3       |           |  |         |       |  |           | 6.29.05  |        |          |           | 706p   |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.20.08 |             |  |  | 214,870 |  |  |  | 2,711,660  |  |  |  |           |  
|                 |  |         |         |         |           |  | 146,110 | 4     |  |           | 4.3.06   |        |          |           | 941.5p |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.18.09 |             |  |  | 146,110 |  |  |  | 1,843,909  |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Total            |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             |  |  | 526,110 |  |  |  | 6,639,510  |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Stevan Porter    |  |         | 170,710 | 1       |           |  |         |       |  |           | 6.18.03  |        |          |           | 445p   |           |          |  | 73,063  |          |         |         | 858p    |             |          |          | 626,881  | 7 |            |             | 3.3.06  |             |  |  |        |  |  |  |            |  |  |  |           |  
|                 |  |         | 142,290 | 2       |           |  |         |       |  |           | 6.24.04  |        |          |           | 549.5p |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.21.07 |             |  |  | 142,290 |  |  |  | 1,795,700  |  |  |  | 1,120,517 | 8
|                 |  |         | 174,900 | 3       |           |  |         |       |  |           | 6.29.05  |        |          |           | 706p   |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.20.08 |             |  |  | 174,900 |  |  |  | 2,207,238  |  |  |  |           |  
|                 |  |         |         |         |           |  | 132,240 | 4     |  |           | 4.3.06   |        |          |           | 941.5p |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.18.09 |             |  |  | 132,240 |  |  |  | 1,668,869  |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Total            |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             |  |  | 449,430 |  |  |  | 5,671,807  |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Richard Solomons |  |         | 165,160 | 1       |           |  |         |       |  |           | 6.18.03  |        |          |           | 445p   |           |          |  | 70,688  |          |         |         | 858p    |             |          |          | 606,503  |   |            |             | 3.3.06  |             |  |  |        |  |  |  |            |  |  |  |           |  
|                 |  |         | 144,990 | 2       |           |  |         |       |  |           | 6.24.04  |        |          |           | 549.5p |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.21.07 |             |  |  | 144,990 |  |  |  | 1,829,774  |  |  |  | 1,141,779 | 8
|                 |  |         | 176,550 | 3       |           |  |         |       |  |           | 6.29.05  |        |          |           | 706p   |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.20.08 |             |  |  | 176,550 |  |  |  | 2,228,061  |  |  |  |           |  
|                 |  |         |         |         |           |  | 128,470 | 4     |  |           | 4.3.06   |        |          |           | 941.5p |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.18.09 |             |  |  | 128,470 |  |  |  | 1,621,292  |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Total            |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             |  |  | 450,010 |  |  |  | 5,679,127  |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Former Directors |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             |  |  |         |  |  |  |            |  |  |  |           |  
|Richard North    |  |         | 259,545 | 1,5     |           |  |         |       |  |           | 6.18.03  |        |          |           | 445p   |           |          |  | 111,085 |          |         |         | 858p    |             |          |          | 953,109  |   |            |             | 3.3.06  |             |  |  |        |  |  |  |            |  |  |  |           |  
|                 |  |         | 144,993 | 2,5     |           |  |         |       |  |           | 6.24.04  |        |          |           | 549.5p |           |          |  |        |          |         |         |         |             |          |          |          |   |            |             | 2.21.07 |             |  |  | 144,993 |  |  |  | 1,829,812  |  |  |  | 1,141,803 | 8
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Total            |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             |  |  | 144,993 |  |  |  | 1,829,812  |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Sir Ian Prosser  |  |         | 65,410  | 1,6     |           |  |         |       |  |           | 6.18.03  |        |          |           | 445p   |           |          |  | 27,995  |          |         |         | 858p    |             |          |          | 240,197  |   |            |             | 3.3.06  |             |  |  |        |  |  |  |            |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Total            |  |         |        |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             |  |  |        |  |  |  |            |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 
|Total            |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             |  |  |         |  |  |  | 27,561,011 |  |  |  |           |  
|                 |  |         |         |         |           |  |         |       |  |           |          |        |          |           |        |           |          |  |         |          |         |         |         |             |          |          |          |   |            |             |         |             | 






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 | This award was based on performance to December 31, 2005
    where the performance measure related to both the Companys
    Total Shareholder Return (TSR) against a group of 11
    other comparator companies and growth in return on capital
    employed (ROCE). The number of shares released was
    graded, according to a) where the Company finished in the
    TSR comparator group, with 50% of the award being released for
    first or second position and 10% of the award being released for
    sixth place, and b) growth in ROCE, with 50%

F-37



---



##### 



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  | of the award being released for
    80% growth and 10% of the award being released for 30% growth.
    The Company finished in fifth place in the TSR group and
    achieved ROCE growth of 46%. Accordingly 42.8% of the award
    vested on March 3, 2006.                                                                                                                                                                                                                                                                                                                                                 
| 
|2 | This award is based on
    performance to December 31, 2006 where the performance
    measure relates to both the Companys TSR against a group
    of eight other comparator companies and growth in ROCE. The
    number of shares released is graded, according to a) where
    the Company finishes in the TSR comparator group, with 50% of
    the award being released for first or second position and 10% of
    the award being released for fifth place; and b) growth in
    ROCE, with 50% of the award being released for 141.6% growth and
    10% of the award being released for 70% growth.
| 
|3 | This award is based on
    performance to December 31, 2007 where the performance
    measure relates to both the Companys TSR against a group
    of eight other comparator companies and the relative
    cumulative annual growth rate of rooms in the IHG system.                                                                                                                                                                                                                                                                                                                                       
| 
|4 | This award is based on
    performance to December 31, 2008 where the performance
    measure relates to both the Companys TSR against a group
    of nine other comparator companies and the relative
    cumulative annual growth of rooms in the IHG system.                                                                                                                                                                                                                                                                                                                                             
| 
|5 | Richard Norths awards were
    pro-rated to reflect his contractual service during the
    applicable performance periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| 
|6 | Sir Ian Prossers award was
    pro-rated to reflect his actual service during the applicable
    performance period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| 
|7 | The value of Stevan Porters
    shares at vesting includes £44,404 that was chargeable to
    UK income tax.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| 
|8 | The Company finished in third
    place in the TSR group and achieved ROCE growth of 98.2%.
    Accordingly, 62.4% of the award vested on February 21, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-38



---



##### 



Share options




|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        |  |  |        |  |  |  |        | 
|---------------- |  | ---------------------------- | ------- | - | ---------- |  | - | ---------- |  |  | ---------- | ------- |  | -------- | ------- | - | ------- |  | ------- | ------ |  |  | ------ |  |  |  | ------ | 
|                 |  | Ordinary shares under option |         |   |            |  |  
|                 |  |                              |         |   | Weighted   |  |   |           
|                 |  | Options held at              |         |   | Granted    |  |   | Lapsed     |  |  | Exercised  |         |  | Options  |         |   | average |  |         |       
|                 |  | 1.1.06 or date               |         |   | during the |  |   | during the |  |  | during the |         |  | held at  |         |   | option  |  |         | Option | 
|Directors        |  | of appointment               |         |   | year       |  |   | year       |  |  | year       |         |  | 12.31.06 |         |   | price   |  |         | price  | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            | (pence) |  |          | (pence) |  
|Andrew Cosslett  |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        |  |  |        |  |  |  |        | 
|                 |  |                              | 157,300 |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        |  |  | 619.83 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  | 157,300 | 1      |  |  |        |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        | 
|Total            |  |                              | 157,300 |   |            |  |  |            |  |  |           |         |  |          |        |   |         |  | 157,300 |        |  |  | 619.83 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        | 
|                
|Richard Hartman  |  |                              | 952,832 |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        |  |  | 458.66 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          | 136,795 |   |         |  |         |        |  |  |        |  |  |  | 349.13 | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          | 105,332 |   |         |  |         |        |  |  |        |  |  |  | 422.81 | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          | 122,261 |   |         |  |         |        |  |  |        |  |  |  | 434.22 | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          | 250,684 |   |         |  |         |        |  |  |        |  |  |  | 438.00 | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  | 337,760 | 1      |  |  | 538.37 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        | 
|Total            |  |                              | 952,832 |   |            |  |  |            |  |  |           |         |  |          | 615,072 |   |         |  | 337,760 |        |  |  | 538.37 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        | 
|                
|Stevan Porter    |  |                              | 576,513 |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        |  |  | 490.34 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          | 254,883 | 3 |         |  |         |        |  |  |        |  |  |  | 438.00 | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  | 321,630 | 1      |  |  | 531.82 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        | 
|Total            |  |                              | 576,513 |   |            |  |  |            |  |  |           |         |  |          | 254,883 |   |         |  | 321,630 |        |  |  | 531.82 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        | 
|                
|Richard Solomons |  |                              | 574,365 | 2 |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        |  |  | 494.24 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          | 239,726 |   |         |  |         |        |  |  |        |  |  |  | 438.00 | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  | 334,639 | 1,2    |  |  | 531.10 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        | 
|Total            |  |                              | 574,365 |   |            |  |  |            |  |  |           |         |  |          | 239,726 |   |         |  | 334,639 |        |  |  | 531.10 |  |  |  |        | 
|                 |  |                              |         |   |            |  |   |            |  |  |            |         |  |          |         |   |         |  |         |        | 






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 | Where options are not yet exercisable. Sharesave options granted
    in 2003 are exercisable for six months from March 2009.
    Executive share options granted in 2004 are exercisable between
    April 2007 and April 2014. Executive share options granted in
    2005 are exercisable between April 2008 and April 2015. The
    performance condition relating to both the 2004 and 2005 grants
    of executive share options is set out on page F-33.
| 
|2 | Includes 3,769 Sharesave options granted in 2003.                                                                                                                                                                                                                                                                                                                                                                                                             
| 
|3 | The value of Stevan Porters shares on exercise includes
    £91,778 that was chargeable to UK income tax.                                                                                                                                                                                                                                                                                                                                                    





F-39



---



##### 



Directors
shareholdings


|                        |  |                                   |         |   |                                   |  |        |  
|----------------------- |  | --------------------------------- | ------- | - | --------------------------------- |  | ------ | -
|                        |  | December 31, 2006                 |         |   | January 1, 20061                  | 
|                        |  | InterContinental Hotels Group PLC |         |   | InterContinental Hotels Group PLC | 
|                        |  | ordinary shares of 113/7 pence3   |         |   | ordinary shares of 10 pence       | 
|                        |  |                                   |         |   |                                   | 
|Executive Directors     |  |                                   |         |   |                                   |  |        |  
|Andrew Cosslett         |  |                                   | 42,063  |   |                                   |  | 7,332  |  
|Richard Hartman         |  |                                   |        |   |                                   |  | 70,117 |  
|Stevan Porter           |  |                                   | 114,446 |   |                                   |  | 64,589 |  
|Richard Solomons        |  |                                   | 104,247 |   |                                   |  | 60,339 |  
|Non-executive Directors |  |                                   |         |   |                                   |  |        |  
|David Kappler           |  |                                   | 1,669   |   |                                   |  | 1,908  |  
|Ralph Kugler            |  |                                   | 572     |   |                                   |  | 654    |  
|Jennifer Laing          |  |                                   | 872     |   |                                   |  |       |  
|Robert C Larson         |  |                                   | 6,874   | 2 |                                   |  | 7,857  | 2
|Jonathan Linen          |  |                                   | 8,750   | 2 |                                   |  |       |  
|Sir David Prosser       |  |                                   | 2,863   |   |                                   |  | 3,273  |  
|David Webster           |  |                                   | 31,975  |   |                                   |  | 31,823 |  






|  |                                                                                                                                                                                                                                                                                                                                                                                       
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 | These share interests were in InterContinental Hotels Group PLC
    10 pence ordinary shares prior to the share consolidation
    effective from June 12, 2006. For every eight existing
    InterContinental Hotels Group PLC shares held on June 9,
    2006, shareholders received seven new ordinary shares of
    113/7
    pence each and 118 pence per existing ordinary share.
| 
|2 | Held in the form of American Depositary Receipts.                                                                                                                                                                                                                                                                                                                                     
| 
|3 | These shareholdings are all beneficial interests and include
    shares held by Directors spouses and other connected
    persons. None of the Directors has a beneficial interest in the
    shares of any subsidiary.                                                                                                                                                              





Directors
pensions


Top-Up






F-40



---



##### 









| |                            
| | ---------------------------
| | Directors pension benefits

|                 |  |          |    |            |               |                |                     |                |          |              |            |   |          |               |           |          |            |  |          |            |  |  |          |  |  |  |        |  |  |  |         | 
|---------------- |  | -------- | -- | ---------- | ------------- | -------------- | ------------------- | -------------- | -------- | ------------ | ---------- | - | -------- | ------------- | --------- | -------- | ---------- |  | -------- | ---------- |  |  | -------- |  |  |  | ------ |  |  |  | ------- | 
|                 |  |          |    |            |               |                |                     |                |          | Increases in |            |   |          |               |           |          |           
|                 |  |          |    |            |               |                |                     | transfer value |          |              |            |   |          |               |          
|                 |  |          |    |            |               | Transfer value |                     |                | over the |              |            |   |          |               |           |         
|                 |  |          |    | Directors |               |                | of accrued benefits |                |          | year, less   |            |   | Increase |               |           | Increase |            |  | Accrued  |           
|                 |  | Age at   |    |            | contributions |                |                     |                |          |              | Directors |   |          | in accrued    |           |          | in accrued |  |          | pension at | 
|                 |  | 12.31.06 |    |            | in the year   |                |                     | 1.1.06         |          |              | 12.31.06   |   |          | contributions |           |          | pension    |  |          | pension    |  |  | 12.31.06 | 
|                 |  |          |    |            |               |                |                     |                |          |              |            |   |          |               |           |          |            |  |          |            |  |  |          | 
|                 |  |          |    |            |               | £              |                     |                | £        |              |            | £ |          |               |           |          |            |  |         
|                 |  |          |    | (note 1)   |               |                |                     |                |          |              |            |   | (note 2) |               |           | (note 3) |            |  | (note 4) |           
|                 |  |          |    | £          |               |                |                     |                |          |              |            |   | £ pa     |               |           | £ pa     |            |  | £ pa     |           
|Directors        |  |          |    |            |               |                |                     |                |          |              |            |   |          |               |           |          |            |  |          |            |  |  |          |  |  |  |        |  |  |  |         | 
|Andrew Cosslett  |  |          | 51 |            |               |                | 28,300              |                |          |              | 266,900    |   |          |               | 595,300   |          |            |  | 300,100  |            |  |  | 24,200   |  |  |  | 23,600 |  |  |  | 43,800  | 
|Richard Hartman  |  |          | 60 |            |               |                | 1,300               |                |          |              | 1,848,200  |   |          |               | 1,935,400 |          |            |  | 85,900   |            |  |  | 8,100    |  |  |  | 5,600  |  |  |  | 94,700  | 
|Richard Solomons |  |          | 45 |            |               |                | 19,500              |                |          |              | 1,227,100  |   |          |               | 1,470,200 |          |            |  | 223,900  |            |  |  | 24,500   |  |  |  | 21,000 |  |  |  | 143,800 | 






|        |                                                                                                                                                                                                                                                
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|note 1: | Contributions paid in the year by the Directors under the terms
    of the plans. Contributions increased in April 2006 under the
    new pensions regime, to 5% of full pensionable salary.                                                   
|       
|note 2: | The absolute increase in accrued pension during the year.                                                                                                                                                                                      
|       
|note 3: | The increase in accrued pension during the year excluding any
    increase for inflation, on the basis that increases to accrued
    pensions are applied at October 1.                                                                        
|       
|note 4: | Accrued pension is that which would be paid annually on
    retirement at 60, based on service to December 31, 2006,
    except that for Richard Hartman the figure shown is the pension
    at age 60, increase to allow for its late payment.



|                           |  |     |                           |  |        |  |       |  |  |               |  |  |        |  |  |  |       | 
|-------------------------- |  | --- | ------------------------- |  | ------ |  | ----- |  |  | ------------- |  |  | ------ |  |  |  | ----- | 
|Directors contribution to |  |     | Companys contribution to | 
|                           |  | DCP |                           |  | 401(k) |  |       |  |  | DCP           |  |  | 401(k) | 
|                           |  |     |                           |  |        |  |       |  |  |               |  |  |        | 
|                           |  |     |                           | 
|                           |  | £   |                           |  | £      |  |       |  |  | £             |  |  | £      | 
|Stevan Porter              |  |     | 43,300                    |  |        |  | 6,000 |  |  | Stevan Porter |  |  | 80,900 |  |  |  | 4,900 | 
|                           |  |    





|         |                                                 
|-------- | ------------------------------------------------
|Note 4  | Auditors Remuneration paid to Ernst & Young LLP

|                                                      |  |              |     |  |              |  |     | 
|----------------------------------------------------- |  | ------------ | --- |  | ------------ |  | --- | 
|                                                      |  | Year ended   |     |  | Year ended   | 
|                                                      |  | December 31, |     |  | December 31, | 
|                                                      |  | 2006         |     |  | 2005         | 
|                                                      |  |              |     |  |              | 
|                                                      |  | (£ million)  |    
|Audit fees                                            |  |              | 0.9 |  |              |  | 1.0 | 
|Audit fees in respect of subsidiaries                 |  |              | 1.4 |  |              |  | 2.1 | 
|Tax fees                                              |  |              | 0.7 |  |              |  | 0.6 | 
|Fees in respect of reporting under Sarbanes Oxley Act |  |              | 1.0 |  |              |  |    | 
|Interim review fees                                   |  |              | 0.2 |  |              |  | 0.2 | 
|Other services pursuant to legislation                |  |              | 0.1 |  |              |  | 0.8 | 
|Corporate finance fees                                |  |              | 0.1 |  |              |  | 1.8 | 
|Other                                                 |  |              | 0.8 |  |              |  | 0.7 | 
|                                                      |  |              |     |  |              | 
|                                                      |  |              | 5.2 |  |              |  | 7.2 | 
|                                                      |  |              |     |  |              | 

F-41



---



##### 









|         |              
|-------- | -------------
|Note 5  | Special Items

|                                                                 |  |              |     |   |              |  |     |              |  |  |     |  
|---------------------------------------------------------------- |  | ------------ | --- | - | ------------ |  | --- | ------------ |  |  | --- | -
|                                                                 |  | Year ended   |     |   | Year ended   |  |     | Year ended   | 
|                                                                 |  | December 31, |     |   | December 31, |  |     | December 31, | 
|                                                                 |  | 2006         |     |   | 2005         |  |     | 2004         | 
|                                                                 |  |              |     |   |              |  |     |              | 
|                                                                 |  | (£ million)  |    
|Other operating income and expenses                              |  |              |     |   |              |  |     |              |  |  |     |  
|Gain on sale of
    investment(i)                                |  |              | 25  |   |              |  |    |              |  |  |    |  
|Reversal of previously recorded
    impairment(ii)               |  |              | 2   |   |              |  |    |              |  |  |    |  
|Impairment of property, plant and
    equipment(iii)             |  |              |    |   |              |  | (7  | )            |  |  | (48 | )
|Restructuring
    costs(iv)                                      |  |              |    |   |              |  | (13 | )            |  |  | (11 | )
|Property
    damage(v)                                           |  |              |    |   |              |  | (9  | )            |  |  |    |  
|Employee benefits curtailment
    gain(vi)                       |  |              |    |   |              |  | 7   |              |  |  |    |  
|Reversal of previously recorded
    provisions(vii)              |  |              |    |   |              |  |    |              |  |  | 20  |  
|Provision for investment in
    associates(viii)                 |  |              |    |   |              |  |    |              |  |  | (16 | )
|Provision for investment in other financial assets               |  |              |    |   |              |  |    |              |  |  | (2  | )
|Write back of provision for investment in other financial assets |  |              |    |   |              |  |    |              |  |  | 8   |  
|                                                                 |  |              |     |   |              |  |     |              | 
|                                                                 |  |              | 27  |   |              |  | (22 | )            |  |  | (49 | )
|                                                                 |  |              |     |   |              |  |     |              | 
|Financing                                                        |  |              |     |   |              |  |     |              |  |  |     |  
|Financial
    income(ix)                                         |  |              |    |   |              |  |    |              |  |  | 22  |  
|Financial
    expenses(x)                                        |  |              |    |   |              |  |    |              |  |  | (16 | )
|Financial expense on early settlement of
    debt(xi)            |  |              |    |   |              |  |    |              |  |  | (17 | )
|                                                                 |  |              |     |   |              |  |     |              | 
|                                                                 |  |              |    |   |              |  |    |              |  |  | (11 | )
|                                                                 |  |              |     |   |              |  |     |              | 
|Tax                                                              |  |              |     |   |              |  |     |              |  |  |     |  
|Tax (charge)/credit on other operating income and expenses       |  |              | (6  | ) |              |  |    |              |  |  | 22  |  
|Special tax
    credit(xii)                                      |  |              | 100 |   |              |  | 8   |              |  |  | 161 |  
|                                                                 |  |              |     |   |              |  |     |              | 
|                                                                 |  |              | 94  |   |              |  | 8   |              |  |  | 183 |  
|                                                                 |  |              |     |   |              |  |     |              | 
|Gain on disposal of assets                                       |  |              |     |   |              |  |     |              |  |  |     |  
|Gain on disposal of assets                                       |  |              | 123 |   |              |  | 349 |              |  |  | 15  |  
|Tax (charge)/credit                                              |  |              | (6  | ) |              |  | (38 | )            |  |  | 4   |  
|                                                                 |  |              |     |   |              |  |     |              | 
|                                                                 |  |              | 117 |   |              |  | 311 |              |  |  | 19  |  
|                                                                 |  |              |     |   |              |  |     |              | 








|     |  |                                                                               
|---- |  | ------------------------------------------------------------------------------
|(i)  |  | Gain on the sale of the Companys investment in FelCor
    Lodging Trust, Inc.
|    
|(ii) |  | Relates to the reversal of impairment in value of an associate
    investment.

F-42



---



##### 





|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(iii)  |  | Property, plant and equipment were written down by
    £7 million in 2005 (2004 £48 million)
    following an impairment review of the hotel estate.                                                                                                                                                                                                                                                            
|      
|(iv)   |  | Restructuring costs relate to the delivery of the further
    restructuring of the Hotels business.                                                                                                                                                                                                                                                                                                             
|      
|(v)    |  | Damage to properties resulting from fire and natural disasters.                                                                                                                                                                                                                                                                                                                                                 
|      
|(vi)   |  | A curtailment gain arising as a result of the sale of UK hotel
    properties.                                                                                                                                                                                                                                                                                                                                  
|      
|(vii)  |  | Following adoption of IAS 39 at January 1, 2005,
    adjustments to market value are recorded directly in equity. In
    2004, under UK GAAP, the adjustment is a reversal of
    previously recorded provisions.                                                                                                                                                                                               
|      
|(viii) |  | Relates to an impairment in value of associate investments.                                                                                                                                                                                                                                                                                                                                                     
|      
|(ix)   |  | Relates to interest on special tax refunds.                                                                                                                                                                                                                                                                                                                                                                     
|      
|(x)    |  | Relates to costs of closing out currency swaps and costs related
    to refinancing the Companys debt.                                                                                                                                                                                                                                                                                                         
|      
|(xi)   |  | Relates to premiums paid on the repurchase of the Companys
    public debt.                                                                                                                                                                                                                                                                                                                                    
|      
|(xii)  |  | Represents the release of provisions which are special by reason
    of their size or incidence relating to tax matters which have
    been settled or in respect of which the relevant statutory
    limitation period has expired, principally relating to
    intra-group financing and internal restructuring, together with,
    in 2004 and 2006, credit in respect of previously unrecognized
    losses.

Note 6  Finance costs


|                                                                           |  |              |    |  |              |  |    |              |  |  |     | 
|-------------------------------------------------------------------------- |  | ------------ | -- |  | ------------ |  | -- | ------------ |  |  | --- | 
|                                                                           |  | Year ended   |    |  | Year ended   |  |    | Year ended   | 
|                                                                           |  | December 31, |    |  | December 31, |  |    | December 31, | 
|                                                                           |  | 2006         |    |  | 2005         |  |    | 2004         | 
|                                                                           |  |              |    |  |              |  |    |              | 
|                                                                           |  | (£ million)  |   
|Financial income                                                           |  |              |    |  |              |  |    |              |  |  |     | 
|Interest on tax refunds                                                    |  |              |   |  |              |  |   |              |  |  | 22  | 
|Interest income                                                            |  |              | 21 |  |              |  | 28 |              |  |  | 48  | 
|Fair value gains                                                           |  |              | 5  |  |              |  | 2  |              |  |  |    | 
|                                                                           |  |              |    |  |              |  |    |              | 
|                                                                           |  |              | 26 |  |              |  | 30 |              |  |  | 70  | 
|                                                                           |  |              |    |  |              |  |    |              | 
|Financial expenses                                                         |  |              |    |  |              |  |    |              |  |  |     | 
|Financial expense on early settlement of debt                              |  |              |   |  |              |  |   |              |  |  | 17  | 
|Costs of closing out currency swaps and refinancing the
    Companys debt |  |              |   |  |              |  |   |              |  |  | 16  | 
|Interest expense  Hotels                                                  |  |              | 33 |  |              |  | 51 |              |  |  | 70  | 
|Interest expense  Soft Drinks                                             |  |              |   |  |              |  | 9  |              |  |  |    | 
|Finance charge payable under finance leases                                |  |              | 4  |  |              |  |   |              |  |  |    | 
|                                                                           |  |              |    |  |              |  |    |              | 
|                                                                           |  |              | 37 |  |              |  | 60 |              |  |  | 103 | 
|Fair value charge                                                          |  |              |   |  |              |  | 3  |              |  |  |    | 
|                                                                           |  |              |    |  |              |  |    |              | 
|                                                                           |  |              | 37 |  |              |  | 63 |              |  |  | 103 | 
|                                                                           |  |              |    |  |              |  |    |              | 



F-43



---



##### 



Note 7  Tax




| |           
| | ----------
| | Income tax

|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |    |   |      |      |      |     |  
|------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------------------ | -------------------------------------------------- | --- | ------------ | - | --- | ------------ | -- | - | ---- | ---- | ---- | --- | -
|                                                                          |                                                                           | Year ended                           |                                                    |     | Year ended   |   |     | Year ended   |   
|                                                                          |                                                                           | December 31,                         |                                                    |     | December 31, |   |     | December 31, |   
|                                                                          |                                                                           | 2006                                 |                                                    |     | 2005         |   |     | 2004         |   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|                                                                          |                                                                           | (£ million)                          |                                                   
|UK corporation tax at 30% (2005 30%: 2004 30%):                           |                                                                           |                                      |                                                    |     |              |   |     |              |    |   |      |     
|                                                                          | Current period                                                            |                                      |                                                    | 16  |              |   |     | 11           |    |   |      | 23   |     
|                                                                          | Benefit of tax reliefs on which no deferred tax previously
    recognized |                                      |                                                    | (10 | )            |   |     |             |    |   |      |     |     
|                                                                          | Adjustments in respect of prior periods                                   |                                      |                                                    | (4  | )            |   |     | (6           | )  |   |      | (48  | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|                                                                          |                                                                           |                                      | 2                                                  |     |              |   | 5   |              |    |   | (25  | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|Foreign tax:                                                              |                                                                           |                                      |                                                    |     |              |   |     |              |    |   |      |     
|                                                                          | Current period                                                            |                                      |                                                    | 72  |              |   |     | 149          |    |   |      | 62   |     
|                                                                          | Benefit of tax reliefs on which no deferred tax previously
    recognized |                                      |                                                    | (1  | )            |   |     | (2           | )  |   |      | (9   | )   
|                                                                          | Adjustments in respect of prior periods                                   |                                      |                                                    | (94 | )            |   |     | (19          | )  |   |      | (82  | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|                                                                          |                                                                           |                                      | (23                                                | )   |              |   | 128 |              |    |   | (29  | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|Total current tax                                                         |                                                                           |                                      | (21                                                | )   |              |   | 133 |              |    |   | (54  | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|Deferred tax:                                                             |                                                                           |                                      |                                                    |     |              |   |     |              |    |   |      |     
|                                                                          | Origination and reversal of temporary differences                         |                                      |                                                    | 27  |              |   |     | (3           | )  |   |      | 18   |     
|                                                                          | Changes in tax rates                                                      |                                      |                                                    | (4  | )            |   |     | (2           | )  |   |      | (11  | )   
|                                                                          | Adjustments to estimated recoverable deferred tax assets                  |                                      |                                                    | (13 | )            |   |     | 1            |    |   |      | 12   |     
|                                                                          | Adjustments in respect of prior periods                                   |                                      |                                                    | (24 | )            |   |     | (11          | )  |   |      | (96  | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|Total deferred tax                                                        |                                                                           |                                      | (14                                                | )   |              |   | (15 | )            |    |   | (77  | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|Total income tax on profit for the year                                   |                                                                           |                                      | (35                                                | )   |              |   | 118 |              |    |   | (131 | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|Further analyzed as tax relating to:                                      |                                                                           |                                      |                                                    |     |              |   |     |              |    |   |      |     
|                                                                          | Profit before special items                                               |                                      |                                                    | 53  |              |   |     | 88           |    |   |      | 56   |     
|                                                                          | Special items (Note 5):                                                   |                                      |                                                    |     |              |   |     |              |    |   |      |      |     
|                                                                          |                                                                           | Other operating income and expenses: |                                                    |     |              |   |     |              |    |   |      |      |      |    
|                                                                          |                                                                           |                                      | Gain on sale of investment                         |     |              | 6 |     |              |    |  |      |      |      |    |  
|                                                                          |                                                                           |                                      | Impairment of property, plant and equipment        |     |              |  |     |              |    |  |      |      |      | (14 | )
|                                                                          |                                                                           |                                      | Restructuring costs                                |     |              |  |     |              |    |  |      |      |      | (8  | )
|                                                                          |                                                                           |                                      | Provision for investment in other financial assets |     |              |  |     |              |    |  |      |      |      | 3   |  
|                                                                          |                                                                           | Financing:                           |                                                    |     |              |   |     |              |    |   |      |      |      |    
|                                                                          |                                                                           |                                      | Financial expense on early settlement of debt      |     |              |  |     |              |    |  |      |      |      | (5  | )
|                                                                          |                                                                           |                                      | Other                                              |     |              |  |     |              |    |  |      |      |      | 2   |  
|                                                                          |                                                                           | Special tax
    credit(i)            |                                                    |     | (100         | ) |     |              | (8 | ) |      |      | (161 | )  
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|Tax (credit)/charge                                                       |                                                                           |                                      | (41                                                | )   |              |   | 80  |              |    |   | (127 | )   
|Gain on disposal of assets                                                |                                                                           |                                      | 6                                                  |     |              |   | 38  |              |    |   | (4   | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|                                                                          |                                                                           |                                      | (35                                                | )   |              |   | 118 |              |    |   | (131 | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|The total tax (credit)/charge can be further analyzed as
    relating to: |                                                                           |                                      |                                                    |     |              |   |     |              |    |   |      |     
|                                                                          | Profit on continuing operations                                           |                                      |                                                    | (50 | )            |   |     | 24           |    |   |      | (196 | )   
|                                                                          | Profit on discontinued operations                                         |                                      |                                                    | 9   |              |   |     | 56           |    |   |      | 69   |     
|                                                                          | Gain on disposal of assets                                                |                                      |                                                    | 6   |              |   |     | 38           |    |   |      | (4   | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   
|                                                                          |                                                                           |                                      | (35                                                | )   |              |   | 118 |              |    |   | (131 | )   
|                                                                          |                                                                           |                                      |                                                    |     |              |   |     |              |   






|    |                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | Represents the release of provisions which are special by reason
    of their size or incidence relating to tax matters which have
    been settled or in respect of which the relevant statutory
    limitation period has expired, principally relating to
    intra-group financing and internal restructuring, together with,
    in 2004 and 2006, a credit in respect of previously unrecognized
    losses.

F-44



---



##### 





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



| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Reconciliation of tax (credit)/charge on total profit, including
    gain on disposal of assets

|                                                                          |  |              |       |   |              |  |       |              |  |  |       |  
|------------------------------------------------------------------------- |  | ------------ | ----- | - | ------------ |  | ----- | ------------ |  |  | ----- | -
|                                                                          |  | Year ended   |       |   | Year ended   |  |       | Year ended   | 
|                                                                          |  | December 31, |       |   | December 31, |  |       | December 31, | 
|                                                                          |  | 2006         |       |   | 2005         |  |       | 2004         | 
|                                                                          |  |              |       |   |              |  |       |              | 
|                                                                          |  |              |       | % |              |  |      
|UK corporation tax at standard rate                                       |  |              | 30.0  |   |              |  | 30.0  |              |  |  | 30.0  |  
|Permanent differences                                                     |  |              | 3.7   |   |              |  | 1.3   |              |  |  | 1.5   |  
|Net effect of different rates of tax in overseas businesses               |  |              | 3.5   |   |              |  | 2.9   |              |  |  | 6.3   |  
|Effect of changes in tax rates                                            |  |              | (1.0  | ) |              |  | (0.3  | )            |  |  | (3.9  | )
|Benefit of tax reliefs on which no deferred tax previously
    recognized |  |              | (3.0  | ) |              |  | (0.1  | )            |  |  | (1.1  | )
|Effect of adjustments to estimated recoverable deferred tax
    assets    |  |              | (0.2  | ) |              |  | 0.1   |              |  |  | 4.3   |  
|Adjustment to tax charge in respect of prior periods                      |  |              | (6.9  | ) |              |  | (4.5  | )            |  |  | (22.6 | )
|Other                                                                     |  |              | 0.4   |   |              |  | (0.1  | )            |  |  | 0.6   |  
|Special items and gain on disposal of assets                              |  |              | (36.1 | ) |              |  | (10.7 | )            |  |  | (61.9 | )
|                                                                          |  |              |       |   |              |  |       |              | 
|                                                                          |  |              | (9.6  | ) |              |  | 18.6  |              |  |  | (46.8 | )
|                                                                          |  |              |       |   |              |  |       |              | 

Note 8  Dividends paid and proposed


|                      |                                   |                   |        |        |              |  |       |              |  |  |              |       |  |              |     |     |              |  |    |    |  |  |     |     | 
|--------------------- | --------------------------------- | ----------------- | ------ | ------ | ------------ |  | ----- | ------------ |  |  | ------------ | ----- |  | ------------ | --- | --- | ------------ |  | -- | -- |  |  | --- | --- | 
|                      |                                   | Year ended        |        |        | Year ended   |  |       | Year ended   |  |  | Year ended   |       |  | Year ended   |     |     | Year ended   | 
|                      |                                   | December 31,      |        |        | December 31, |  |       | December 31, |  |  | December 31, |       |  | December 31, |     |     | December 31, | 
|                      |                                   | 2006              |        |        | 2005         |  |       | 2004         |  |  | 2006         |       |  | 2005         |     |     | 2004         | 
|                      |                                   |                   |        |        |              |  |       |              |  |  |              |       |  |              |     |     |              | 
|                      |                                   | (pence per share) |        |        | (£ million)  | 
|Paid during the year: |                                   |                   |        |        |              |  |       |              |  |  |              |       |  |              |     |     |              |  |    |    |  |  |     |    
|                      | Final (declared in previous year) |                   |        | 10.70  |              |  |       | 10.00        |  |  |              | 9.45  |  |              |     | 46  |              |  |    | 61 |  |  |     | 70  | 
|                      | Interim                           |                   |        | 5.10   |              |  |       | 4.60         |  |  |              | 4.30  |  |              |     | 18  |              |  |    | 20 |  |  |     | 29  | 
|                      | Special interim                   |                   |        | 118.00 |              |  |       |             |  |  |              | 72.00 |  |              |     | 497 |              |  |    |   |  |  |     | 501 | 
|                      |                                   |                   |        |        |              |  |       |              |  |  |              |       |  |              |     |     |              |  |    |    |  |  |     |    
|                      |                                   |                   | 133.80 |        |              |  | 14.60 |              |  |  | 85.75        |       |  |              | 561 |     |              |  | 81 |    |  |  | 600 |    
|                      |                                   |                   |        |        |              |  |       |              |  |  |              |       |  |              |     |     |              |  |    |    |  |  |     |    



|      |  |  |       |  |  |  |       |  |  |  |       |  |  |  |    |  |  |  |    |  |  |  |    | 
|----- |  |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | -- |  |  |  | -- |  |  |  | -- | 
|Final |  |  | 13.30 |  |  |  | 10.70 |  |  |  | 10.00 |  |  |  | 47 |  |  |  | 46 |  |  |  | 62 | 
|      |  |  |       |  |  |  |       |  |  |  |       |  |  |  |    |  |  |  |    |  |  |  |    | 



Note 9  Earnings per ordinary share








F-45



---



##### 





|                                                                              |  |              |      |  |              |  |            |              |  |  |       |            |  |            |      |  |       |  |      |  |  |  |      | 
|----------------------------------------------------------------------------- |  | ------------ | ---- |  | ------------ |  | ---------- | ------------ |  |  | ----- | ---------- |  | ---------- | ---- |  | ----- |  | ---- |  |  |  | ---- | 
|                                                                              |  | Year ended   |      |  | Year ended   |  |            | Year ended   | 
|                                                                              |  | December 31, |      |  | December 31, |  |            | December 31, | 
|                                                                              |  | 2006         |      |  | 2005         |  |            | 2004         | 
|                                                                              |  |              |      |  |              |  |            |              | 
|                                                                              |  | Continuing   |      |  |              |  | Continuing |              |  |  |       | Continuing |  |            |     
|                                                                              |  | operations   |      |  | Total        |  |            | operations   |  |  | Total |            |  | operations |      |  | Total | 
|                                                                              |  |              |      |  |              |  |            |              |  |  |       |            |  |            |      |  |       | 
|Basic earnings per share                                                      |  |              |      |  |              |  |            |              |  |  |       |            |  |            |      |  |       |  |      |  |  |  |      | 
|Profit available for equity holders (£ million)                               |  |              | 267  |  |              |  | 405        |              |  |  | 103   |            |  |            | 496  |  |       |  | 234  |  |  |  | 383  | 
|Basic weighted average number of ordinary shares (millions)                   |  |              | 389  |  |              |  | 389        |              |  |  | 521   |            |  |            | 521  |  |       |  | 710  |  |  |  | 710  | 
|Basic earnings per share (pence)                                              |  |              | 68.6 |  |              |  | 104.1      |              |  |  | 19.8  |            |  |            | 95.2 |  |       |  | 32.9 |  |  |  | 53.9 | 
|                                                                              |  |              |      |  |              |  |            |              |  |  |       |            |  |            |      |  |       | 
|Diluted earnings per share                                                    |  |              |      |  |              |  |            |              |  |  |       |            |  |            |      |  |       |  |      |  |  |  |      | 
|Profit available for equity holders (£ million)                               |  |              | 267  |  |              |  | 405        |              |  |  | 103   |            |  |            | 496  |  |       |  | 234  |  |  |  | 383  | 
|Diluted weighted average number of ordinary shares (millions)
    (see below) |  |              | 399  |  |              |  | 399        |              |  |  | 533   |            |  |            | 533  |  |       |  | 718  |  |  |  | 718  | 
|Diluted earnings per share (pence)                                            |  |              | 66.9 |  |              |  | 101.5      |              |  |  | 19.3  |            |  |            | 93.1 |  |       |  | 32.6 |  |  |  | 53.3 | 
|                                                                              |  |              |      |  |              |  |            |              |  |  |       |            |  |            |      |  |       | 

|                                                              |                                                                 |            |     |     |      |  |     |      |  |  |     |     | 
|------------------------------------------------------------- | --------------------------------------------------------------- | ---------- | --- | --- | ---- |  | --- | ---- |  |  | --- | --- | 
|                                                              |                                                                 | 2006       |     |     | 2005 |  |     | 2004 | 
|                                                              |                                                                 |            |     |     |      |  |     |      | 
|                                                              |                                                                 | (millions) |    
|Diluted weighted average of ordinary shares is calculated as: |                                                                 |            |     |     |      |  |     |      |  |  |     |    
|                                                              | Basic weighted average number of ordinary shares                |            |     | 389 |      |  |     | 521  |  |  |     | 710 | 
|                                                              | Dilutive potential ordinary shares  employee share
    options |            |     | 10  |      |  |     | 12   |  |  |     | 8   | 
|                                                              |                                                                 |            |     |     |      |  |     |      | 
|                                                              |                                                                 |            | 399 |     |      |  | 533 |      |  |  | 718 |    
|                                                              |                                                                 |            |     |     |      |  |     |      | 

|                                                              |                                            |              |      |      |              |  |            |              |   |  |       |            |   |            |      |      |       |  |      |      |   |  |      |      |  
|------------------------------------------------------------- | ------------------------------------------ | ------------ | ---- | ---- | ------------ |  | ---------- | ------------ | - |  | ----- | ---------- | - | ---------- | ---- | ---- | ----- |  | ---- | ---- | - |  | ---- | ---- | -
|                                                              |                                            | Year ended   |      |      | Year ended   |  |            | Year ended   |  
|                                                              |                                            | December 31, |      |      | December 31, |  |            | December 31, |  
|                                                              |                                            | 2006         |      |      | 2005         |  |            | 2004         |  
|                                                              |                                            |              |      |      |              |  |            |              |  
|                                                              |                                            | Continuing   |      |      |              |  | Continuing |              |   |  |       | Continuing |   |            |     
|                                                              |                                            | operations   |      |      | Total        |  |            | operations   |   |  | Total |            |   | operations |      |      | Total | 
|                                                              |                                            |              |      |      |              |  |            |              |   |  |       |            |   |            |      |      |       | 
|                                                              |                                            | (£ million)  |     
|Adjusted earnings per share                                   |                                            |              |      |      |              |  |            |              |   |  |       |            |   |            |      |      |       |  |      |      |   |  |      |     
|Profit available for equity holders                           |                                            |              | 267  |      |              |  | 405        |              |   |  | 103   |            |   |            | 496  |      |       |  | 234  |      |   |  | 383  |     
|Less adjusting items (Note 5):                                |                                            |              |      |      |              |  |            |              |   |  |       |            |   |            |      |      |       |  |      |      |   |  |      |     
|                                                              | Other operating income and expenses        |              |      | (27  | )            |  |            | (27          | ) |  |       | 22         |   |            |      | 22   |       |  |      | 49   |   |  |      | 49   |  
|                                                              | Financing                                  |              |      |     |              |  |            |             |   |  |       |           |   |            |      |     |       |  |      | 11   |   |  |      | 11   |  
|                                                              | Tax on other operating income and expenses |              |      | 6    |              |  |            | 6            |   |  |       |           |   |            |      |     |       |  |      | (22  | ) |  |      | (22  | )
|                                                              | Special tax credit                         |              |      | (100 | )            |  |            | (100         | ) |  |       | (8         | ) |            |      | (8   | )     |  |      | (161 | ) |  |      | (161 | )
|                                                              | Gain on disposal of assets, net of tax     |              |      |     |              |  |            | (117         | ) |  |       |           |   |            |      | (311 | )     |  |      |     |   |  |      | (19  | )
|                                                              |                                            |              |      |      |              |  |            |              |   |  |       |            |   |            |      |      |       | 
|Adjusted earnings                                             |                                            |              | 146  |      |              |  | 167        |              |   |  | 117   |            |   |            | 199  |      |       |  | 111  |      |   |  | 241  |     
|Basic weighted average number of ordinary shares (millions)   |                                            |              | 389  |      |              |  | 389        |              |   |  | 521   |            |   |            | 521  |      |       |  | 710  |      |   |  | 710  |     
|Adjusted earnings per share (pence)                           |                                            |              | 37.5 |      |              |  | 42.9       |              |   |  | 22.5  |            |   |            | 38.2 |      |       |  | 15.6 |      |   |  | 33.9 |     
|                                                              |                                            |              |      |      |              |  |            |              |   |  |       |            |   |            |      |      |       | 
|Diluted weighted average number of ordinary shares (millions) |                                            |              | 399  |      |              |  | 399        |              |   |  | 533   |            |   |            | 533  |      |       |  | 718  |      |   |  | 718  |     
|Adjusted diluted earnings per share (pence)                   |                                            |              | 36.6 |      |              |  | 41.8       |              |   |  | 21.9  |            |   |            | 37.3 |      |       |  | 15.5 |      |   |  | 33.6 |     
|                                                              |                                            |              |      |      |              |  |            |              |   |  |       |            |   |            |      |      |       | 

F-46



---



##### 



Note 10  Property, Plant and Equipment


|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |      |   |  |       |      |  
|----------------------------------- | --------------------------------------------------------------- | ----------- | ----- | ---- | ------------ |  | ---- | --------- | - |  | ----- | ---- | - |  | ----- | ---- | -
|                                    |                                                                 | Land        |       |      | Fixtures,    |  |      |           |   | 
|                                    |                                                                 | and         |       |      | fittings and |  |      | Plant and |   |  |      
|                                    |                                                                 | buildings   |       |      | equipment    |  |      | machinery |   |  | Total |     
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     
|                                    |                                                                 | (£ million) |      
|Year ended December 31, 2005        |                                                                 |             |       |      |              |  |      |           |   |  |       |      |   |  |       |     
|Cost:                               |                                                                 |             |       |      |              |  |      |           |   |  |       |      |   |  |       |     
|At January 1, 2005                  |                                                                 |             | 1,421 |      |              |  | 985  |           |   |  | 182   |      |   |  | 2,588 |     
|                                    | Exchange and other adjustments                                  |             |       | 34   |              |  |      | 13        |   |  |       |     |   |  |       | 47   |  
|                                    | Additions                                                       |             |       | 15   |              |  |      | 107       |   |  |       | 18   |   |  |       | 140  |  
|                                    | Net transfers to non-current assets classified as held for sale |             |       | (163 | )            |  |      | (150      | ) |  |       |     |   |  |       | (313 | )
|                                    | Disposals                                                       |             |       | (152 | )            |  |      | (333      | ) |  |       | (200 | ) |  |       | (685 | )
|                                    | Impairment                                                      |             |       |     |              |  |      | (7        | ) |  |       |     |   |  |       | (7   | )
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     
|At December 31, 2005                |                                                                 |             | 1,155 |      |              |  | 615  |           |   |  |      |      |   |  | 1,770 |     
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     
|Depreciation:                       |                                                                 |             |       |      |              |  |      |           |   |  |       |      |   |  |       |     
|At January 1, 2005                  |                                                                 |             | (132  | )    |              |  | (425 | )         |   |  | (105  | )    |   |  | (662  | )   
|                                    | Exchange and other adjustments                                  |             |       |     |              |  |      | (14       | ) |  |       |     |   |  |       | (14  | )
|                                    | Provided                                                        |             |       | (11  | )            |  |      | (88       | ) |  |       | (17  | ) |  |       | (116 | )
|                                    | Net transfers to non-current assets classified as held for sale |             |       | 10   |              |  |      | 58        |   |  |       |     |   |  |       | 68   |  
|                                    | On disposals                                                    |             |       | 32   |              |  |      | 156       |   |  |       | 122  |   |  |       | 310  |  
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     
|At December 31, 2005                |                                                                 |             | (101  | )    |              |  | (313 | )         |   |  |      |      |   |  | (414  | )   
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     
|Net book value at December 31, 2005 |                                                                 |             | 1,054 |      |              |  | 302  |           |   |  |      |      |   |  | 1,356 |     
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     
|Year ended December 31, 2006        |                                                                 |             |       |      |              |  |      |           |   |  |       |      |   |  |       |     
|Cost:                               |                                                                 |             |       |      |              |  |      |           |   |  |       |      |   |  |       |     
|At January 1, 2006                  |                                                                 |             | 1,155 |      |              |  | 615  |           |   |  |      |      |   |  | 1,770 |     
|                                    | Exchange and other adjustments                                  |             |       | (73  | )            |  |      | (42       | ) |  |       |     |   |  |       | (115 | )
|                                    | Additions                                                       |             |       | 104  |              |  |      | 82        |   |  |       |     |   |  |       | 186  |  
|                                    | Transfers to non-current assets classified as held for sale     |             |       | (363 | )            |  |      | (118      | ) |  |       |     |   |  |       | (481 | )
|                                    | Disposals                                                       |             |       | (2   | )            |  |      | (31       | ) |  |       |     |   |  |       | (33  | )
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     
|At December 31, 2006                |                                                                 |             | 821   |      |              |  | 506  |           |   |  |      |      |   |  | 1,327 |     
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     
|Depreciation:                       |                                                                 |             |       |      |              |  |      |           |   |  |       |      |   |  |       |     
|At January 1, 2006                  |                                                                 |             | (101  | )    |              |  | (313 | )         |   |  |      |      |   |  | (414  | )   
|                                    | Exchange and other adjustments                                  |             |       | 7    |              |  |      | 23        |   |  |       |     |   |  |       | 30   |  
|                                    | Provided                                                        |             |       | (7   | )            |  |      | (41       | ) |  |       |     |   |  |       | (48  | )
|                                    | Transfers to non-current assets classified as held for sale     |             |       | 17   |              |  |      | 55        |   |  |       |     |   |  |       | 72   |  
|                                    | On disposals                                                    |             |       | 2    |              |  |      | 28        |   |  |       |     |   |  |       | 30   |  
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     
|At December 31, 2006                |                                                                 |             | (82   | )    |              |  | (248 | )         |   |  |      |      |   |  | (330  | )   
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     
|Net book value at December 31, 2006 |                                                                 |             | 739   |      |              |  | 258  |           |   |  |      |      |   |  | 997   |     
|                                    |                                                                 |             |       |      |              |  |      |           |   |  |       |     

First-time




F-47



---



##### 





Note 11  Held for Sale and Discontinued
Operations




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





F-48



---



##### 



|                                                                |                                       |                         |      |     |      |  |        |       |   |  |       |       |  
|--------------------------------------------------------------- | ------------------------------------- | ----------------------- | ---- | --- | ---- |  | ------ | ----- | - |  | ----- | ----- | -
|                                                                |                                       | Year ended December 31, |     
|                                                                |                                       |                         |     
|                                                                |                                       | 2006                    |      |     | 2005 |  |        | 2004  |  
|Net assets of hotels on disposal                                |                                       |                         |      |     |      |  |        |       |  
|                                                                |                                       | (£ million)             |     
|Property, plant and equipment                                   |                                       |                         | 648  |     |      |  | 1,961  |       |   |  | 100   |      
|Goodwill                                                        |                                       |                         |     |     |      |  | 20     |       |   |  |      |      
|Net working capital                                             |                                       |                         | (22  | )   |      |  | 1      |       |   |  | (1    | )    
|Cash and cash equivalents                                       |                                       |                         | 31   |     |      |  | 16     |       |   |  |      |      
|Loans and other borrowings                                      |                                       |                         | (10  | )   |      |  |       |       |   |  |      |      
|Deferred tax                                                    |                                       |                         | (117 | )   |      |  | (121   | )     |   |  | (5    | )    
|Minority equity interest                                        |                                       |                         | (13  | )   |      |  |       |       |   |  | (11   | )    
|                                                                |                                       |                         |      |     |      |  |        |       |  
|Companys share of net assets disposed of                       |                                       |                         | 517  |     |      |  | 1,877  |       |   |  | 83    |      
|                                                                |                                       |                         |      |     |      |  |        |       |  
|Consideration                                                   |                                       |                         |      |     |      |  |        |       |   |  |       |      
|Current year disposals:                                         |                                       |                         |      |     |      |  |        |       |   |  |       |      
|                                                                | Cash consideration, net of cost paid  |                         |      | 628 |      |  |        | 1,832 |   |  |       | 101   |  
|                                                                | Deferred consideration                |                         |      | 10  |      |  |        | 40    |   |  |       |      |  
|                                                                | Management contract value             |                         |      | 30  |      |  |        | 82    |   |  |       |      |  
|                                                                | Other                                 |                         |      | (14 | )    |  |        | (12   | ) |  |       | (3    | )
|                                                                |                                       |                         |      |     |      |  |        |       |  
|                                                                |                                       |                         | 654  |     |      |  | 1,942  |       |   |  | 98    |      
|                                                               
|Net assets disposed of                                          |                                       |                         | (517 | )   |      |  | (1,877 | )     |   |  | (83   | )    
|Other, including tax and impairment                             |                                       |                         | (20  | )   |      |  | (38    | )     |   |  | 4     |      
|                                                                |                                       |                         |      |     |      |  |        |       |  
|Gain on disposal of assets, net of tax                          |                                       |                         | 117  |     |      |  | 27     |       |   |  | 19    |      
|                                                                |                                       |                         |      |     |      |  |        |       |  
|Net cash inflow                                                 |                                       |                         |      |     |      |  |        |       |   |  |       |      
|Current year disposals:                                         |                                       |                         |      |     |      |  |        |       |   |  |       |      
|                                                                | Cash consideration, net of costs paid |                         |      | 628 |      |  |        | 1,832 |   |  |       | 101   |  
|                                                                | Cash disposed of                      |                         |      | (31 | )    |  |        | (16   | ) |  |       |      |  
|                                                                | Prior year disposal                   |                         |      | 23  |      |  |        |      |   |  |       |      |  
|                                                                |                                       |                         |      |     |      |  |        |       |  
|                                                                |                                       |                         | 620  |     |      |  | 1,816  |       |   |  | 101   |      
|                                                                |                                       |                         |      |     |      |  |        |       |  
|Assets and liabilities held for sale                            |                                       |                         |      |     |      |  |        |       |   |  |       |      
|Non-current assets classified as held for sale:                 |                                       |                         |      |     |      |  |        |       |   |  |       |      
|                                                                | Property, plant and equipment         |                         |      | 40  |      |  |        | 279   |   |  |       | 1,826 |  
|                                                                | Associates                            |                         |      | 10  |      |  |        |      |   |  |       |      |  
|                                                                |                                       |                         |      |     |      |  |        |       |  
|                                                                |                                       |                         | 50   |     |      |  | 279    |       |   |  | 1,826 |      
|                                                                |                                       |                         |      |     |      |  |        |       |  
|Liabilities classified as held for sale:                        |                                       |                         |      |     |      |  |        |       |   |  |       |      
|                                                                | Deferred tax                          |                         |      | (2  | )    |  |        | (34   | ) |  |       | (148  | )
|                                                                |                                       |                         |      |     |      |  |        |       |  
|Cash flows related to discontinued operations                   |                                       |                         |      |     |      |  |        |       |   |  |       |      
|Operating profit before interest, depreciation and amortization |                                       |                         | 34   |     |      |  | 124    |       |   |  | 203   |      
|Investing activities                                            |                                       |                         | (8   | )   |      |  | (54    | )     |   |  | (78   | )    
|Financing activities                                            |                                       |                         | (25  | )   |      |  | (16    | )     |   |  | (3    | )    
|                                                                |                                       |                         |      |     |      |  |        |       |  

F-49



---



##### 





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



|                                               |  |              |      |  
|---------------------------------------------- |  | ------------ | ---- | -
|                                               |  | Year ended   |     
|                                               |  | December 31, |     
|                                               |  | 2005         |     
|                                               |  |              |     
|                                               |  | (£ million)  |     
|Net liabilities of Soft Drinks on disposal     |  |              |      |  
|Property, plant and equipment                  |  |              | 234  |  
|Goodwill                                       |  |              | 18   |  
|Software                                       |  |              | 25   |  
|Inventories                                    |  |              | 36   |  
|Trade and other receivables                    |  |              | 141  |  
|Cash and cash equivalents                      |  |              | 1    |  
|Current liabilities                            |  |              | (162 | )
|Borrowings                                     |  |              | (341 | )
|Employee benefits                              |  |              | (91  | )
|Deferred tax                                   |  |              | 8    |  
|Minority equity interest                       |  |              | 66   |  
|                                               |  |              |     
|Companys share of net liabilities disposed of |  |              | (65  | )
|                                               |  |              |     
|Consideration                                  |  |              |      |  
|Cash consideration, net of costs paid          |  |              | 221  |  
|Other                                          |  |              | (2   | )
|                                               |  |              |     
|                                               |  |              | 219  |  
|Net liabilities disposed of                    |  |              | 65   |  
|                                               |  |              |     
|Gain on disposal of assets, net of tax         |  |              | 284  |  
|                                               |  |              |     
|Net cash inflow                                |  |              |      |  
|Cash consideration, net of costs paid          |  |              | 221  |  
|Cash disposed of                               |  |              | (1   | )
|                                               |  |              |     
|                                               |  |              | 220  |  
|                                               |  |              |     

|                                                                |  |              |   |  |      |  |     |      |  |  |     |  
|--------------------------------------------------------------- |  | ------------ | - |  | ---- |  | --- | ---- |  |  | --- | -
|                                                                |  | Year ended   |  
|                                                                |  | December 31, |  
|                                                                |  |              |  
|                                                                |  | 2006         |   |  | 2005 |  |     | 2004 | 
|                                                                |  |              |   |  |      |  |     |      | 
|                                                                |  | (£ million)  |  
|Cash flows related to discontinued operations                   |  |              |   |  |      |  |     |      |  |  |     |  
|Operating profit before interest, depreciation and amortization |  |              |  |  |      |  | 115 |      |  |  | 123 |  
|Investing activities                                            |  |              |  |  |      |  | (47 | )    |  |  | (70 | )
|Financing activities                                            |  |              |  |  |      |  | 162 |      |  |  | (25 | )

F-50



---



##### 



Note 12  Goodwill


|               |                                     |              |     |     |      |  |     |     |  
|-------------- | ----------------------------------- | ------------ | --- | --- | ---- |  | --- | --- | -
|               |                                     | At           |    
|               |                                     | December 31, |    
|               |                                     |              |    
|               |                                     | 2006         |     |     | 2005 | 
|               |                                     |              |     |     |      | 
|               |                                     | (£ million)  |    
|At January 1   |                                     |              | 118 |     |      |  | 152 |    
|               | Acquisition of subsidiary (note 31) |              |     | 2   |      |  |     |    |  
|               | Disposals                           |              |     |    |      |  |     | (44 | )
|               | Exchange and other adjustments      |              |     | (11 | )    |  |     | 10  |  
|               |                                     |              |     |     |      | 
|At December 31 |                                     |              | 109 |     |      |  | 118 |    
|               |                                     |              |     |     |      | 





|                                               |  |                 |     |  |      |  |     | 
|---------------------------------------------- |  | --------------- | --- |  | ---- |  | --- | 
|                                               |  | At December 31, |    
|                                               |  |                 |    
|                                               |  | 2006            |     |  | 2005 | 
|                                               |  |                 |     |  |      | 
|                                               |  | (£ million)     |    
|The Americas managed operations                |  |                 | 72  |  |      |  | 82  | 
|Asia Pacific managed and franchised operations |  |                 | 37  |  |      |  | 36  | 
|                                               |  |                 |     |  |      | 
|                                               |  |                 | 109 |  |      |  | 118 | 
|                                               |  |                 |     |  |      | 



long-term




| |                                
| | -------------------------------
| | The Americas managed operations





| |                                               
| | ----------------------------------------------
| | Asia Pacific managed and franchised operations





F-51



---



##### 



Note 13  Intangible assets


|                                    |                                     |          |     |             |           |  |       |             |   |  |       |    |   |  |     |     |  
|----------------------------------- | ----------------------------------- | -------- | --- | ----------- | --------- |  | ----- | ----------- | - |  | ----- | -- | - |  | --- | --- | -
|                                    |                                     |          |     | Management  |           |  | Other |             |   | 
|                                    |                                     | Software |     |             | contracts |  |       | intangibles |   |  | Total |   
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   
|                                    |                                     |          |     | (£ million) |           |  |      
|Year ended December 31, 2005        |                                     |          |     |             |           |  |       |             |   |  |       |    |   |  |     |    
|Cost:                               |                                     |          |     |             |           |  |       |             |   |  |       |    |   |  |     |    
|At January 1, 2005                  |                                     |          | 52  |             |           |  |      |             |   |  | 22    |    |   |  | 74  |    
|                                    | Additions                           |          |     | 14          |           |  |       | 82          |   |  |       | 5  |   |  |     | 101 |  
|                                    | Disposals                           |          |     | (32         | )         |  |       |            |   |  |       | (1 | ) |  |     | (33 | )
|                                    | Exchange and other adjustments      |          |     | 4           |           |  |       | 2           |   |  |       | 2  |   |  |     | 8   |  
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   
|At December 31, 2005                |                                     |          | 38  |             |           |  | 84    |             |   |  | 28    |    |   |  | 150 |    
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   
|Amortization:                       |                                     |          |     |             |           |  |       |             |   |  |       |    |   |  |     |    
|At January 1, 2005                  |                                     |          | (13 | )           |           |  |      |             |   |  | (7    | )  |   |  | (20 | )  
|                                    | Provided                            |          |     | (9          | )         |  |       | (3          | ) |  |       | (2 | ) |  |     | (14 | )
|                                    | On disposals                        |          |     | 7           |           |  |       |            |   |  |       |   |   |  |     | 7   |  
|                                    | Exchange and other adjustments      |          |     | (2          | )         |  |       |            |   |  |       | (1 | ) |  |     | (3  | )
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   
|At December 31, 2005                |                                     |          | (17 | )           |           |  | (3    | )           |   |  | (10   | )  |   |  | (30 | )  
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   
|Net book value at December 31, 2005 |                                     |          | 21  |             |           |  | 81    |             |   |  | 18    |    |   |  | 120 |    
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   
|Year ended December 31, 2006        |                                     |          |     |             |           |  |       |             |   |  |       |    |   |  |     |    
|Cost:                               |                                     |          |     |             |           |  |       |             |   |  |       |    |   |  |     |    
|At January 1, 2006                  |                                     |          | 38  |             |           |  | 84    |             |   |  | 28    |    |   |  | 150 |    
|                                    | Additions                           |          |     | 10          |           |  |       | 30          |   |  |       | 13 |   |  |     | 53  |  
|                                    | Acquisition of subsidiary (note 32) |          |     | 1           |           |  |       | 7           |   |  |       |   |   |  |     | 8   |  
|                                    | Disposals                           |          |     |            |           |  |       |            |   |  |       | (2 | ) |  |     | (2  | )
|                                    | Exchange and other adjustments      |          |     | (6          | )         |  |       | (4          | ) |  |       | (3 | ) |  |     | (13 | )
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   
|At December 31, 2006                |                                     |          | 43  |             |           |  | 117   |             |   |  | 36    |    |   |  | 196 |    
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   
|Amortization:                       |                                     |          |     |             |           |  |       |             |   |  |       |    |   |  |     |    
|At January 1, 2006                  |                                     |          | (17 | )           |           |  | (3    | )           |   |  | (10   | )  |   |  | (30 | )  
|                                    | Provided                            |          |     | (9          | )         |  |       | (4          | ) |  |       | (3 | ) |  |     | (16 | )
|                                    | Exchange and other adjustments      |          |     | 3           |           |  |       |            |   |  |       | 1  |   |  |     | 4   |  
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   
|At December 31, 2006                |                                     |          | (23 | )           |           |  | (7    | )           |   |  | (12   | )  |   |  | (42 | )  
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   
|Net book value at December 31, 2006 |                                     |          | 20  |             |           |  | 110   |             |   |  | 24    |    |   |  | 154 |    
|                                    |                                     |          |     |             |           |  |       |             |   |  |       |   

F-52



---



##### 



Note 14  Investments in associates




|                                        |  |              |     |   |              |  |     |  
|--------------------------------------- |  | ------------ | --- | - | ------------ |  | --- | -
|                                        |  | At           |     |   | At           | 
|                                        |  | December 31, |     |   | December 31, | 
|                                        |  | 2006         |     |   | 2005         | 
|                                        |  |              |     |   |              | 
|                                        |  | (£ million)  |    
|Share of associates balance sheet      |  |              |     |   |              |  |     |  
|Current assets                          |  |              | 2   |   |              |  | 4   |  
|Non-current assets                      |  |              | 50  |   |              |  | 93  |  
|Current liabilities                     |  |              | (5  | ) |              |  | (9  | )
|Non-current liabilities                 |  |              | (15 | ) |              |  | (46 | )
|                                        |  |              |     |   |              | 
|Net assets                              |  |              | 32  |   |              |  | 42  |  
|                                        |  |              |     |   |              | 
|Share of associates revenue and profit |  |              |     |   |              |  |     |  
|Revenue                                 |  |              | 22  |   |              |  | 18  |  
|Net profit                              |  |              | 2   |   |              |  | 1   |  
|                                        |  |              |     |   |              | 
|Related party transactions              |  |              |     |   |              |  |     |  
|Revenue from related parties            |  |              | 4   |   |              |  | 3   |  
|Amounts owed by related parties         |  |              | 1   |   |              |  | 2   |  
|                                        |  |              |     |   |              | 

Note 15  Other Financial Assets


|                                     |  |              |    |  |              |  |     | 
|------------------------------------ |  | ------------ | -- |  | ------------ |  | --- | 
|                                     |  | At           |    |  | At           | 
|                                     |  | December 31, |    |  | December 31, | 
|                                     |  | 2006         |    |  | 2005         | 
|                                     |  |              |    |  |              | 
|                                     |  | (£ million)  |   
|Non-current                          |  |              |    |  |              |  |     | 
|Equity securities available-for-sale |  |              | 48 |  |              |  | 41  | 
|Other                                |  |              | 48 |  |              |  | 72  | 
|                                     |  |              |    |  |              | 
|                                     |  |              | 96 |  |              |  | 113 | 
|                                     |  |              |    |  |              | 
|Current                              |  |              |    |  |              |  |     | 
|Equity securities available-for-sale |  |              | 9  |  |              |  | 104 | 
|Derivatives                          |  |              | 4  |  |              |  | 2   | 
|                                     |  |              |    |  |              | 
|                                     |  |              | 13 |  |              |  | 106 | 
|                                     |  |              |    |  |              | 





F-53



---



##### 



Note 16  Inventories


|                  |  |              |   |  |              |  |   | 
|----------------- |  | ------------ | - |  | ------------ |  | - | 
|                  |  | At           |   |  | At           | 
|                  |  | December 31, |   |  | December 31, | 
|                  |  | 2006         |   |  | 2005         | 
|                  |  |              |   |  |              | 
|                  |  | (£ million)  |  
|Finished goods    |  |              | 1 |  |              |  | 2 | 
|Consumable stores |  |              | 2 |  |              |  | 1 | 
|                  |  |              |   |  |              | 
|                  |  |              | 3 |  |              |  | 3 | 
|                  |  |              |   |  |              | 

Note 17  Trade and other receivables


|                  |  |              |     |  |              |  |     | 
|----------------- |  | ------------ | --- |  | ------------ |  | --- | 
|                  |  | At           |     |  | At           | 
|                  |  | December 31, |     |  | December 31, | 
|                  |  | 2006         |     |  | 2005         | 
|                  |  |              |     |  |              | 
|                  |  | (£ million)  |    
|Trade receivables |  |              | 163 |  |              |  | 160 | 
|Other receivables |  |              | 51  |  |              |  | 66  | 
|Other prepayments |  |              | 23  |  |              |  | 26  | 
|                  |  |              |     |  |              | 
|                  |  |              | 237 |  |              |  | 252 | 
|                  |  |              |     |  |              | 



Note 18  Cash and cash equivalents


|                         |  |              |     |  |              |  |     | 
|------------------------ |  | ------------ | --- |  | ------------ |  | --- | 
|                         |  | At           |     |  | At           | 
|                         |  | December 31, |     |  | December 31, | 
|                         |  | 2006         |     |  | 2005         | 
|                         |  |              |     |  |              | 
|                         |  | (£ million)  |    
|Cash at bank and in hand |  |              | 30  |  |              |  | 34  | 
|Short-term deposits      |  |              | 149 |  |              |  | 290 | 
|                         |  |              |     |  |              | 
|                         |  |              | 179 |  |              |  | 324 | 
|                         |  |              |     |  |              | 



F-54



---



##### 



Note 19  Trade and other payables


|                                      |  |              |     |  |              |  |     | 
|------------------------------------- |  | ------------ | --- |  | ------------ |  | --- | 
|                                      |  | At           |     |  | At           | 
|                                      |  | December 31, |     |  | December 31, | 
|                                      |  | 2006         |     |  | 2005         | 
|                                      |  |              |     |  |              | 
|                                      |  | (£ million)  |    
|Current                               |  |              |     |  |              |  |     | 
|Trade payables                        |  |              | 47  |  |              |  | 84  | 
|Other tax and social security payable |  |              | 26  |  |              |  | 12  | 
|Other payables                        |  |              | 190 |  |              |  | 174 | 
|Accruals                              |  |              | 139 |  |              |  | 186 | 
|Derivatives                           |  |              |    |  |              |  | 6   | 
|Provisions (Note 24)                  |  |              |    |  |              |  | 6   | 
|                                      |  |              |     |  |              | 
|                                      |  |              | 402 |  |              |  | 468 | 
|                                      |  |              |     |  |              | 
|Non-current                           |  |              |     |  |              |  |     | 
|Other payables                        |  |              | 109 |  |              |  | 107 | 
|Provisions (Note 24)                  |  |              |    |  |              |  |    | 
|                                      |  |              |     |  |              | 
|                                      |  |              | 109 |  |              |  | 107 | 
|                                      |  |              |     |  |              | 



Note 20  Loans and other borrowings


|                           |  |                      |    |  |                      |  |     |       |  |  |         |  |  |             |   |  |       |  |     |  |  |  |     | 
|-------------------------- |  | -------------------- | -- |  | -------------------- |  | --- | ----- |  |  | ------- |  |  | ----------- | - |  | ----- |  | --- |  |  |  | --- | 
|                           |  | At December 31, 2006 |    |  | At December 31, 2005 | 
|                           |  |                      |    |  |                      | 
|                           |  | Current              |    |  | Non-current          |  |     | Total |  |  | Current |  |  | Non-current |   |  | Total | 
|                           |  |                      |    |  |                      |  |     |       |  |  |         |  |  |             |   |  |       | 
|                           |  | (£ million)          |   
|Secured bank loans         |  |                      | 4  |  |                      |  | 3   |       |  |  | 7       |  |  |             | 2 |  |       |  | 36  |  |  |  | 38  | 
|Finance leases             |  |                      | 3  |  |                      |  | 94  |       |  |  | 97      |  |  |             |  |  |       |  |    |  |  |  |    | 
|Unsecured bank loans       |  |                      | 3  |  |                      |  | 206 |       |  |  | 209     |  |  |             |  |  |       |  | 374 |  |  |  | 374 | 
|Other unsecured borrowings |  |                      |   |  |                      |  |    |       |  |  |        |  |  |             |  |  |       |  |    |  |  |  |    | 
|                           |  |                      |    |  |                      |  |     |       |  |  |         |  |  |             |   |  |       | 
|Total borrowings           |  |                      | 10 |  |                      |  | 303 |       |  |  | 313     |  |  |             | 2 |  |       |  | 410 |  |  |  | 412 | 
|                           |  |                      |    |  |                      |  |     |       |  |  |         |  |  |             |   |  |       | 



| |                   
| | ------------------
| | Secured bank loans



F-55



---



##### 





| |               
| | --------------
| | Finance leases



|                                         |  |              |        |   |          |  |    | 
|---------------------------------------- |  | ------------ | ------ | - | -------- |  | -- | 
|                                         |  | At           |       
|                                         |  | December 31, |       
|                                         |  | 2006         |       
|                                         |  |              |       
|                                         |  | Minimum      |        |   | Present  | 
|                                         |  | lease        |        |   | value of | 
|                                         |  | payments     |        |   | payments | 
|                                         |  |              |        |   |          | 
|                                         |  | (£ million)  |       
|Less than one year                       |  |              | 3      |   |          |  | 3  | 
|Between one and five years               |  |              | 33     |   |          |  | 24 | 
|More than five years                     |  |              | 1,745  |   |          |  | 70 | 
|                                         |  |              |        |   |          | 
|                                         |  |              | 1,781  |   |          |  | 97 | 
|Less amount representing finance charges |  |              | (1,684 | ) |          |  |   | 
|                                         |  |              |        |   |          | 
|                                         |  |              | 97     |   |          |  | 97 | 
|                                         |  |              |        |   |          | 





| |                     
| | --------------------
| | Unsecured bank loans





| |                             
| | ----------------------------
| | Facilities provided by banks

|            |  |                      |     |  |                      |  |     |       |  |  |          |  |  |            |     |  |       |  |     |  |  |  |       | 
|----------- |  | -------------------- | --- |  | -------------------- |  | --- | ----- |  |  | -------- |  |  | ---------- | --- |  | ----- |  | --- |  |  |  | ----- | 
|            |  | At December 31, 2006 |     |  | At December 31, 2005 | 
|            |  |                      |     |  |                      | 
|            |  | Utilized             |     |  | Unutilized           |  |     | Total |  |  | Utilized |  |  | Unutilized |     |  | Total | 
|            |  |                      |     |  |                      |  |     |       |  |  |          |  |  |            |     |  |       | 
|            |  | (£ million)          |    
|Committed   |  |                      | 213 |  |                      |  | 944 |       |  |  | 1,157    |  |  |            | 412 |  |       |  | 751 |  |  |  | 1,163 | 
|Uncommitted |  |                      | 3   |  |                      |  | 36  |       |  |  | 39       |  |  |            |    |  |       |  | 14  |  |  |  | 14    | 
|            |  |                      |     |  |                      |  |     |       |  |  |          |  |  |            |     |  |       | 
|            |  |                      | 216 |  |                      |  | 980 |       |  |  | 1,196    |  |  |            | 412 |  |       |  | 765 |  |  |  | 1,177 | 
|            |  |                      |     |  |                      |  |     |       |  |  |          |  |  |            |     |  |       | 

|                              |                                     |             |     |     |      |  |     |     | 
|----------------------------- | ----------------------------------- | ----------- | --- | --- | ---- |  | --- | --- | 
|                              |                                     | At December |    
|                              |                                     | 31,         |    
|                              |                                     |             |    
|                              |                                     | 2006        |     |     | 2005 | 
|                              |                                     |             |     |     |      | 
|                              |                                     | (£ million) |    
|Unutilized facilities expire: |                                     |             |     |     |      |  |     |    
|                              | within one year                     |             |     | 86  |      |  |     | 39  | 
|                              | after one year but before two years |             |     |    |      |  |     |    | 
|                              | after two years                     |             |     | 894 |      |  |     | 726 | 
|                              |                                     |             |     |     |      | 
|                              |                                     |             | 980 |     |      |  | 765 |    
|                              |                                     |             |     |     |      | 

Note 21  Financial risk management
policies




| |                      
| | ---------------------
| | Financial instruments



F-56



---



##### 











short-term




| |              
| | -------------
| | Sensitivities







| |        
| | -------
| | Hedging



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

 




F-57



---



##### 





| |                      
| | ---------------------
| | Foreign currency risk









| |                                               
| | ----------------------------------------------
| | Hedge of net investment in a foreign operation



Note 22  Financial Instruments




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



|                                 |                                            |               |         |       |             |                    |      |           |  |  |          |     |   |           |   |           |         |  |     |    |  |  |    |   | 
|-------------------------------- | ------------------------------------------ | ------------- | ------- | ----- | ----------- | ------------------ | ---- | --------- |  |  | -------- | --- | - | --------- | - | --------- | ------- |  | --- | -- |  |  | -- | - | 
|                                 |                                            |               |         |       |             | Repricing analysis |     
|                                 |                                            |               |         | Total |             |                    |      |          
|                                 |                                            | Effective     |         |       | carrying    |                    |      | Less than |  |  | 6 months |     |   |           |   | More than |        
|As at December 31, 2006          |                                            | interest rate |         |       | amount      |                    |      | 6 months  |  |  | -1 year  |     |   | 1-2 years |   |           | 5 years | 
|                                 |                                            |               |         |       |             |                    |      |           |  |  |          |     |   |           |   |           |         | 
|                                 |                                            | (%)           |         |       | (£ million) |                   
|Cash and cash equivalents        |                                            |               | 0.0-5.2 |       |             |                    | (179 | )         |  |  | (179     | )   |   |           |  |           |         |  |    |    |  |  |   |  
|Secured bank loans (floating)    |                                            |               | 8.5     |       |             |                    | 7    |           |  |  | 7        |     |   |           |  |           |         |  |    |    |  |  |   |  
|Obligations under finance leases |                                            |               | 9.7     |       |             |                    | 97   |           |  |  |         |     |   |           |  |           |         |  |    |    |  |  | 97 |  
|Unsecured bank loans:            |                                            |               |         |       |             |                    |      |           |  |  |          |     |   |           |   |           |         |  |     |    |  |  |    |  
|                                 | Euro floating rate                         |               |         | 4.0   |             |                    |      | 54        |  |  |          | 54  |   |           |   |          |         |  |     |   |  |  |    |  | 
|                                 |  effect of euro interest rate swaps*      |               |         | (1.0  | )           |                    |      |           |  |  |          | (54 | ) |           |   |          |         |  |     | 54 |  |  |    |  | 
|                                 | US dollar floating rate                    |               |         | 5.7   |             |                    |      | 53        |  |  |          | 53  |   |           |   |          |         |  |     |   |  |  |    |  | 
|                                 |  effect of US dollar interest rate swaps* |               |         | (1.2  | )           |                    |      |           |  |  |          | (51 | ) |           |   |          |         |  |     | 51 |  |  |    |  | 
|                                 | Sterling floating rate                     |               |         | 5.6   |             |                    |      | 102       |  |  |          | 102 |   |           |   |          |         |  |     |   |  |  |    |  | 
|                                 |                                            |               |         |       |             |                    |      |           |  |  |          |     |   |           |   |           |         | 
|Net debt                         |                                            |               |         |       |             |                    | 134  |           |  |  | (68      | )   |   |           |  |           |         |  | 105 |    |  |  | 97 |  
|Foreign exchange contracts       |                                            |               |         |       |             |                    | (4   | )         |  |  | (4       | )   |   |           |  |           |         |  |    |    |  |  |   |  
|                                 |                                            |               |         |       |             |                    |      |           |  |  |          |     |   |           |   |           |         | 
|                                 |                                            |               |         |       |             |                    | 130  |           |  |  | (72      | )   |   |           |  |           |         |  | 105 |    |  |  | 97 |  
|                                 |                                            |               |         |       |             |                    |      |           |  |  |          |     |   |           |   |           |         | 






|  |                                           
|- | ------------------------------------------
|* | These items bear interest at a fixed rate.

F-58



---



##### 



|                              |                                            |               |           |       |             |                    |      |           |  |  |          |     |   |       |    |    |           |  |    |    |  |  |   |   | 
|----------------------------- | ------------------------------------------ | ------------- | --------- | ----- | ----------- | ------------------ | ---- | --------- |  |  | -------- | --- | - | ----- | -- | -- | --------- |  | -- | -- |  |  | - | - | 
|                              |                                            |               |           |       |             | Repricing analysis |     
|                              |                                            |               |           | Total |             |                    |      |          
|                              |                                            | Effective     |           |       | carrying    |                    |      | Less than |  |  | 6 months |     |   | 12   |    |    | More than | 
|As at December 31, 2005       |                                            | interest rate |           |       | amount      |                    |      | 6 months  |  |  | 1 year  |     |   | years |    |    | 5 years   | 
|                              |                                            |               |           |       |             |                    |      |           |  |  |          |     |   |       |    |    |           | 
|                              |                                            | %             |           |       | (£ million) |                   
|Cash and cash equivalents     |                                            |               | 0.0  4.5 |       |             |                    | (324 | )         |  |  | (324     | )   |   |       |   |    |           |  |   |    |  |  |  |  
|Secured bank loans (fixed)*   |                                            |               | 6.5  7.8 |       |             |                    | 28   |           |  |  |         |     |   |       |   |    |           |  | 28 |    |  |  |  |  
|Secured bank loans (floating) |                                            |               | 2.9  8.5 |       |             |                    | 10   |           |  |  | 10       |     |   |       |   |    |           |  |   |    |  |  |  |  
|Unsecured bank loans:         |                                            |               |           |       |             |                    |      |           |  |  |          |     |   |       |    |    |           |  |    |    |  |  |   |  
|                              | Euro floating rate                         |               |           | 2.9   |             |                    |      | 141       |  |  |          | 141 |   |       |    |   |           |  |    |   |  |  |   |  | 
|                              |  effect of euro interest rate swaps*      |               |           | (0.4  | )           |                    |      |           |  |  |          | (55 | ) |       |    |   |           |  |    | 55 |  |  |   |  | 
|                              | US dollar floating rate                    |               |           | 4.7   |             |                    |      | 162       |  |  |          | 162 |   |       |    |   |           |  |    |   |  |  |   |  | 
|                              |  effect of US dollar interest rate swaps* |               |           | 0.2   |             |                    |      |           |  |  |          | (87 | ) |       |    | 87 |           |  |    |   |  |  |   |  | 
|                              | Hong Kong dollar floating rate             |               |           | 4.7   |             |                    |      | 71        |  |  |          | 71  |   |       |    |   |           |  |    |   |  |  |   |  | 
|                              |                                            |               |           |       |             |                    |      |           |  |  |          |     |   |       |    |    |           | 
|Net debt                      |                                            |               |           |       |             |                    | 88   |           |  |  | (82      | )   |   |       | 87 |    |           |  | 83 |    |  |  |  |  
|Effect of currency swaps:     |                                            |               |           |       |             |                    |      |           |  |  |          |     |   |       |    |    |           |  |    |    |  |  |   |  
|                              | Receive and pay fixed*                     |               |           | (1.5  | )           |                    |      | 3         |  |  |          | 3   |   |       |    |   |           |  |    |   |  |  |   |  | 
|                              | Receive and pay floating                   |               |           | (2.0  | )           |                    |      | 2         |  |  |          | 2   |   |       |    |   |           |  |    |   |  |  |   |  | 
|                              |                                            |               |           |       |             |                    |      |           |  |  |          |     |   |       |    |    |           | 
|                              |                                            |               |           |       |             |                    | 93   |           |  |  | (77      | )   |   |       | 87 |    |           |  | 83 |    |  |  |  |  
|                              |                                            |               |           |       |             |                    |      |           |  |  |          |     |   |       |    |    |           | 






|  |                                           
|- | ------------------------------------------
|* | These items bear interest at a fixed rate.







F-59



---



##### 





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



|                                                          |  |                      |      |   |                      |  |          |       |  |  |            |   |  |  |      |  
|--------------------------------------------------------- |  | -------------------- | ---- | - | -------------------- |  | -------- | ----- |  |  | ---------- | - |  |  | ---- | -
|                                                          |  | At December 31, 2006 |      |   | At December 31, 2005 | 
|                                                          |  |                      |      |   |                      | 
|                                                          |  | Carrying             |      |   |                      |  | Carrying |       |  | 
|                                                          |  | value                |      |   | Fair value           |  |          | value |  |  | Fair value |  
|                                                          |  |                      |      |   |                      |  |          |       |  |  |            |  
|                                                          |  | (£ million)          |     
|Financial assets                                          |  |                      |      |   |                      |  |          |       |  |  |            |   |  |  |      |  
|Cash and cash equivalents (note 18)                       |  |                      | 179  |   |                      |  | 179      |       |  |  | 324        |   |  |  | 324  |  
|Equity securities available-for-sale (note 15)            |  |                      | 57   |   |                      |  | 57       |       |  |  | 145        |   |  |  | 145  |  
|Derivatives (note 15)                                     |  |                      | 4    |   |                      |  | 4        |       |  |  | 2          |   |  |  | 2    |  
|Other financial assets (note 15)                          |  |                      | 48   |   |                      |  | 48       |       |  |  | 72         |   |  |  | 72   |  
|Financial liabilities                                     |  |                      |      |   |                      |  |          |       |  |  |            |   |  |  |      |  
|Borrowings, excluding finance lease liabilities (note 20) |  |                      | (216 | ) |                      |  | (216     | )     |  |  | (412       | ) |  |  | (412 | )
|Liabilities under finance leases (note 20)                |  |                      | (97  | ) |                      |  | (97      | )     |  |  |           |   |  |  |     |  
|Derivatives (note 19)                                     |  |                      |     |   |                      |  |         |       |  |  | (6         | ) |  |  | (6   | )

available-for-sale




Note 23  Share-based payments




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

(i)






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






|    |                                                                   
|--- | ------------------------------------------------------------------
|(i) | Adjusted for the share capital consolidation on June 12,
    2006.

F-60



---



##### 







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





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

three-year five-year




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





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





F-61



---



##### 









|                                 |  |                     |         |  |                        |  |           | 
|-------------------------------- |  | ------------------- | ------- |  | ---------------------- |  | --------- | 
|                                 |  | Short Term Deferred |         |  | Performance Restricted | 
|                                 |  | Incentive Plan      |         |  | Share Plan             | 
|                                 |  |                     |         |  |                        | 
|Number of shares awarded in 2006 |  |                     | 569,293 |  |                        |  | 4,277,550 | 



|                             |  |                     |        |                |                        |  |        | 
|---------------------------- |  | ------------------- | ------ | -------------- | ---------------------- |  | ------ | 
|                             |  | Short Term Deferred |        |                | Performance Restricted | 
|2006                         |  | Incentive Plan(iii) |        |                | Share Plan             | 
|                             |  |                     |        |                |                        | 
|Valuation model              |  | Binomial            |        |                | Monte Carlo            | 
|                             |  |                     |        | Simulation and |                       
|                             |  |                     |        | Binomial       |                       
|Weighted average share price |  |                     | 831.0p |                |                        |  | 946.0p | 
|Expected dividend yield      |  |                     |        |                |                        |  | 2.32%  | 
|Risk-free interest rate      |  |                     |        |                |                        |  | 4.9%   | 
|Volatility(i)                |  |                     |        |                |                        |  | 20%    | 
|Term
    (years)(ii)         |  |                     | 2.0    |                |                        |  | 3.0    | 

|                             |  |                     |        |                |                        |  |        |                 |  |  |        | 
|---------------------------- |  | ------------------- | ------ | -------------- | ---------------------- |  | ------ | --------------- |  |  | ------ | 
|                             |  | Short Term Deferred |        |                | Performance Restricted |  |        | Executive Share | 
|2005                         |  | Incentive Plan(iii) |        |                | Share Plan             |  |        | Option Plan     | 
|                             |  |                     |        |                |                        |  |        |                 | 
|Valuation model              |  | Binomial            |        |                | Monte Carlo            |  |        | Binomial        | 
|                             |  |                     |        | Simulation and |                        |  |       
|                             |  |                     |        | Binomial       |                        |  |       
|Weighted average share price |  |                     | 652.8p |                |                        |  | 702.0p |                 |  |  | 627.0p | 
|Exercise price               |  |                     |        |                |                        |  |        |                 |  |  | 620.0p | 
|Expected dividend yield      |  |                     | 2.73%  |                |                        |  | 3.18%  |                 |  |  | 3.62%  | 
|Risk-free interest rate      |  |                     |        |                |                        |  | 4.10%  |                 |  |  | 4.69%  | 
|Volatility(i)                |  |                     |        |                |                        |  | 23%    |                 |  |  | 28%    | 
|Term
    (years)(ii)         |  |                     | 2.0    |                |                        |  | 3.0    |                 |  |  | 6.5    | 

|                             |  |                     |        |                |                        |  |        |                 |  |  |        | 
|---------------------------- |  | ------------------- | ------ | -------------- | ---------------------- |  | ------ | --------------- |  |  | ------ | 
|                             |  | Short Term Deferred |        |                | Performance Restricted |  |        | Executive Share | 
|2004                         |  | Incentive Plan(iii) |        |                | Share Plan             |  |        | Option Plan     | 
|                             |  |                     |        |                |                        |  |        |                 | 
|Valuation model              |  | Binomial            |        |                | Monte Carlo            |  |        | Binomial        | 
|                             |  |                     |        | Simulation and |                        |  |       
|                             |  |                     |        | Binomial       |                        |  |       
|Weighted average share price |  |                     | 498.0p |                |                        |  | 550.0p |                 |  |  | 494.0p | 
|Exercise price               |  |                     |        |                |                        |  |        |                 |  |  | 494.0p | 
|Expected dividend yield      |  |                     | 3.74%  |                |                        |  | 3.49%  |                 |  |  | 3.81%  | 
|Risk-free interest rate      |  |                     |        |                |                        |  |        |                 |  |  | 4.73%  | 
|Volatility(i)                |  |                     |        |                |                        |  |        |                 |  |  | 31.33% | 
|Term
    (years)(ii)         |  |                     | 2.8    |                |                        |  | 3.0    |                 |  |  | 6.5    | 






|     |  |                                                                                                                                                                                      
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)  |  | The expected volatility was determined by calculating the
    historical volatility of the Companys share price
    corresponding to the expected life of the option or share award.
|    
|(ii) |  | The expected term of the options is taken to be the mid point
    between vesting and lapse, as historical exercise patterns have
    shown this to be appropriate.                  

F-62



---



##### 





|      |  |                                                                                                                                                                                                                                                                                                                                                          
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(iii) |  | Awards made under the STDIP are structured as nil cost
    share awards and expected volatility and risk free rate do
    not impact the fair value calculation of these awards. The
    employees are entitled to receive dividend equivalents over the
    vesting period and, therefore, the expected dividend yield
    assumption is not required.



|                                                 |  |                     |       |   |                        |  |        |  
|------------------------------------------------ |  | ------------------- | ----- | - | ---------------------- |  | ------ | -
|                                                 |  | Short Term Deferred |       |   | Performance Restricted | 
|                                                 |  | Incentive Plan      |       |   | Share Plan             | 
|                                                 |  |                     |       |   |                        | 
|                                                 |  | Number of shares    |       |   | Number of shares       | 
|                                                 |  | (thousands)         |      
|Outstanding at January 1, 2004                   |  |                     | 107   |   |                        |  | 5,445  |  
|Granted                                          |  |                     | 231   |   |                        |  | 2,665  |  
|Vested                                           |  |                     | (47   | ) |                        |  |       |  
|Lapsed or canceled                               |  |                     | (50   | ) |                        |  | (375   | )
|                                                 |  |                     |       |   |                        | 
|Outstanding at December 31, 2004                 |  |                     | 241   |   |                        |  | 7,735  |  
|Granted                                          |  |                     | 625   |   |                        |  | 5,174  |  
|Vested                                           |  |                     | (32   | ) |                        |  | (1,278 | )
|Lapsed or canceled                               |  |                     | (5    | ) |                        |  | (997   | )
|                                                 |  |                     |       |   |                        | 
|Outstanding at December 31, 2005                 |  |                     | 829   |   |                        |  | 10,634 |  
|Granted                                          |  |                     | 569   |   |                        |  | 4,277  |  
|Vested                                           |  |                     | (328  | ) |                        |  | (1,395 | )
|Lapsed or canceled                               |  |                     | (69   | ) |                        |  | (2,191 | )
|                                                 |  |                     |       |   |                        | 
|Outstanding at December 31, 2006                 |  |                     | 1,001 |   |                        |  | 11,325 |  
|                                                 |  |                     |       |   |                        | 
|Fair value of awards granted during the period   |  |                     |       |   |                        |  |        |  
|At December 31, 2006                             |  |                     | 894.5 | p |                        |  | 287.0  | p
|At December 31, 2005                             |  |                     | 649.1 | p |                        |  | 117.0  | p
|At December 31, 2004                             |  |                     | 448.3 | p |                        |  | 125.1  | p
|                                                 |  |                     |       |   |                        | 
|Weighted average remaining contract life (years) |  |                     |       |   |                        |  |        |  
|At December 31, 2006                             |  |                     | 1.0   |   |                        |  | 1.3    |  
|At December 31, 2005                             |  |                     | 1.1   |   |                        |  | 1.2    |  
|At December 31, 2004                             |  |                     | 1.7   |   |                        |  | 1.0    |  



F-63



---



##### 



|                                                    |  |                |       |          |                             |  |           |              |  |  |           |          |  |           |           |  |               |  |        |              |  |  |             |  |  |  |       |  |  |  |      | 
|--------------------------------------------------- |  | -------------- | ----- | -------- | --------------------------- |  | --------- | ------------ |  |  | --------- | -------- |  | --------- | --------- |  | ------------- |  | ------ | ------------ |  |  | ----------- |  |  |  | ----- |  |  |  | ---- | 
|                                                    |  | Sharesave Plan |       |          | Executive Share Option Plan | 
|                                                    |  |                |       |          |                             | 
|                                                    |  |                |       | Weighted |                             |  | Aggregate |              |  |  |           | Weighted |  |           | Aggregate | 
|                                                    |  | Number of      |       |          | Range of                    |  |           | average      |  |  | intrinsic |          |  | Number of |           |  | Range of      |  |        | average      |  |  | intrinsic   | 
|                                                    |  | shares         |       |          | option prices               |  |           | option price |  |  | value     |          |  | shares    |           |  | option prices |  |        | option price |  |  | value       | 
|                                                    |  |                |       |          |                             |  |           |              |  |  |           |          |  |           |           |  |               |  |        |              |  |  |             | 
|                                                    |  | thousands      |       |          | pence                       |  |           | pence        |  |  | £ million |          |  | thousands |           |  | pence         |  |        | pence        |  |  | £ million   | 
|Options outstanding at
    January 1, 2004          |  |                | 1,373 |          |                             |  | 420.5     |              |  |  | 420.5     |          |  |           |           |  |               |  | 27,220 |              |  |  | 295.3-593.3 |  |  |  | 424.9 |  |  |  |      | 
|Granted                                             |  |                |      |          |                             |  |          |              |  |  |          |          |  |           |           |  |               |  | 6,951  |              |  |  | 494.2       |  |  |  | 494.2 |  |  |  |      | 
|Exercised                                           |  |                |      |          |                             |  |          |              |  |  |          |          |  |           |           |  |               |  | (7,430 | )            |  |  | 295.3-593.3 |  |  |  | 408.2 |  |  |  |      | 
|Lapsed or canceled                                  |  |                | (111  | )        |                             |  | 420.5     |              |  |  | 420.5     |          |  |           |           |  |               |  |       |              |  |  |            |  |  |  |      |  |  |  |      | 
|                                                    |  |                |       |          |                             |  |           |              |  |  |           |          |  |           |           |  |               |  |        |              |  |  |             | 
|Options outstanding at December 31, 2004            |  |                | 1,262 |          |                             |  | 420.5     |              |  |  | 420.5     |          |  |           | 0.3       |  |               |  | 26,741 |              |  |  | 308.5-593.3 |  |  |  | 447.6 |  |  |  | 5.3  | 
|Granted                                             |  |                |      |          |                             |  |          |              |  |  |          |          |  |           |           |  |               |  | 2,105  |              |  |  | 619.8       |  |  |  | 619.8 |  |  |  |      | 
|Exercised                                           |  |                | (118  | )        |                             |  | 420.5     |              |  |  | 420.5     |          |  |           |           |  |               |  | (4,138 | )            |  |  | 308.5-593.3 |  |  |  | 429.1 |  |  |  |      | 
|Lapsed or canceled                                  |  |                | (280  | )        |                             |  | 420.5     |              |  |  | 420.5     |          |  |           |           |  |               |  | (2,089 | )            |  |  | 345.6-619.8 |  |  |  | 465.3 |  |  |  |      | 
|                                                    |  |                |       |          |                             |  |           |              |  |  |           |          |  |           |           |  |               |  |        |              |  |  |             | 
|Options outstanding at December 31, 2005            |  |                | 864   |          |                             |  | 420.5     |              |  |  | 420.5     |          |  |           | 0.4       |  |               |  | 22,619 |              |  |  | 308.5-619.8 |  |  |  | 465.4 |  |  |  | 8.5  | 
|Exercised                                           |  |                | (389  | )        |                             |  | 420.5     |              |  |  | 420.5     |          |  |           |           |  |               |  | (8,365 | )            |  |  | 308.5-619.8 |  |  |  | 438.7 |  |  |  |      | 
|Lapsed or canceled                                  |  |                | (310  | )        |                             |  | 420.5     |              |  |  | 420.5     |          |  |           |           |  |               |  | (175   | )            |  |  | 345.6-619.8 |  |  |  | 404.6 |  |  |  |      | 
|                                                    |  |                |       |          |                             |  |           |              |  |  |           |          |  |           |           |  |               |  |        |              |  |  |             | 
|Options outstanding at December 31, 2006            |  |                | 165   |          |                             |  | 420.5     |              |  |  | 420.5     |          |  |           | 0.1       |  |               |  | 14,079 |              |  |  | 308.5-619.8 |  |  |  | 482.2 |  |  |  | 11.0 | 
|                                                    |  |                |       |          |                             |  |           |              |  |  |           |          |  |           |           |  |               |  |        |              |  |  |             | 
|Options exercisable                                 |  |                |       |          |                             |  |           |              |  |  |           |          |  |           |           |  |               |  |        |              |  |  |             |  |  |  |       |  |  |  |      | 
|At December 31, 2006                                |  |                |      |          |                             |  |          |              |  |  |          |          |  |           |          |  |               |  | 6,002  |              |  |  | 308.5-619.8 |  |  |  | 430.2 |  |  |  | 5.0  | 
|At December 31, 2005                                |  |                |      |          |                             |  |          |              |  |  |          |          |  |           |          |  |               |  | 8,710  |              |  |  | 308.5-619.8 |  |  |  | 434.3 |  |  |  | 3.5  | 
|At December 31, 2004                                |  |                |      |          |                             |  |          |              |  |  |          |          |  |           |          |  |               |  | 12,569 |              |  |  | 308.5-593.3 |  |  |  | 426.4 |  |  |  | 1.7  | 
|Fair value of options granted
    during the period |  |                |       |          |                             |  |           |              |  |  |           |          |  |           |           |  |               |  |        |              |  |  |             |  |  |  |       |  |  |  |      | 
|At December 31, 2005                                |  |                |      |          |                             |  |           |              |  |  |           |          |  |           |           |  |               |  | 164.0  | p            |  |  |             |  |  |  |       |  |  |  |      | 
|At December 31, 2004                                |  |                |      |          |                             |  |           |              |  |  |           |          |  |           |           |  |               |  | 136.0  | p            |  |  |             |  |  |  |       |  |  |  |      | 

Weighted average remaining contract life (years)


|                     |  |                |     |  |                             |  |   |             |  |  |             |  |  |  |     | 
|-------------------- |  | -------------- | --- |  | --------------------------- |  | - | ----------- |  |  | ----------- |  |  |  | --- | 
|                     |  | Sharesave Plan |     |  | Executive Share Option Plan | 
|                     |  |                |     |  |                             | 
|                     |  | Outstanding    |     |  | Exercisable                 |  |   | Outstanding |  |  | Exercisable | 
|                     |  |                |     |  |                             |  |   |             |  |  |             | 
|At December 31, 2006 |  |                | 0.8 |  |                             |  |  |             |  |  | 6.4         |  |  |  | 5.1 | 
|At December 31, 2005 |  |                | 1.9 |  |                             |  |  |             |  |  | 6.9         |  |  |  | 5.2 | 
|At December 31, 2004 |  |                | 2.8 |  |                             |  |  |             |  |  | 7.3         |  |  |  | 4.6 | 





F-64



---



##### 





|                                 |                             |                     |        |          |                     |  |          |              |  |  |             |          |  |              |       |  |  |  |       |  | 
|-------------------------------- | --------------------------- | ------------------- | ------ | -------- | ------------------- |  | -------- | ------------ |  |  | ----------- | -------- |  | ------------ | ----- |  |  |  | ----- |  | 
|                                 |                             | Options outstanding |        |          | Options exercisable | 
|                                 |                             |                     |        |          |                     | 
|                                 |                             |                     |        | Weighted |                     |  |          |              | 
|                                 |                             |                     |        | average  |                     |  | Weighted |              |  |  |             | Weighted | 
|                                 |                             | Number              |        |          | remaining           |  |          | average      |  |  | Number      |          |  | average      |      
|                                 |                             | outstanding         |        |          | contract life       |  |          | option price |  |  | exercisable |          |  | option price |      
|                                 |                             |                     |        |          |                     |  |          |              |  |  |             |          |  |              |      
|                                 |                             | thousands           |        |          | years               |  |          | pence        |  |  | thousands   |          |  | pence        |      
|Range of exercise prices (pence) |                             |                     |        |          |                     |  |          |              |  |  |             |          |  |              |       |  |  |  |       | 
|Sharesave Plan                   |                             |                     |        |          |                     |  |          |              |  |  |             |          |  |              |       |  |  |  |       | 
|420.5                            |                             |                     | 165    |          |                     |  | 0.8      |              |  |  | 420.5       |          |  |              |      |  |  |  |      | 
|                                 |                             |                     |        |          |                     |  |          |              |  |  |             |          |  |              |      
|                                 | Executive Share Option Plan |                     |        |          |                     |  |          |              |  |  |             |          |  |              |       |  |  |  |       |  | 
|308.5 to 353.8                   |                             |                     | 735    |          |                     |  | 3.5      |              |  |  | 343.3       |          |  |              | 734   |  |  |  | 343.3 | 
|353.9 to 498.0                   |                             |                     | 11,396 |          |                     |  | 6.5      |              |  |  | 468.1       |          |  |              | 5,033 |  |  |  | 436.2 | 
|498.1 to 619.8                   |                             |                     | 1,948  |          |                     |  | 7.5      |              |  |  | 616.8       |          |  |              | 235   |  |  |  | 595.0 | 
|                                 |                             |                     |        |          |                     |  |          |              |  |  |             |          |  |              |      
|                                 |                             |                     | 14,079 |          |                     |  | 6.4      |              |  |  | 482.2       |          |  |              | 6,002 |  |  |  | 430.2 | 
|                                 |                             |                     |        |          |                     |  |          |              |  |  |             |          |  |              |      

|                                                 |                                    |                    |      |      |      |  |      |     | 
|------------------------------------------------ | ---------------------------------- | ------------------ | ---- | ---- | ---- |  | ---- | --- | 
|                                                 |                                    | For the year ended |     
|                                                 |                                    | December 31,       |     
|                                                 |                                    |                    |     
|                                                 |                                    | 2006               |      |      | 2005 | 
|                                                 |                                    |                    |      |      |      | 
|                                                 |                                    | (£ million)        |     
|Intrinsic value of options exercised in the year |                                    |                    |      |      |      |  |      |    
|                                                 | Short term deferred incentive plan |                    |      | 5.6  |      |  |      | 0.2 | 
|                                                 | Performance restricted share plan  |                    |      | 7.2  |      |  |      | 4.8 | 
|                                                 | Sharesave plan                     |                    |      | 1.9  |      |  |      | 0.3 | 
|                                                 | Executive share option plan        |                    |      | 17.8 |      |  |      | 8.0 | 
|                                                 |                                    |                    |      |      |      | 
|                                                 |                                    |                    | 32.5 |      |      |  | 13.3 |    
|                                                 |                                    |                    |      |      |      | 
|Fair value of shares vested during the year      |                                    |                    |      |      |      |  |      |    
|                                                 | Short term deferred incentive plan |                    |      | 1.7  |      |  |      | 0.2 | 
|                                                 | Performance restricted share plan  |                    |      | 6.2  |      |  |      |    | 
|                                                 | Sharesave plan                     |                    |      |     |      |  |      |    | 
|                                                 | Executive share option plan        |                    |      | 9.3  |      |  |      |    | 
|                                                 |                                    |                    |      |      |      | 
|                                                 |                                    |                    | 17.2 |      |      |  | 0.2  |    
|                                                 |                                    |                    |      |      |      | 





F-65



---



##### 



Note 24  Provisions


|                                   |             |                   |    |   |              |  |    |       |  |  |    |   | 
|---------------------------------- | ----------- | ----------------- | -- | - | ------------ |  | -- | ----- |  |  | -- | - | 
|                                   |             | Hotels            |    |   | Onerous      |  |    |      
|                                   |             | reorganization(a) |    |   | contracts(b) |  |    | Total | 
|                                   |             |                   |    |   |              |  |    |       | 
|                                   |             | (£ million)       |   
|At January 1, 2005                 |             |                   |    |   |              |  |    |       |  |  |    |  
|                                   | Current     |                   |    | 4 |              |  |    | 1     |  |  |    | 5 | 
|                                   | Non-current |                   |    | 4 |              |  |    | 2     |  |  |    | 6 | 
|                                   |             |                   |    |   |              |  |    |       | 
|                                   |             |                   | 8  |   |              |  | 3  |       |  |  | 11 |  
|Income statement                   |             |                   |   |   |              |  | (1 | )     |  |  | (1 | )
|Expenditure                        |             |                   | (4 | ) |              |  |   |       |  |  | (4 | )
|                                   |             |                   |    |   |              |  |    |       | 
|At December 31, 2005  all current |             |                   | 4  |   |              |  | 2  |       |  |  | 6  |  
|Income statement                   |             |                   | (2 | ) |              |  |   |       |  |  | (2 | )
|Expenditure                        |             |                   | (2 | ) |              |  | (2 | )     |  |  | (4 | )
|                                   |             |                   |    |   |              |  |    |       | 
|At December 31, 2006               |             |                   |   |   |              |  |   |       |  |  |   |  
|                                   |             |                   |    |   |              |  |    |       | 






|    |  |                                                                                                           
|--- |  | ----------------------------------------------------------------------------------------------------------
|(a) |  | Relates to the Hotels reorganization charged to the
    non-operating special item in 2003.               
|   
|(b) |  | Primarily relates to onerous fixed lease contracts acquired with
    the InterContinental hotels business.

Note 25  Deferred tax payable


|                                           |  |             |      |   |            |  |     |        |  |          |          |       |            |            |     |           |              |  |     |       |  |  |     |   |  |  |      |  
|------------------------------------------ |  | ----------- | ---- | - | ---------- |  | --- | ------ |  | -------- | -------- | ----- | ---------- | ---------- | --- | --------- | ------------ |  | --- | ----- |  |  | --- | - |  |  | ---- | -
|                                           |  |             |      |   |            |  |     |        |  |          |          | Other |            |            |    
|                                           |  | Property,   |      |   | Deferred   |  |     |        |  |          |          |       |            | short-term |     |           |             
|                                           |  | plant and   |      |   | gains on   |  |     |        |  | Employee |          |       | Intangible |            |     | temporary |              |  |    
|                                           |  | equipment   |      |   | loan notes |  |     | Losses |  |          | benefits |       |            | assets     |     |           | differences* |  |     | Total | 
|                                           |  |             |      |   |            |  |     |        |  |          |          |       |            |            |     |           |              |  |     |       | 
|                                           |  | (£ million) |     
|At January 1, 2004                         |  |             | 519  |   |            |  | 123 |        |  |          | (37      | )     |            |            | (42 | )         |              |  | (37 | )     |  |  | (49 | ) |  |  | 477  |  
|Disposals                                  |  |             | (5   | ) |            |  |    |        |  |          |         |       |            |            |    |           |              |  |    |       |  |  |    |   |  |  | (5   | )
|Income statement                           |  |             | (17  | ) |            |  |    |        |  |          | (77      | )     |            |            | 17  |           |              |  | 5   |       |  |  | (5  | ) |  |  | (77  | )
|Statement of recognized income and expense |  |             |     |   |            |  |    |        |  |          |         |       |            |            | (14 | )         |              |  |    |       |  |  |    |   |  |  | (14  | )
|Exchange and other adjustments             |  |             | (5   | ) |            |  | (1  | )      |  |          | 1        |       |            |            |    |           |              |  | 2   |       |  |  | 4   |   |  |  | 1    |  
|                                           |  |             |      |   |            |  |     |        |  |          |          |       |            |            |     |           |              |  |     |       | 
|At December 31, 2004                       |  |             | 492  |   |            |  | 122 |        |  |          | (113     | )     |            |            | (39 | )         |              |  | (30 | )     |  |  | (50 | ) |  |  | 382  |  
|Disposals                                  |  |             | (150 | ) |            |  |    |        |  |          |         |       |            |            | 34  |           |              |  |    |       |  |  | 3   |   |  |  | (113 | )
|Income statement                           |  |             | (87  | ) |            |  |    |        |  |          | (11      | )     |            |            | (5  | )         |              |  | 32  |       |  |  | 56  |   |  |  | (15  | )
|Statement of recognized income and expense |  |             |     |   |            |  |    |        |  |          |         |       |            |            | (5  | )         |              |  |    |       |  |  | (2  | ) |  |  | (7   | )
|Exchange and other adjustments             |  |             | 1    |   |            |  |    |        |  |          | 1        |       |            |            | (1  | )         |              |  | (3  | )     |  |  | (1  | ) |  |  | (3   | )
|                                           |  |             |      |   |            |  |     |        |  |          |          |       |            |            |     |           |              |  |     |       | 
|At December 31, 2005                       |  |             | 256  |   |            |  | 122 |        |  |          | (123     | )     |            |            | (16 | )         |              |  | (1  | )     |  |  | 6   |   |  |  | 244  |  
|Disposals                                  |  |             | (126 | ) |            |  |    |        |  |          | 2        |       |            |            |    |           |              |  |    |       |  |  | 7   |   |  |  | (117 | )
|Income statement                           |  |             | (2   | ) |            |  | (26 | )      |  |          | 31       |       |            |            | (1  | )         |              |  | 16  |       |  |  | (32 | ) |  |  | (14  | )
|Statement of recognized income and expense |  |             |     |   |            |  |    |        |  |          |         |       |            |            | 1   |           |              |  |    |       |  |  | (27 | ) |  |  | (26  | )
|Acquisition of subsidiary (note 31)        |  |             |     |   |            |  |    |        |  |          |         |       |            |            |    |           |              |  | 1   |       |  |  |    |   |  |  | 1    |  
|Exchange and other adjustments             |  |             | (9   | ) |            |  | (4  | )      |  |          | 1        |       |            |            | 2   |           |              |  | 1   |       |  |  | 2   |   |  |  | (7   | )
|                                           |  |             |      |   |            |  |     |        |  |          |          |       |            |            |     |           |              |  |     |       | 
|At December 31, 2006                       |  |             | 119  |   |            |  | 92  |        |  |          | (89      | )     |            |            | (14 | )         |              |  | 17  |       |  |  | (44 | ) |  |  | 81   |  
|                                           |  |             |      |   |            |  |     |        |  |          |          |       |            |            |     |           |              |  |     |       | 






|  |                                                                                                                         
|- | ------------------------------------------------------------------------------------------------------------------------
|* | Other short-term
    temporary differences relate primarily to provisions and
    accruals and
    share-based payments.

F-66



---



##### 



|               |                                         |                 |    |    |      |  |     |      |  |  |     |     | 
|-------------- | --------------------------------------- | --------------- | -- | -- | ---- |  | --- | ---- |  |  | --- | --- | 
|               |                                         | At December 31, |   
|               |                                         |                 |   
|               |                                         | 2006            |    |    | 2005 |  |     | 2004 | 
|               |                                         |                 |    |    |      |  |     |      | 
|               |                                         | (£ million)     |   
|Analyzed as:   |                                         |                 |    |    |      |  |     |      |  |  |     |    
|               | Deferred tax payable                    |                 |    | 79 |      |  |     | 210  |  |  |     | 234 | 
|               | Liabilities classified as held for sale |                 |    | 2  |      |  |     | 34   |  |  |     | 148 | 
|               |                                         |                 |    |    |      |  |     |      | 
|At December 31 |                                         |                 | 81 |    |      |  | 244 |      |  |  | 382 |    
|               |                                         |                 |    |    |      |  |     |      | 









Note 26  Minority equity interest


|                                                |  |                         |     |   |      |  |      |      |  |  |     |  
|----------------------------------------------- |  | ----------------------- | --- | - | ---- |  | ---- | ---- |  |  | --- | -
|                                                |  | Year ended December 31, |    
|                                                |  |                         |    
|                                                |  | 2006                    |     |   | 2005 |  |      | 2004 | 
|                                                |  |                         |     |   |      |  |      |      | 
|                                                |  | (£ million)             |    
|At January, 1                                   |  |                         | 20  |   |      |  | 117  |      |  |  | 139 |  
|Total recognized income and expense in the year |  |                         |    |   |      |  | 15   |      |  |  | 17  |  
|Dividends paid to minority interests            |  |                         | (1  | ) |      |  | (177 | )    |  |  | (26 | )
|Disposal of hotels (Note 11)                    |  |                         | (13 | ) |      |  |     |      |  |  | (11 | )
|Disposal of Soft Drinks business (Note 11)      |  |                         |    |   |      |  | 66   |      |  |  |    |  
|Acquisition of subsidiary (Note 31)             |  |                         | 3   |   |      |  |     |      |  |  |    |  
|Exchange and other adjustments                  |  |                         | (1  | ) |      |  | (1   | )    |  |  | (2  | )
|                                                |  |                         |     |   |      |  |      |      | 
|At December, 31                                 |  |                         | 8   |   |      |  | 20   |      |  |  | 117 |  
|                                                |  |                         |     |   |      |  |      |      | 

Note 27  Operating leases




F-67



---



##### 



non-cancelable


|                     |  |                 |     |  |                 |  |     |                 |  |  |       | 
|-------------------- |  | --------------- | --- |  | --------------- |  | --- | --------------- |  |  | ----- | 
|                     |  | At December 31, |     |  | At December 31, |  |     | At December 31, | 
|                     |  | 2006            |     |  | 2005            |  |     | 2004            | 
|                     |  |                 |     |  |                 |  |     |                 | 
|                     |  | (£ million)     |    
|Due within one year  |  |                 | 27  |  |                 |  | 36  |                 |  |  | 55    | 
|One to two years     |  |                 | 21  |  |                 |  | 31  |                 |  |  | 51    | 
|Two to three years   |  |                 | 19  |  |                 |  | 25  |                 |  |  | 47    | 
|Three to four years  |  |                 | 14  |  |                 |  | 19  |                 |  |  | 38    | 
|Four to five years   |  |                 | 9   |  |                 |  | 14  |                 |  |  | 31    | 
|More than five years |  |                 | 100 |  |                 |  | 149 |                 |  |  | 884   | 
|                     |  |                 |     |  |                 |  |     |                 | 
|                     |  |                 | 190 |  |                 |  | 274 |                 |  |  | 1,106 | 
|                     |  |                 |     |  |                 |  |     |                 | 



Note 28  Capital commitments


|                                                                                                                   |  |                 |    |  |                 |  |    |                 |  |  |    | 
|------------------------------------------------------------------------------------------------------------------ |  | --------------- | -- |  | --------------- |  | -- | --------------- |  |  | -- | 
|                                                                                                                   |  | At December 31, |    |  | At December 31, |  |    | At December 31, | 
|                                                                                                                   |  | 2006            |    |  | 2005            |  |    | 2004            | 
|                                                                                                                   |  |                 |    |  |                 |  |    |                 | 
|                                                                                                                   |  | (£ million)     |   
|Contracts placed for expenditure on property, plant and
    equipment not provided for in the financial statements |  |                 | 24 |  |                 |  | 76 |                 |  |  | 53 | 
|                                                                                                                   |  |                 |    |  |                 |  |    |                 | 

Note 29  Contingencies




|           |  |                 |    |  |                 |  |    |                 |  |  |   | 
|---------- |  | --------------- | -- |  | --------------- |  | -- | --------------- |  |  | - | 
|           |  | At December 31, |    |  | At December 31, |  |    | At December 31, | 
|           |  | 2006            |    |  | 2005            |  |    | 2004            | 
|           |  |                 |    |  |                 |  |    |                 | 
|           |  | (£ million)     |   
|Guarantees |  |                 | 11 |  |                 |  | 20 |                 |  |  | 9 | 
|           |  |                 |    |  |                 |  |    |                 | 









F-68



---



##### 



Note 30  Related party disclosures




|                                               |  |                         |      |  |      |  |      |      |  |  |      | 
|---------------------------------------------- |  | ----------------------- | ---- |  | ---- |  | ---- | ---- |  |  | ---- | 
|                                               |  | Year ended December 31, |     
|                                               |  |                         |     
|                                               |  | 2006                    |      |  | 2005 |  |      | 2004 | 
|                                               |  |                         |      |  |      |  |      |      | 
|                                               |  | (£ million)             |     
|Total compensation of key management personnel |  |                         |      |  |      |  |      |      |  |  |      | 
|Short-term employment benefits                 |  |                         | 9.5  |  |      |  | 6.5  |      |  |  | 5.5  | 
|Post-employment benefits                       |  |                         | 0.5  |  |      |  | 0.2  |      |  |  | 0.2  | 
|Termination benefits                           |  |                         |     |  |      |  | 0.8  |      |  |  | 0.8  | 
|Equity compensation benefits                   |  |                         | 7.9  |  |      |  | 6.9  |      |  |  | 4.1  | 
|                                               |  |                         |      |  |      |  |      |      | 
|                                               |  |                         | 17.9 |  |      |  | 14.4 |      |  |  | 10.6 | 
|                                               |  |                         |      |  |      |  |      |      | 



Note 31  Acquisition of subsidiary




|                                                                     |  |                 |    |   |       |  |    |  
|-------------------------------------------------------------------- |  | --------------- | -- | - | ----- |  | -- | -
|                                                                     |  | Carrying        |    |   |      
|                                                                     |  | values          |    |   | Fair  | 
|                                                                     |  | pre-acquisition |    |   | value | 
|                                                                     |  |                 |    |   |       | 
|                                                                     |  | (£ million)     |   
|Intangible assets                                                    |  |                 | 1  |   |       |  | 8  |  
|Current assets (excluding cash and cash equivalents)                 |  |                 | 4  |   |       |  | 4  |  
|Cash and cash equivalents                                            |  |                 | 4  |   |       |  | 4  |  
|Trade and other payables                                             |  |                 | (3 | ) |       |  | (3 | )
|Current tax payable                                                  |  |                 | (1 | ) |       |  | (1 | )
|Deferred tax payable                                                 |  |                 |   |   |       |  | (1 | )
|                                                                     |  |                 |    |   |       | 
|                                                                     |  |                 | 5  |   |       |  | 11 |  
|                                                                     |  |                 |    |   |       | 
|Minority interest                                                    |  |                 |    |   |       |  | (3 | )
|                                                                     |  |                 |    |   |       | 
|Net assets acquired                                                  |  |                 |    |   |       |  | 8  |  
|Goodwill on acquisition                                              |  |                 |    |   |       |  | 2  |  
|                                                                     |  |                 |    |   |       | 
|Consideration, satisfied in cash (including costs of
    £2 million) |  |                 |    |   |       |  | 10 |  
|Cash and cash equivalents acquired                                   |  |                 |    |   |       |  | (4 | )
|                                                                     |  |                 |    |   |       | 
|Net cash outflow                                                     |  |                 |    |   |       |  | 6  |  
|                                                                     |  |                 |    |   |       | 





F-69



---



##### 





|          |                                                                                                                                   
|--------- | ----------------------------------------------------------------------------------------------------------------------------------
|Note 32  | Differences between International Financial Reporting
    Standards and United States Generally Accepted Accounting
    Principles







Share-Based




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





| |                                           
| | ------------------------------------------
| | Pensions and other postretirement benefits



F-83.




F-70



---



##### 







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













| |                              
| | -----------------------------
| | Property, plant and equipment











F-71



---



##### 







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



Share-based
Compensation


















| |             
| | ------------
| | Deferred tax



F-72



---



##### 









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





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





| |                                     
| | ------------------------------------
| | Assets and liabilities held for sale





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



F-73



---



##### 





| |                                      
| | -------------------------------------
| | Net income in accordance with US GAAP



|                                                                                                     |                                               |                      |     |     |              |  |      |              |    |   |     |     |     |  
|---------------------------------------------------------------------------------------------------- | --------------------------------------------- | -------------------- | --- | --- | ------------ |  | ---- | ------------ | -- | - | --- | --- | --- | -
|                                                                                                     |                                               | Year ended           |     |     | Year ended   |  |      | Year ended   |   
|                                                                                                     |                                               | December 31,         |     |     | December 31, |  |      | December 31, |   
|                                                                                                     |                                               | 2006                 |     |     | 2005         |  |      | 2004         |   
|                                                                                                     |                                               |                      |     |     |              |  |      |              |   
|                                                                                                     |                                               | (£ million)          |    
|Profit available for IHG equity holders in accordance with
    IFRS                                  |                                               |                      | 405 |     |              |  | 496  |              |    |   | 383 |    
|Adjustments:                                                                                         |                                               |                      |     |     |              |  |      |              |    |   |     |    
|                                                                                                     | Amortization of intangible assets             |                      |     | 1   |              |  |      | (1           | )  |   |     | (3  | )  
|                                                                                                     | Impairment of property, plant and equipment   |                      |     | 3   |              |  |      | (17          | )  |   |     | 30  |    
|                                                                                                     | Disposal of property, plant and equipment     |                      |     | 35  |              |  |      | (107         | )  |   |     | 5   |    
|                                                                                                     | Depreciation of property, plant and equipment |                      |     | (20 | )            |  |      | (31          | )  |   |     | (20 | )  
|                                                                                                     | Deferred revenue                              |                      |     | 14  |              |  |      | 15           |    |   |     | 5   |    
|                                                                                                     | Gain on held for sale equity investment       |                      |     | 27  |              |  |      |             |    |   |     | (28 | )  
|                                                                                                     | Pension costs                                 |                      |     | (6  | )            |  |      | (20          | )  |   |     | (9  | )  
|                                                                                                     | Staff costs                                   |                      |     | (30 | )            |  |      | (1           | )  |   |     | 2   |    
|                                                                                                     | Change in fair value of
    derivatives(i)    |                      |     | (2  | )            |  |      | 6            |    |   |     | 52  |    
|                                                                                                     | Provisions                                    |                      |     | (2  | )            |  |      | (3           | )  |   |     | (5  | )  
|                                                                                                     | Impairment of investment in associates        |                      |     | (2  | )            |  |      |             |    |   |     |    |    
|                                                                                                     | Current and deferred tax:                     |                      |     |     |              |  |      |              |    |   |     |     |    
|                                                                                                     |                                               | on above adjustments |     |     | 13           |  |      |              | 16 |   |     |     | 4   |  
|                                                                                                     |                                               | methodology          |     |     | 69           |  |      |              | (2 | ) |     |     | (79 | )
|                                                                                                     |                                               |                      |     |     |              |  |      |              |   
|                                                                                                     |                                               |                      | 100 |     |              |  | (145 | )            |    |   | (46 | )  
|                                                                                                     | Minority share of above adjustments           |                      |     |    |              |  |      | 4            |    |   |     | 3   |    
|                                                                                                     |                                               |                      |     |     |              |  |      |              |   
|                                                                                                     |                                               |                      | 100 |     |              |  | (141 | )            |    |   | (43 | )  
|                                                                                                     |                                               |                      |     |     |              |  |      |              |   
|Net income in accordance with US GAAP before cumulative effect
    of change in accounting principle |                                               |                      | 505 |     |              |  | 355  |              |    |   | 340 |    
|Cumulative effect of change in accounting principle, net of tax                                      |                                               |                      | (19 | )   |              |  |     |              |    |   |    |    
|                                                                                                     |                                               |                      |     |     |              |  |      |              |   
|Net income in accordance with US GAAP                                                                |                                               |                      | 486 |     |              |  | 355  |              |    |   | 340 |    
|                                                                                                     |                                               |                      |     |     |              |  |      |              |   

See page F-75 for footnotes.


F-74



---



##### 





|                                                                                                 |                                                     |                                     |        |       |              |  |        |              |   |  |        |      |  
|------------------------------------------------------------------------------------------------ | --------------------------------------------------- | ----------------------------------- | ------ | ----- | ------------ |  | ------ | ------------ | - |  | ------ | ---- | -
|                                                                                                 |                                                     | Year ended                          |        |       | Year ended   |  |        | Year ended   |  
|                                                                                                 |                                                     | December 31,                        |        |       | December 31, |  |        | December 31, |  
|                                                                                                 |                                                     | 2006                                |        |       | 2005         |  |        | 2004         |  
|                                                                                                 |                                                     |                                     |        |       |              |  |        |              |  
|                                                                                                 |                                                     | (£ million, except per ADS amounts) |       
|Net sales                                                                                        |                                                     |                                     | 1,362  |       |              |  | 1,521  |              |   |  | 1,606  |     
|Operating and administrative expenses                                                            |                                                     |                                     | (1,124 | )     |              |  | (1,323 | )            |   |  | (1,374 | )   
|Financial income and financial expenses                                                          |                                                     |                                     | (11    | )     |              |  | (24    | )            |   |  | (33    | )   
|                                                                                                 |                                                     |                                     |        |       |              |  |        |              |  
|Income before income tax expense and minority interest                                           |                                                     |                                     | 227    |       |              |  | 174    |              |   |  | 199    |     
|Income tax credit/(expense)                                                                      |                                                     |                                     | 111    |       |              |  | (56    | )            |   |  | 79     |     
|Gain/(loss) on disposal of assets, net of
    tax(iv)                                            |                                                     |                                     | 167    |       |              |  | (14    | )            |   |  | 3      |     
|Minority interest                                                                                |                                                     |                                     |       |       |              |  |       |              |   |  | (24    | )   
|                                                                                                 |                                                     |                                     |        |       |              |  |        |              |  
|Income from continuing operations before cumulative effect of
    change in accounting principle |                                                     |                                     | 505    |       |              |  | 104    |              |   |  | 257    |     
|Cumulative effect of change in accounting principle, net of
    tax(v)                           |                                                     |                                     | (19    | )     |              |  |       |              |   |  |       |     
|Discontinued operations:                                                                         |                                                     |                                     |        |       |              |  |        |              |   |  |        |     
|Result for period, net of
    tax(vi)                                                            |                                                     |                                     |       |       |              |  | 41     |              |   |  | 62     |     
|Surplus on disposal, net of
    tax(vii)                                                         |                                                     |                                     |       |       |              |  | 210    |              |   |  | 21     |     
|                                                                                                 |                                                     |                                     |        |       |              |  |        |              |  
|Net income                                                                                       |                                                     |                                     | 486    |       |              |  | 355    |              |   |  | 340    |     
|                                                                                                 |                                                     |                                     |        |       |              |  |        |              |  
|Per ordinary share and American Depositary Share                                                 |                                                     |                                     |        |       |              |  |        |              |   |  |        |     
|Basic(ii)                                                                                        |                                                     |                                     |        |       |              |  |        |              |   |  |        |     
|                                                                                                 | Continuing operations                               |                                     |        | 129.8 | p            |  |        | 20.0         | p |  |        | 36.2 | p
|                                                                                                 | Cumulative effect of change in accounting principle |                                     |        | (4.9  | )p           |  |        |             |   |  |        |     |  
|                                                                                                 | Discontinued operations                             |                                     |        |      |              |  |        | 48.2         | p |  |        | 11.7 | p
|                                                                                                 |                                                     |                                     |        |       |              |  |        |              |  
|Net income                                                                                       |                                                     |                                     | 124.9  | p     |              |  | 68.2   | p            |   |  | 47.9   | p   
|                                                                                                 |                                                     |                                     |        |       |              |  |        |              |  
|Diluted(iii)                                                                                     |                                                     |                                     |        |       |              |  |        |              |   |  |        |     
|                                                                                                 | Continuing operations                               |                                     |        | 127.2 | p            |  |        | 19.5         | p |  |        | 35.7 | p
|                                                                                                 | Cumulative effect of change in accounting principle |                                     |        | (4.8  | )p           |  |        |             |   |  |        |     |  
|                                                                                                 | Discontinued operations                             |                                     |        |      |              |  |        | 47.1         | p |  |        | 11.5 | p
|                                                                                                 |                                                     |                                     |        |       |              |  |        |              |  
|Net income                                                                                       |                                                     |                                     | 122.4  | p     |              |  | 66.6   | p            |   |  | 47.2   | p   
|                                                                                                 |                                                     |                                     |        |       |              |  |        |              |  






|      |                                                                                                                                                                                                                                                                                                                                                                                                     
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)   | Comprises net gains in the fair value of derivatives that do not
    qualify for hedge accounting of £nil (2005
    £6 million, 2004 £50 million) and net losses
    reclassified from other comprehensive income of
    £2 million (2005 £nil, 2004 £2 million
    gain).                                                                                                                          
|     
|(ii)  | Calculated by dividing net income in accordance with US GAAP by
    389 million (2005 521 million, 2004 710 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 in accordance with US
    GAAP to reflect both the future compensation on share-based
    payments and the notional exercise of the weighted average
    number of dilutive ordinary share options outstanding during the
    period. The resulting weighted average number of ordinary shares
    is 397 million (2005 533 million, 2004
    720 million).
|     
|(iv)  | Tax credit for the year ended December 31, 2006 of
    £6 million (2005 £3 million charge, 2004
    £2 million credit).                                                                                                                                                                                                                                                                             
|     
|(v)   | Arises on the adoption of FAS 123(R) Share-Based
    Payment. Charge of £28 million, net of
    £9 million tax credit.                                                                                                                                                                                                                                                                            
|     
|(vi)  | Tax charge for the year ended December 31, 2006 of
    £nil (2005 £17 million, 2004
    £29 million). Financial expenses for the year ended
    December 31, 2006 of £nil (2005 £9 million,
    2004 £1 million).                                                                                                                                                                                   
|     
|(vii) | Tax charge for the year ended December 31, 2006 of
    £nil (2005 £28 million charge, 2004
    £3 million credit).                                                                                                                                                                                                                                                                                  

F-75



---



##### 





| |                     
| | --------------------
| | Comprehensive Income



|                                                                                                                                       |  |              |      |   |              |  |      |              |  |  |     |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---- | - | ------------ |  | ---- | ------------ |  |  | --- | -
|                                                                                                                                       |  | Year ended   |      |   | Year ended   |  |      | Year ended   | 
|                                                                                                                                       |  | December 31, |      |   | December 31, |  |      | December 31, | 
|                                                                                                                                       |  | 2006         |      |   | 2005         |  |      | 2004         | 
|                                                                                                                                       |  |              |      |   |              |  |      |              | 
|                                                                                                                                       |  | (£ million)  |     
|Net income in accordance with US GAAP                                                                                                  |  |              | 486  |   |              |  | 355  |              |  |  | 340 |  
|Other comprehensive income:                                                                                                            |  |              |      |   |              |  |      |              |  |  |     |  
|Transfer to Britvic of minimum pension liability on
    December 14, 2005, net of tax of £21 million                                   |  |              |     |   |              |  | 49   |              |  |  |    |  
|Minimum pension liability, net of tax charge of
    £1 million (2005 £20 million credit,
    2004 £1 million charge)                   |  |              | 6    |   |              |  | (48  | )            |  |  | 8   |  
|Change in valuation of marketable securities, net of tax credit
    of £7 million (2005 £6 million charge,
    2004 £3 million charge) |  |              | (32  | ) |              |  | 9    |              |  |  | 29  |  
|Change in fair value of derivatives, net of tax credit of
    £nil (2005 £2 million credit, 2004 £nil)                                 |  |              | 3    |   |              |  | (4   | )            |  |  | (2  | )
|Currency translation differences                                                                                                       |  |              | (157 | ) |              |  | (132 | )            |  |  | 83  |  
|                                                                                                                                       |  |              |      |   |              |  |      |              | 
|                                                                                                                                       |  |              | (180 | ) |              |  | (126 | )            |  |  | 118 |  
|                                                                                                                                       |  |              |      |   |              |  |      |              | 
|Comprehensive income in accordance with US GAAP                                                                                        |  |              | 306  |   |              |  | 229  |              |  |  | 458 |  
|                                                                                                                                       |  |              |      |   |              |  |      |              | 



|                                                  |  |                 |     |   |           |  |              |            |  |           |                |   |          |             |    |   |       |  |      |   |  |  |      |  
|------------------------------------------------- |  | --------------- | --- | - | --------- |  | ------------ | ---------- |  | --------- | -------------- | - | -------- | ----------- | -- | - | ----- |  | ---- | - |  |  | ---- | -
|                                                  |  | Defined benefit |     |   |           |  |              |            |  |           |               
|                                                  |  | pension plans   |     |   |           |  |              |            |  |           |               
|                                                  |  |                 |     |   | Change in |  |              | Derivative |  |           |                |   |         
|                                                  |  | Minimum         |     |   |           |  | valuation of |            |  | financial |                |   | Currency |             |    |  
|                                                  |  | pension         |     |   | FAS 158   |  |              | marketable |  |           | instruments    |   |          | translation |    |   |      
|                                                  |  | liability       |     |   | adoption  |  |              | securities |  |           | gains/(losses) |   |          | differences |    |   | Total | 
|                                                  |  |                 |     |   |           |  |              |            |  |           |                |   |          |             |    |   |       | 
|                                                  |  | (£ million)     |    
|At January 1, 2004                                |  |                 | (72 | ) |           |  |             |            |  |           | 2              |   |          |             | 4  |   |       |  | 10   |   |  |  | (56  | )
|Movement in the year                              |  |                 | 8   |   |           |  |             |            |  |           | 29             |   |          |             | (2 | ) |       |  | 83   |   |  |  | 118  |  
|                                                  |  |                 |     |   |           |  |              |            |  |           |                |   |          |             |    |   |       | 
|At December 31, 2004                              |  |                 | (64 | ) |           |  |             |            |  |           | 31             |   |          |             | 2  |   |       |  | 93   |   |  |  | 62   |  
|Movement in the year                              |  |                 | 1   |   |           |  |             |            |  |           | 9              |   |          |             | (4 | ) |       |  | (149 | ) |  |  | (143 | )
|                                                  |  |                 |     |   |           |  |              |            |  |           |                |   |          |             |    |   |       | 
|At December 31, 2005                              |  |                 | (63 | ) |           |  |             |            |  |           | 40             |   |          |             | (2 | ) |       |  | (56  | ) |  |  | (81  | )
|Movement in the year                              |  |                 | 6   |   |           |  |             |            |  |           | (32            | ) |          |             | 3  |   |       |  | (164 | ) |  |  | (187 | )
|Adjustment to initially apply FAS 158, net of tax |  |                 | 57  |   |           |  | (79          | )          |  |           |               |   |          |             |   |   |       |  | 5    |   |  |  | (17  | )
|                                                  |  |                 |     |   |           |  |              |            |  |           |                |   |          |             |    |   |       | 
|At December 31, 2006                              |  |                 |    |   |           |  | (79          | )          |  |           | 8              |   |          |             | 1  |   |       |  | (215 | ) |  |  | (285 | )
|                                                  |  |                 |     |   |           |  |              |            |  |           |                |   |          |             |    |   |       | 



F-76



---



##### 





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



|                                                    |                                                |                                          |                      |     |              |      |       |     |      |      |  
|--------------------------------------------------- | ---------------------------------------------- | ---------------------------------------- | -------------------- | --- | ------------ | ---- | ----- | --- | ---- | ---- | -
|                                                    |                                                | At                                       |                      |     | At           |     
|                                                    |                                                | December 31,                             |                      |     | December 31, |     
|                                                    |                                                | 2006                                     |                      |     | 2005         |     
|                                                    |                                                |                                          |                      |     |              |     
|                                                    |                                                | (£ million)                              |                     
|IHG shareholders equity in accordance with IFRS    |                                                |                                          | 678                  |     |              |      | 1,084 |    
|                                                    |                                                |                                          |                      |     |              |     
|Adjustments:                                        |                                                |                                          |                      |     |              |      |       |    
|                                                    | Intangible assets:                             |                                          |                      |     |              |      |       |     |     
|                                                    |                                                | Cost: goodwill                           |                      |     | 703          |      |       |     | 761  |     
|                                                    |                                                | other intangible assets                  |                      |     | 502          |      |       |     | 655  |     
|                                                    |                                                | Accumulated amortization                 |                      |     | (244         | )    |       |     | (260 | )   
|                                                    |                                                |                                          |                      |     |              |     
|                                                    |                                                |                                          | 961                  |     |              |      | 1,156 |    
|                                                    | Intangible asset  minimum pension liability   |                                          |                      |    |              |      |       | 1   |     
|                                                    |                                                |                                          |                      |     |              |     
|                                                    |                                                |                                          | 961                  |     |              |      | 1,157 |    
|                                                    | Property, plant and equipment:                 |                                          |                      |     |              |      |       |     |     
|                                                    |                                                | Cost                                     |                      |     | 354          |      |       |     | 327  |     
|                                                    |                                                | Assets classified as held for sale       |                      |     |             |      |       |     | 21   |     
|                                                    |                                                | Accumulated depreciation                 |                      |     | (23          | )    |       |     | (19  | )   
|                                                    |                                                |                                          |                      |     |              |     
|                                                    |                                                |                                          | 331                  |     |              |      | 329   |    
|                                                    | Investment in associates                       |                                          |                      | 9   |              |      |       |    |     
|                                                    | Other financial assets                         |                                          |                      | (28 | )            |      |       | (14 | )   
|                                                    | Non-current assets classified as held for sale |                                          |                      | (7  | )            |      |       | (21 | )   
|                                                    | Current assets:                                |                                          |                      |     |              |      |       |     |     
|                                                    |                                                | Other receivables                        |                      |     | 44           |      |       |     | 31   |     
|                                                    | Current liabilities:                           |                                          |                      |     |              |      |       |     |     
|                                                    |                                                | Deferred income on property transactions |                      |     | (13          | )    |       |     | (15  | )   
|                                                    |                                                | Other payables                           |                      |     | 16           |      |       |     | 8    |     
|                                                    | Non-current liabilities:                       |                                          |                      |     |              |      |       |     |     
|                                                    |                                                | Deferred income on property transactions |                      |     | (260         | )    |       |     | (309 | )   
|                                                    |                                                | Other payables                           |                      |     | (98          | )    |       |     | (41  | )   
|                                                    |                                                | Provisions                               |                      |     |             |      |       |     | 4    |     
|                                                    |                                                | Accrued pension liability                |                      |     |             |      |       |     | 15   |     
|                                                    |                                                | Deferred tax payable:                    |                      |     |              |      |       |     |      |     
|                                                    |                                                |                                          | on above adjustments |     |              | (133 | )     |     |      | (204 | )
|                                                    |                                                |                                          | methodology          |     |              | (4   | )     |     |      | (10  | )
|                                                    | Liabilities held for sale                      |                                          |                      |    |              |      |       | 1   |     
|                                                    |                                                |                                          |                      |     |              |     
|                                                    |                                                |                                          | 818                  |     |              |      | 931   |    
|                                                    | Minority share of above adjustments            |                                          |                      | 2   |              |      |       |    |     
|                                                    |                                                |                                          |                      |     |              |     
|                                                    |                                                |                                          | 820                  |     |              |      | 931   |    
|                                                    |                                                |                                          |                      |     |              |     
|IHG shareholders equity in accordance with US GAAP |                                                |                                          | 1,498                |     |              |      | 2,015 |    
|                                                    |                                                |                                          |                      |     |              |     

F-77



---



##### 





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



|             |                                                                             |                                                                 |  |     |              |    |  |              |       |  |  |     |       | 
|------------ | --------------------------------------------------------------------------- | --------------------------------------------------------------- |  | --- | ------------ | -- |  | ------------ | ----- |  |  | --- | ----- | 
|             |                                                                             | Year ended                                                      |  |     | Year ended   |    |  | Year ended   |      
|             |                                                                             | December 31,                                                    |  |     | December 31, |    |  | December 31, |      
|             |                                                                             | 2006                                                            |  |     | 2005         |    |  | 2004         |      
|             |                                                                             |                                                                 |  |     |              |    |  |              |      
|             |                                                                             | (£ million, except per ADS amounts)                             | 
|Numerator:   |                                                                             |                                                                 |  |     |              |    |  |              |       |  |  |    
|             | For basic and diluted earnings per ordinary share and ADS                   |                                                                 |  |     |              |    |  |              |       |  |  |     |      
|             |                                                                             | Before cumulative effect of change in accounting principle      |  |     | 505          |    |  |              | 104   |  |  |     | 257   | 
|             |                                                                             | Cumulative effect of change in accounting principle, net of tax |  |     | (19          | )  |  |              |      |  |  |     |      | 
|             |                                                                             |                                                                 |  |     |              |    |  |              |      
|             |                                                                             | After cumulative effect of change in accounting principle       |  |     | 486          |    |  |              | 104   |  |  |     | 257   | 
|             |                                                                             |                                                                 |  |     |              |    |  |              |      
|Denominator: |                                                                             |                                                                 |  |     |              |    |  |              |       |  |  |    
|             | Denominator for basic earnings per ordinary share and ADS                   |                                                                 |  | 389 |              |    |  | 521          |       |  |  | 710 |      
|             | Effect of dilutive securities:                                              |                                                                 |  |     |              |    |  |              |       |  |  |     |      
|             | Employee options and restricted stock awards                                |                                                                 |  | 8   |              |    |  | 12           |       |  |  | 10  |      
|             |                                                                             |                                                                 |  |     |              |    |  |              |      
|             | Denominator for diluted earnings per ordinary share and ADS                 |                                                                 |  | 397 |              |    |  | 533          |       |  |  | 720 |      
|             |                                                                             |                                                                 |  |     |              |    |  |              |      
|             | Basic earnings per ordinary share and ADS from continuing
    operations:   |                                                                 |  |     |              |    |  |              |       |  |  |     |      
|             |                                                                             | Before cumulative effect of change in accounting principle      |  |     | 129.8p       |    |  |              | 20.0p |  |  |     | 36.2p | 
|             |                                                                             |                                                                 |  |     |              |    |  |              |      
|             |                                                                             | Cumulative effect of change in accounting principle             |  |     | (4.9         | )p |  |              |      |  |  |     |      | 
|             |                                                                             |                                                                 |  |     |              |    |  |              |      
|             |                                                                             | After cumulative effect of change in accounting principle       |  |     | 124.9p       |    |  |              | 20.0p |  |  |     | 36.2p | 
|             |                                                                             |                                                                 |  |     |              |    |  |              |      
|             | Diluted earnings per ordinary share and ADS from continuing
    operations: |                                                                 |  |     |              |    |  |              |       |  |  |     |      
|             |                                                                             | Before cumulative effect of change in accounting principle      |  |     | 127.2p       |    |  |              | 19.5p |  |  |     | 35.7p | 
|             |                                                                             |                                                                 |  |     |              |    |  |              |      
|             |                                                                             | Cumulative effect of change in accounting principle             |  |     | (4.8         | )p |  |              |      |  |  |     |      | 
|             |                                                                             |                                                                 |  |     |              |    |  |              |      
|             |                                                                             | After cumulative effect in change in accounting principle       |  |     | 122.4p       |    |  |              | 19.5p |  |  |     | 35.7p | 
|             |                                                                             |                                                                 |  |     |              |    |  |              |      



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





F-78



---



##### 







|                                                 |                             |              |        |     |              |  |        |              |  |  |      |     | 
|------------------------------------------------ | --------------------------- | ------------ | ------ | --- | ------------ |  | ------ | ------------ |  |  | ---- | --- | 
|                                                 |                             | Year ended   |        |     | Year ended   |  |        | Year ended   | 
|                                                 |                             | December 31, |        |     | December 31, |  |        | December 31, | 
|                                                 |                             | 2006         |        |     | 2005         |  |        | 2004         | 
|                                                 |                             |              |        |     |              |  |        |              | 
|                                                 |                             | (£ million)  |       
|Cash inflow from operating activities            |                             |              | 230    |     |              |  | 302    |              |  |  | 444  |    
|Cash inflow/(outflow) on investing activities    |                             |              | 620    |     |              |  | 1,863  |              |  |  | (151 | )  
|Cash outflow from financing activities           |                             |              | (1,002 | )   |              |  | (1,906 | )            |  |  | (631 | )  
|                                                 |                             |              |        |     |              |  |        |              | 
|(Decrease)/increase in cash and cash equivalents |                             |              | (152   | )   |              |  | 259    |              |  |  | (338 | )  
|Effect of foreign exchange rate changes          |                             |              | 7      |     |              |  | (7     | )            |  |  | (1   | )  
|Cash and cash equivalents                        |                             |              |        |     |              |  |        |              |  |  |      |    
|                                                 | At start of the fiscal year |              |        | 324 |              |  |        | 72           |  |  |      | 411 | 
|                                                 |                             |              |        |     |              |  |        |              | 
|                                                 | At end of the fiscal year   |              |        | 179 |              |  |        | 324          |  |  |      | 72  | 
|                                                 |                             |              |        |     |              |  |        |              | 



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



|                               |  |                     |     |   |                     |  |     |                            |  |  |              |   |  |              |    |   |              |  |    |              |  |  |              |   |  |              |   |  |  |  |   |  |  |  |   | 
|------------------------------ |  | ------------------- | --- | - | ------------------- |  | --- | -------------------------- |  |  | ------------ | - |  | ------------ | -- | - | ------------ |  | -- | ------------ |  |  | ------------ | - |  | ------------ | - |  |  |  | - |  |  |  | - | 
|                               |  | UK pension benefits |     |   | US pension benefits |  |     | US postretirement benefits | 
|                               |  |                     |     |   |                     |  |     |                            | 
|                               |  | Year ended          |     |   | Year ended          |  |     | Year ended                 |  |  | Year ended   |   |  | Year ended   |    |   | Year ended   |  |    | Year ended   |  |  | Year ended   |   |  | Year ended   |  
|                               |  | December 31,        |     |   | December 31,        |  |     | December 31,               |  |  | December 31, |   |  | December 31, |    |   | December 31, |  |    | December 31, |  |  | December 31, |   |  | December 31, |  
|                               |  | 2006                |     |   | 2005                |  |     | 2004                       |  |  | 2006         |   |  | 2005         |    |   | 2004         |  |    | 2006         |  |  | 2005         |   |  | 2004         |  
|                               |  |                     |     |   |                     |  |     |                            |  |  |              |   |  |              |    |   |              |  |    |              |  |  |              |   |  |              |  
|                               |  | (£ million)         |    
|Service cost                   |  |                     | 5   |   |                     |  | 20  |                            |  |  | 17           |   |  |              |   |   |              |  |   |              |  |  |             |   |  |              |  |  |  |  |  |  |  |  |  | 
|Interest cost                  |  |                     | 13  |   |                     |  | 30  |                            |  |  | 26           |   |  |              | 5  |   |              |  | 5  |              |  |  | 5            |   |  |              | 1 |  |  |  | 1 |  |  |  | 1 | 
|Expected return on plan assets |  |                     | (14 | ) |                     |  | (33 | )                          |  |  | (25          | ) |  |              | (4 | ) |              |  | (4 | )            |  |  | (4           | ) |  |              |  |  |  |  |  |  |  |  |  | 
|Net amortization and deferral  |  |                     | 4   |   |                     |  | 5   |                            |  |  | 7            |   |  |              | 2  |   |              |  |   |              |  |  |             |   |  |              |  |  |  |  |  |  |  |  |  | 
|Recognized net actuarial gain  |  |                     |    |   |                     |  |    |                            |  |  |             |   |  |              |   |   |              |  | 2  |              |  |  | 2            |   |  |              |  |  |  |  |  |  |  |  |  | 
|                               |  |                     |     |   |                     |  |     |                            |  |  |              |   |  |              |    |   |              |  |    |              |  |  |              |   |  |              |  
|Net periodic pension cost      |  |                     | 8   |   |                     |  | 22  |                            |  |  | 25           |   |  |              | 3  |   |              |  | 3  |              |  |  | 3            |   |  |              | 1 |  |  |  | 1 |  |  |  | 1 | 
|                               |  |                     |     |   |                     |  |     |                            |  |  |              |   |  |              |    |   |              |  |    |              |  |  |              |   |  |              |  



|                                                 |  |                     |       |  |                     |  |       |                            |  |  |              |  |  |              |       |  |              |  |       |              |  |  |              |  |  |              |       |  |  |  |       |  |  |  |       | 
|------------------------------------------------ |  | ------------------- | ----- |  | ------------------- |  | ----- | -------------------------- |  |  | ------------ |  |  | ------------ | ----- |  | ------------ |  | ----- | ------------ |  |  | ------------ |  |  | ------------ | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                                 |  | UK pension benefits |       |  | US pension benefits |  |       | US postretirement benefits | 
|                                                 |  |                     |       |  |                     |  |       |                            | 
|                                                 |  | Year ended          |       |  | Year ended          |  |       | Year ended                 |  |  | Year ended   |  |  | Year ended   |       |  | Year ended   |  |       | Year ended   |  |  | Year ended   |  |  | Year ended   |      
|                                                 |  | December 31,        |       |  | December 31,        |  |       | December 31,               |  |  | December 31, |  |  | December 31, |       |  | December 31, |  |       | December 31, |  |  | December 31, |  |  | December 31, |      
|                                                 |  | 2006                |       |  | 2005                |  |       | 2004                       |  |  | 2006         |  |  | 2005         |       |  | 2004         |  |       | 2006         |  |  | 2005         |  |  | 2004         |      
|                                                 |  |                     |       |  |                     |  |       |                            |  |  |              |  |  |              |       |  |              |  |       |              |  |  |              |  |  |              |      
|Expected long-term rate of return on plan assets |  |                     | 6.10% |  |                     |  | 5.80% |                            |  |  | 6.90%        |  |  |              | 8.00% |  |              |  | 8.00% |              |  |  | 8.00%        |  |  |              |      |  |  |  |      |  |  |  |      | 
|Discount rate                                    |  |                     | 5.00% |  |                     |  | 4.70% |                            |  |  | 5.30%        |  |  |              | 5.80% |  |              |  | 5.50% |              |  |  | 5.75%        |  |  |              | 5.80% |  |  |  | 5.50% |  |  |  | 5.75% | 
|Expected long-term rate of earnings increases    |  |                     | 4.60% |  |                     |  | 4.30% |                            |  |  | 4.30%        |  |  |              | 3.50% |  |              |  | 3.50% |              |  |  | 3.50%        |  |  |              | 4.00% |  |  |  | 4.00% |  |  |  | 4.00% | 





F-79



---



##### 







|                                                    |  |      |      |   |      |  |      |      |  |  |      |  
|--------------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                    |  | 2006 |      |   | 2005 |  |      | 2004 | 
|                                                    |  |      |      |   |      |  |      |      | 
|Health care cost trend rate assumed for next year   |  |      | 10.0 | % |      |  | 9.0  | %    |  |  | 9.5  | %
|Rate that the cost trend rate gradually declines to |  |      | 5.0  | % |      |  | 4.5  | %    |  |  | 4.5  | %
|Year that rate reaches the assumed ultimate rate    |  |      | 2017 |   |      |  | 2015 |      |  |  | 2014 |  





|                                            |                                    |                      |     |    |                      |  |     |                            |   |  |              |     |   |              |     |    |              |  |    |    |   |  |    |    |  
|------------------------------------------- | ---------------------------------- | -------------------- | --- | -- | -------------------- |  | --- | -------------------------- | - |  | ------------ | --- | - | ------------ | --- | -- | ------------ |  | -- | -- | - |  | -- | -- | -
|                                            |                                    | UK pensions benefits |     |    | US pensions benefits |  |     | US postretirement benefits |  
|                                            |                                    |                      |     |    |                      |  |     |                            |  
|                                            |                                    | Year ended           |     |    | Year ended           |  |     | Year ended                 |   |  | Year ended   |     |   | Year ended   |     |    | Year ended   | 
|                                            |                                    | December 31,         |     |    | December 31,         |  |     | December 31,               |   |  | December 31, |     |   | December 31, |     |    | December 31, | 
|Change in benefit obligation                |                                    | 2006                 |     |    | 2005                 |  |     | 2006                       |   |  | 2005         |     |   | 2006         |     |    | 2005         | 
|                                            |                                    |                      |     |    |                      |  |     |                            |   |  |              |     |   |              |     |    |              | 
|                                            |                                    | (£ million)          |    
|Benefit obligation at beginning of year     |                                    |                      | 275 |    |                      |  | 600 |                            |   |  | 102          |     |   |              | 89  |    |              |  | 12 |    |   |  | 11 |   
|                                            | Service cost                       |                      |     | 5  |                      |  |     | 20                         |   |  |              |    |   |              |     |   |              |  |    |   |   |  |    |   |  
|                                            | Members contributions              |                      |     | 1  |                      |  |     | 2                          |   |  |              |    |   |              |     |   |              |  |    |   |   |  |    |   |  
|                                            | Interest expense                   |                      |     | 13 |                      |  |     | 30                         |   |  |              | 5   |   |              |     | 5  |              |  |    | 1  |   |  |    | 1  |  
|                                            | Benefits paid                      |                      |     | (7 | )                    |  |     | (11                        | ) |  |              | (6  | ) |              |     | (6 | )            |  |    | (1 | ) |  |    | (1 | )
|                                            | Curtailments                       |                      |     |   |                      |  |     | (7                         | ) |  |              |    |   |              |     |   |              |  |    |   |   |  |    |   |  
|                                            | Actuarial loss arising in the year |                      |     | 12 |                      |  |     | 67                         |   |  |              |    |   |              |     | 3  |              |  |    | (1 | ) |  |    |   |  
|                                            | Separation of
    Britvic          |                      |     |   |                      |  |     | (426                       | ) |  |              |    |   |              |     |   |              |  |    |   |   |  |    |   |  
|                                            | Exchange and other                 |                      |     | (1 | )                    |  |     |                           |   |  |              | (12 | ) |              |     | 11 |              |  |    | (1 | ) |  |    | 1  |  
|                                            |                                    |                      |     |    |                      |  |     |                            |   |  |              |     |   |              |     |    |              | 
|Benefit obligation at end of year           |                                    |                      | 298 |    |                      |  | 275 |                            |   |  | 89           |     |   |              | 102 |    |              |  | 10 |    |   |  | 12 |   
|                                            |                                    |                      |     |    |                      |  |     |                            |   |  |              |     |   |              |     |    |              | 
|Accumulated benefit obligation (all vested) |                                    |                      | 284 |    |                      |  | 264 |                            |   |  | 88           |     |   |              | 100 |    |              |  |   |    |   |  |   |   
|                                            |                                    |                      |     |    |                      |  |     |                            |   |  |              |     |   |              |     |    |              | 

|                                               |                         |                      |     |    |                      |  |     |                            |   |  |              |    |   |              |    |    |              |  |   |    |   |  |   |    |  
|---------------------------------------------- | ----------------------- | -------------------- | --- | -- | -------------------- |  | --- | -------------------------- | - |  | ------------ | -- | - | ------------ | -- | -- | ------------ |  | - | -- | - |  | - | -- | -
|                                               |                         | UK pensions benefits |     |    | US pensions benefits |  |     | US postretirement benefits |  
|                                               |                         |                      |     |    |                      |  |     |                            |  
|                                               |                         | Year ended           |     |    | Year ended           |  |     | Year ended                 |   |  | Year ended   |    |   | Year ended   |    |    | Year ended   | 
|                                               |                         | December 31,         |     |    | December 31,         |  |     | December 31,               |   |  | December 31, |    |   | December 31, |    |    | December 31, | 
|Changes in plan assets                         |                         | 2006                 |     |    | 2005                 |  |     | 2006                       |   |  | 2005         |    |   | 2006         |    |    | 2005         | 
|                                               |                         |                      |     |    |                      |  |     |                            |   |  |              |    |   |              |    |    |              | 
|                                               |                         | (£ million)          |    
|Fair value of plan assets at beginning of year |                         |                      | 251 |    |                      |  | 472 |                            |   |  | 61           |    |   |              | 55 |    |              |  |  |    |   |  |  |   
|                                               | Contributions payable   |                      |     | 4  |                      |  |     | 46                         |   |  |              | 2  |   |              |    | 2  |              |  |   | 1  |   |  |   | 1  |  
|                                               | Members contributions   |                      |     | 1  |                      |  |     | 2                          |   |  |              |   |   |              |    |   |              |  |   |   |   |  |   |   |  
|                                               | Benefits paid           |                      |     | (7 | )                    |  |     | (11                        | ) |  |              | (6 | ) |              |    | (6 | )            |  |   | (1 | ) |  |   | (1 | )
|                                               | Actual return on assets |                      |     | 21 |                      |  |     | 77                         |   |  |              | 6  |   |              |    | 3  |              |  |   |   |   |  |   |   |  
|                                               | Separation of Britvic   |                      |     |   |                      |  |     | (335                       | ) |  |              |   |   |              |    |   |              |  |   |   |   |  |   |   |  
|                                               | Exchange                |                      |     | (1 | )                    |  |     |                           |   |  |              | (7 | ) |              |    | 7  |              |  |   |   |   |  |   |   |  
|                                               |                         |                      |     |    |                      |  |     |                            |   |  |              |    |   |              |    |    |              | 
|Fair value of plan assets at end of year       |                         |                      | 269 |    |                      |  | 251 |                            |   |  | 56           |    |   |              | 61 |    |              |  |  |    |   |  |  |   
|                                               |                         |                      |     |    |                      |  |     |                            |   |  |              |    |   |              |    |    |              | 

F-80



---



##### 



|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              |  |     |   |  |  |     |  
|---------------------------------------------------------------------------- |  | -------------------- | ---- | - | -------------------- |  | ---- | -------------------------- |  |  | ------------ | - |  | ------------ | ---- | - | ------------ |  | --- | - |  |  | --- | -
|                                                                             |  | UK pensions benefits |      |   | US pensions benefits |  |      | US postretirement benefits | 
|                                                                             |  |                      |      |   |                      |  |      |                            | 
|                                                                             |  | Year ended           |      |   | Year ended           |  |      | Year ended                 |  |  | Year ended   |   |  | Year ended   |      |   | Year ended   | 
|                                                                             |  | December 31,         |      |   | December 31,         |  |      | December 31,               |  |  | December 31, |   |  | December 31, |      |   | December 31, | 
|Net amounts recognized                                                       |  | 2006                 |      |   | 2005                 |  |      | 2006                       |  |  | 2005         |   |  | 2006         |      |   | 2005         | 
|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              | 
|                                                                             |  | (£ million)          |     
|Fair value of plan assets                                                    |  |                      | 269  |   |                      |  | 251  |                            |  |  | 56           |   |  |              | 61   |   |              |  |    |   |  |  |    |  
|Projected benefit obligation                                                 |  |                      | (298 | ) |                      |  | (275 | )                          |  |  | (89          | ) |  |              | (102 | ) |              |  | (10 | ) |  |  | (12 | )
|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              | 
|Funded status                                                                |  |                      | (29  | ) |                      |  | (24  | )                          |  |  | (33          | ) |  |              | (41  | ) |              |  | (10 | ) |  |  | (12 | )
|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              | 
|Unrecognized prior service cost                                              |  |                      |      |   |                      |  | 1    |                            |  |  |              |   |  |              |     |   |              |  |     |   |  |  |    |  
|Unrecognized net actuarial loss                                              |  |                      |      |   |                      |  | 76   |                            |  |  |              |   |  |              | 27   |   |              |  |     |   |  |  | 3   |  
|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              | 
|Net amount recognized                                                        |  |                      |      |   |                      |  | 53   |                            |  |  |              |   |  |              | (14  | ) |              |  |     |   |  |  | (9  | )
|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              | 
|Amounts recognized in the balance sheet consist of:                          |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              |  |     |   |  |  |     |  
|Accrued pension cost                                                         |  |                      | (29  | ) |                      |  | (13  | )                          |  |  | (33          | ) |  |              | (39  | ) |              |  | (10 | ) |  |  | (9  | )
|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              | 
|Intangible asset                                                             |  |                      |      |   |                      |  | 1    |                            |  |  |              |   |  |              |     |   |              |  |     |   |  |  |    |  
|Other Comprehensive Income (before tax)                                      |  |                      |      |   |                      |  | 65   |                            |  |  |              |   |  |              | 25   |   |              |  |     |   |  |  |    |  
|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              | 
|Net amount recognized                                                        |  |                      |      |   |                      |  | 53   |                            |  |  |              |   |  |              | (14  | ) |              |  |     |   |  |  | (9  | )
|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              | 
|Amounts recognized in Accumulated Other Comprehensive Income
    consist of: |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              |  |     |   |  |  |     |  
|Net actuarial loss                                                           |  |                      | (77  | ) |                      |  |      |                            |  |  | (20          | ) |  |              |      |   |              |  | (2  | ) |  |  |     |  
|Deferred tax                                                                 |  |                      | 20   |   |                      |  |      |                            |  |  |             |   |  |              |      |   |              |  |    |   |  |  |     |  
|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              | 
|                                                                             |  |                      | (57  | ) |                      |  |      |                            |  |  | (20          | ) |  |              |      |   |              |  | (2  | ) |  |  |     |  
|                                                                             |  |                      |      |   |                      |  |      |                            |  |  |              |   |  |              |      |   |              | 





|                                                   |  |                   |       |   |             |  |       |             |  |  |       |  
|-------------------------------------------------- |  | ----------------- | ----- | - | ----------- |  | ----- | ----------- |  |  | ----- | -
|                                                   |  | December 31, 2006 |      
|                                                   |  |                   |      
|                                                   |  | Before            |       |   |             |  | After |            
|                                                   |  | FAS 158           |       |   | FAS 158     |  |       | FAS 158     | 
|                                                   |  | adjustments       |       |   | adjustments |  |       | adjustments | 
|                                                   |  |                   |       |   |             |  |       |             | 
|                                                   |  | (£ million)       |      
|Deferred tax liability                             |  |                   | (217  | ) |             |  | 1     |             |  |  | (218  | )
|Accrued pension liability                          |  |                   | (54   | ) |             |  | (18   | )           |  |  | (72   | )
|Accumulated Other Comprehensive Income, net of tax |  |                   | (62   | ) |             |  | (17   | )           |  |  | (79   | )
|Total shareholders equity                         |  |                   | 1,515 |   |             |  | (17   | )           |  |  | 1,498 |  



|          |  |             |      |  |          |  |      |                |  |  |     | 
|--------- |  | ----------- | ---- |  | -------- |  | ---- | -------------- |  |  | --- | 
|          |  | UK          |      |  | US       |  |      | US             | 
|          |  | pensions    |      |  | pensions |  |      | postretirement | 
|          |  | benefits    |      |  | benefits |  |      | benefits       | 
|          |  |             |      |  |          |  |      |                | 
|          |  | (£ million) |     
|2007      |  |             | 4.0  |  |          |  | 5.5  |                |  |  | 0.5 | 
|2008      |  |             | 4.1  |  |          |  | 5.6  |                |  |  | 0.5 | 
|2009      |  |             | 4.2  |  |          |  | 5.7  |                |  |  | 0.5 | 
|2010      |  |             | 4.3  |  |          |  | 5.8  |                |  |  | 0.6 | 
|2011      |  |             | 4.4  |  |          |  | 5.9  |                |  |  | 0.6 | 
|2012-2016 |  |             | 23.5 |  |          |  | 31.6 |                |  |  | 3.3 | 

F-81



---



##### 





| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | Additional information required by US GAAP in respect of
    accounting for the impairment of property, plant and equipment
    and assets held for sale.



|                                                      |  |              |    |   |              |  |    |              |  |  |     |  
|----------------------------------------------------- |  | ------------ | -- | - | ------------ |  | -- | ------------ |  |  | --- | -
|                                                      |  | Year ended   |    |   | Year ended   |  |    | Year ended   | 
|                                                      |  | December 31, |    |   | December 31, |  |    | December 31, | 
|                                                      |  | 2006         |    |   | 2005         |  |    | 2004         | 
|                                                      |  |              |    |   |              |  |    |              | 
|                                                      |  | (£ million)  |   
|Assets to be disposed of                              |  |              |   |   |              |  |   |              |  |  |    |  
|Assets to be held and used                            |  |              |   |   |              |  | 24 |              |  |  | 18  |  
|                                                      |  |              |    |   |              |  |    |              | 
|Total                                                 |  |              |   |   |              |  | 24 |              |  |  | 18  |  
|                                                      |  |              |    |   |              |  |    |              | 
|Disclosed as:                                         |  |              |    |   |              |  |    |              |  |  |     |  
|Impairment charges recognized under IFRS:             |  |              |    |   |              |  |    |              |  |  |     |  
|(Credit)/charge for the year under IFRS               |  |              | (3 | ) |              |  | 7  |              |  |  | 48  |  
|Adjustment to impairment recognized under
    US GAAP |  |              | 3  |   |              |  | 17 |              |  |  | (30 | )
|                                                      |  |              |    |   |              |  |    |              | 
|                                                      |  |              |   |   |              |  | 24 |              |  |  | 18  |  
|                                                      |  |              |    |   |              |  |    |              | 
|Charged against:                                      |  |              |    |   |              |  |    |              |  |  |     |  
|Intangible assets  goodwill                          |  |              |   |   |              |  |   |              |  |  |    |  
|Property, plant and equipment                         |  |              |   |   |              |  | 24 |              |  |  | 18  |  
|                                                      |  |              |    |   |              |  |    |              | 
|                                                      |  |              |   |   |              |  | 24 |              |  |  | 18  |  
|                                                      |  |              |    |   |              |  |    |              | 











| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | Additional information required by US GAAP in respect of
    accounting for deferred gains



F-82



---



##### 





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



|                                 |  |                   |    |             |                   |  |          |       |  |  |      |             |  |              |          |  |       |  |     |   |  |  |    | 
|-------------------------------- |  | ----------------- | -- | ----------- | ----------------- |  | -------- | ----- |  |  | ---- | ----------- |  | ------------ | -------- |  | ----- |  | --- | - |  |  | -- | 
|                                 |  | December 31, 2006 |    |             | December 31, 2005 | 
|                                 |  |                   |    |             |                   | 
|                                 |  |                   |    | Accumulated |                   |  | Net book |       |  |  |      | Accumulated |  |              | Net book | 
|                                 |  | Cost              |    |             | amortization      |  |          | value |  |  | Cost |             |  | amortization |          |  | value | 
|                                 |  |                   |    |             |                   |  |          |       |  |  |      |             |  |              |          |  |       | 
|                                 |  | (£ million)       |   
|Management & franchise contracts |  |                   | 88 |             |                   |  | (38      | )     |  |  | 50   |             |  |              | 96       |  |       |  | (42 | ) |  |  | 54 | 
|                                 |  |                   |    |             |                   |  |          |       |  |  |      |             |  |              |          |  |       | 





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

|                            |                     |              |       |     |              |  |       |     | 
|--------------------------- | ------------------- | ------------ | ----- | --- | ------------ |  | ----- | --- | 
|                            |                     | December 31, |       |     | December 31, | 
|                            |                     | 2006         |       |     | 2005         | 
|                            |                     |              |       |     |              | 
|                            |                     | (£ million)  |      
|Goodwill by reporting unit: |                     |              |       |     |              |  |       |    
|                            | Americas managed    |              |       | 111 |              |  |       | 130 | 
|                            | Americas franchised |              |       | 600 |              |  |       | 645 | 
|                            | EMEA managed        |              |       | 36  |              |  |       | 38  | 
|                            | Asia Pacific        |              |       | 65  |              |  |       | 66  | 
|                            |                     |              |       |     |              | 
|Goodwill                    |                     |              | 812   |     |              |  | 879   |    
|Trademarks                  |                     |              | 362   |     |              |  | 462   |    
|                            |                     |              |       |     |              | 
|Total                       |                     |              | 1,174 |     |              |  | 1,341 |    
|                            |                     |              |       |     |              | 



| |                                                                      
| | ---------------------------------------------------------------------
| | 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, |      |   | December 31, |  |    | December 31, | 
|               |  | 2006         |      |   | 2005         |  |    | 2004         | 
|               |  |              |      |   |              |  |    |              | 
|               |  | (£ million)  |     
|Current taxes  |  |              | (25  | ) |              |  | 59 |              |  |  | (60 | )
|Deferred taxes |  |              | (101 | ) |              |  |   |              |  |  | 7   |  
|               |  |              |      |   |              |  |    |              | 
|Total          |  |              | (126 | ) |              |  | 59 |              |  |  | (53 | )
|               |  |              |      |   |              |  |    |              | 

F-83



---



##### 





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

|                                                          |  |              |       |   |              |  |       |              |  |  |       |  
|--------------------------------------------------------- |  | ------------ | ----- | - | ------------ |  | ----- | ------------ |  |  | ----- | -
|                                                          |  | Year ended   |       |   | Year ended   |  |       | Year ended   | 
|                                                          |  | December 31, |       |   | December 31, |  |       | December 31, | 
|                                                          |  | 2006         |       |   | 2005         |  |       | 2004         | 
|                                                          |  |              |       |   |              |  |       |              | 
|                                                          |  | (%)          |      
|UK corporate tax standard rate                            |  |              | 30.0  |   |              |  | 30.0  |              |  |  | 30.0  |  
|Permanent differences                                     |  |              | 2.2   |   |              |  | 11.1  |              |  |  | 3.8   |  
|Net effect of different rates of tax in overseas business |  |              | 3.7   |   |              |  | 10.2  |              |  |  | 6.7   |  
|Adjustment to tax charge in respect of prior periods      |  |              | (0.7  | ) |              |  | (16.6 | )            |  |  | (20.4 | )
|Benefit of tax losses not previously recognized           |  |              | (3.1  | ) |              |  | (0.2  | )            |  |  | (1.0  | )
|Adjustments to valuation allowance                        |  |              | (22.0 | ) |              |  | 0.4   |              |  |  | (1.7  | )
|Other                                                     |  |              | (0.5  | ) |              |  | (1.4  | )            |  |  | (0.2  | )
|Impact of disposals, provision releases and one-off items |  |              | (44.9 | ) |              |  | 3.0   |              |  |  | (35.5 | )
|                                                          |  |              |       |   |              |  |       |              | 
|Effective tax rate on continuing operations               |  |              | (35.3 | ) |              |  | 36.5  |              |  |  | (18.3 | )
|                                                          |  |              |       |   |              |  |       |              | 





F-84



---



##### 





| |                                        
| | ---------------------------------------
| | Deferred tax in accordance with US GAAP

|                                             |  |              |      |  
|-------------------------------------------- |  | ------------ | ---- | -
|                                             |  | Deferred tax |     
|                                             |  | liability    |     
|                                             |  |              |     
|                                             |  | (£ million)  |     
|At January 1, 2004                           |  |              | 721  |  
|Disposals                                    |  |              | (5   | )
|Exchange and other adjustments               |  |              | (15  | )
|Income statement                             |  |              |     |  
|Adjustment to other intangible
    assets(i) |  |              | (110 | )
|                                             |  |              |     
|At December 31, 2004                         |  |              | 591  |  
|Disposals                                    |  |              | (132 | )
|Exchange and other adjustments               |  |              | 27   |  
|Income statement                             |  |              | (29  | )
|                                             |  |              |     
|At December 31, 2005                         |  |              | 457  |  
|Disposals                                    |  |              | (92  | )
|Exchange and other adjustments               |  |              | (46  | )
|Income statement                             |  |              | (101 | )
|                                             |  |              |     
|At December 31, 2006                         |  |              | 218  |  
|                                             |  |              |     






|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | 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.



|                          |                                                                               |              |      |      |              |  |      |      |  
|------------------------- | ----------------------------------------------------------------------------- | ------------ | ---- | ---- | ------------ |  | ---- | ---- | -
|                          |                                                                               | December 31, |      |      | December 31, | 
|                          |                                                                               | 2006         |      |      | 2005         | 
|                          |                                                                               |              |      |      |              | 
|                          |                                                                               | (£ million)  |     
|Deferred tax liabilities: |                                                                               |              |      |      |              |  |      |     
|                          | Excess of book value over taxation value of property, plant and
    equipment |              |      | 138  |              |  |      | 242  |  
|                          | Taxation effect of deferred gains                                             |              |      | 92   |              |  |      | 122  |  
|                          | Intangible assets                                                             |              |      | 127  |              |  |      | 163  |  
|                          | Investments in associates, joint ventures and partnerships                    |              |      | 29   |              |  |      | 41   |  
|                          | Other temporary differences                                                   |              |      | 105  |              |  |      | 96   |  
|                          |                                                                               |              |      |      |              | 
|                          |                                                                               |              | 491  |      |              |  | 664  |     
|                          |                                                                               |              |      |      |              | 
|Deferred tax assets:      |                                                                               |              |      |      |              |  |      |     
|                          | Taxation effect of losses carried forward                                     |              |      | (167 | )            |  |      | (123 | )
|                          | Taxation effect of employee benefits                                          |              |      | (14  | )            |  |      | (14  | )
|                          | Taxation effect of share based payments                                       |              |      | (25  | )            |  |      | (1   | )
|                          | Other temporary differences                                                   |              |      | (67  | )            |  |      | (69  | )
|                          |                                                                               |              |      |      |              | 
|                          |                                                                               |              | (273 | )    |              |  | (207 | )   
|                          |                                                                               |              |      |      |              | 
|                          |                                                                               |              | 218  |      |              |  | 457  |     
|                          |                                                                               |              |      |      |              | 
|Of which:                 |                                                                               |              |      |      |              |  |      |     
|                          | Current                                                                       |              |      | (58  | )            |  |      | (40  | )
|                          | Non-current                                                                   |              |      | 276  |              |  |      | 497  |  
|                          |                                                                               |              |      |      |              | 
|                          |                                                                               |              | 218  |      |              |  | 457  |     
|                          |                                                                               |              |      |      |              | 

F-85



---



##### 











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

|                             |  |             |    |   |            |  |    |       |  |  |       |   |  |  |     |  
|---------------------------- |  | ----------- | -- | - | ---------- |  | -- | ----- |  |  | ----- | - |  |  | --- | -
|                             |  | Employee    |    |   | Facilities |  |    | Other |  |  | IHG   |  
|                             |  | costs       |    |   | costs      |  |    | costs |  |  | total |  
|                             |  |             |    |   |            |  |    |       |  |  |       |  
|                             |  | (£ million) |   
|Balance at January 1, 2004   |  |             | 7  |   |            |  | 7  |       |  |  | 4     |   |  |  | 18  |  
|Expenditure                  |  |             | (7 | ) |            |  | (3 | )     |  |  | (4    | ) |  |  | (14 | )
|                             |  |             |    |   |            |  |    |       |  |  |       |  
|Balance at December 31, 2004 |  |             |   |   |            |  | 4  |       |  |  |      |   |  |  | 4   |  
|Expenditure                  |  |             |   |   |            |  | (1 | )     |  |  |      |   |  |  | (1  | )
|                             |  |             |    |   |            |  |    |       |  |  |       |  
|Balance at December 31, 2005 |  |             |   |   |            |  | 3  |       |  |  |      |   |  |  | 3   |  
|Expenditure                  |  |             |   |   |            |  | (3 | )     |  |  |      |   |  |  | (3  | )
|                             |  |             |    |   |            |  |    |       |  |  |       |  
|Balance at December 31, 2006 |  |             |   |   |            |  |   |       |  |  |      |   |  |  |    |  
|                             |  |             |    |   |            |  |    |       |  |  |       |  



| |                           
| | --------------------------
| | Variable Interest Entities







F-86



---



##### 







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







over-funded under-funded




F-87



---



##### 



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, 2006          |  |            |    |           |            |  |    |             |  |  |            |            |        |        |     |   |  |  |    | 
|Provisions for bad and doubtful debts |  |            | 47 |           |            |  | 16 |             |  |  | (5         | )          |        |        | (15 | ) |  |  | 43 | 
|Year ended December 31, 2005          |  |            |    |           |            |  |    |             |  |  |            |            |        |        |     |   |  |  |    | 
|Provisions for bad and doubtful debts |  |            | 43 |           |            |  | 14 |             |  |  | 4          |            |        |        | (14 | ) |  |  | 47 | 
|Year ended December 31, 2004          |  |            |    |           |            |  |    |             |  |  |            |            |        |        |     |   |  |  |    | 
|Provisions for bad and doubtful debts |  |            | 45 |           |            |  | 20 |             |  |  | (3         | )          |        |        | (19 | ) |  |  | 43 | 

S-1



---



##### 



SIGNATURES


20-F




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



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

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