Strong Performance from Ladbrokes Helps Hilton Group

Hilton Group, the global hospitality and betting company, reported for the first four months of 2003 profits 25 percent lower than last year. The numbers could have been worse had it not been for a strong performance from its Ladbrokes gaming division.

Overall, the group's performance is expected to be broadly in line with the market's full-year expectations.

Trading conditions seen in hotels have been especially difficult in London, continental Europe and Asia Pacific. Hilton has inevitably been adversely affected, particularly in April, by the Iraq war and SARS. Looking ahead, growth projections reflect a return to year-on-year RevPAR (revenue per available room) growth in late summer. Since the war ended, booking patterns have shown some improvement.

The RevPAR performance for Hilton hotels over the period (2003 vs. 2002) is as follows:

January: 3.3%
February: 3.2%
March/April: 9.7%

During the period, Ladbrokes' operating profit growth continued and is expected to accelerate during the course of the year. Gross win increased by 14.3 percent in the United Kingdom retail shop estate. Fixed-odds betting terminals remain popular, although the propriety of certain types of bets offered on these terminals is currently being challenged. This matter is expected to be resolved later this year.

The growth in the e-gaming and telephone betting business also continued, with gross win up by 31.6 percent and 6.4 percent respectively. The growth was driven by the successful launch of various new products, in particular ladbrokespoker.com, which has surpassed expectations.

Ladbrokes.com is part of Ladbrokes Limited, the betting and gaming division of Hilton Group plc..

Hilton's betting and gaming division also operates Ladbrokes (The United Kingdom's and Ireland's largest off-track bookmaker) and over 250 off-course betting outlets in Belgium.

Company Background

Hilton Group plc is a major international company with two operating divisions: Hilton International, which owns the rights to the Hilton name outside the United States, and Ladbrokes Worldwide, one of the world's largest commercial off-track betting and gaming organizations. Formerly known as Ladbroke Group PLC, the group's name was changed May 14, 1999 following shareholder approval at its 1999 annual general meeting.

The group was floated on the London Stock Exchange in 1967 with an initial market value of just under £1 million. Today, it's one of the largest companies listed on the London Stock Exchange and a constituent of the FTSE 100 index. It has a market value of approximately £2.5 billion, a turnover of around £5.5 billion and employs more than 77,000 people worldwide.

2002 Summary Financial Statement

Highlights

Group profit before taxation, goodwill amortization and exceptional items down 3.1 percent to £271.4 million.
Hotel profits fell 16.9 percent to £212.1 million as trading remains difficult, particularly in the European gateway cities.
Worldwide RevPAR** fell by 1 percent with occupancy down 0.5 percentage points and rate down by 0.2 percent.
Cost control remains a core focus but not at the expense of guest and customer satisfaction.
Worldwide betting profits up 31.5 percent to £149.3 million with strong growth in all channels.
E-gaming operating profit up £9.3 million to £11.3 million boosted by growth of ladbrokes.com, ladbrokescasino.com and the successful launch of ladbrokespoker.com.
Net borrowings reduced by over £300 million to £1,164.8 million.
Final dividend of 5.52 pence making a total of 8.92 pence level with last year.

** Like for like properties at constant exchange rates, including a full year of Scandic for comparability.

The United Kingdom's Top Five Bookmakers:

Ladbrokes
William Hill PLC (Nomura International plc acquired William Hill in 1997.)
Coral Eurobet Ltd. (Since September 2002, Coral Eurobet has been owned by Charterhouse Development Capital.)
Stanley Leisure plc
Tote (The Tote, the state-run bookmaker, was sold to the horse racing industry in 2001. The Tote, or the Horserace Totalisator Board, was set up by Winston Churchill in 1928.)