SECURITIES AND EXCHANGE COMMISSION

FORM 20-F Annual and transition report of foreign private issuers pursuant to sections 13 or 15(d)

Filing Date: 2008-03-28 | Period of Report: 2007-12-31 SEC Accession No. 0001156973-08-000368

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FILER INTERCONTINENTAL GROUP PLC /NEW/ Mailing Address Business Address 67 ALMA ROAD 67 ALMA ROAD CIK:858446| IRS No.: 250420260 | State of Incorp.:DE | Fiscal Year End: 0930 WINDSOR WINDSOR Type: 20-F | Act: 34 | File No.: 001-10409 | Film No.: 08717082 BERKSHIRE X0 SL4 3HD BERKSHIRE X0 SL4 3HD SIC: 7011 Hotels & motels 4045513500

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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 20-F (Mark One) o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 or þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2007 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) Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered American Depositary Shares New York Stock Exchange Ordinary Shares of 1329/47 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 1329/47 pence each 294,623,308 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes þ No o If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934: Yes o No þ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes þ No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Indicate by check mark which financial statement item the registrant has elected to follow: Item 17 o Item 18 þ If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o No þ Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

US GAAP o International Reporting Standards as issued by Other o the International Standards Accounting Board

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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 11 Item 4. Information on the Company 14 Summary 14 Segmental Information 18 Hotels 22 Soft Drinks 39 Trademarks 39 Organizational Structure 39 Property, Plant and Equipment 39 Environment 40 Item 4A. Unresolved Staff Comments 41 Item 5. Operating and Financial Review and Prospects 41 Critical Accounting Policies 41 Operating Results 43 Liquidity and Capital Resources 51 Item 6. Directors, Senior Management and Employees 54 Directors and Senior Management 54 Compensation 57 Board Practices 58 Employees 61 Share Ownership 62 Item 7. Major Shareholders and Related Party Transactions 63 Major Shareholders 63 Related Party Transactions 63 Item 8. Financial Information 63 Consolidated Statements and Other Financial Information 63 Significant Changes 64 Item 9. The Offer and Listing 64 Plan of Distribution 65 Selling Shareholders 65 Dilution 65 Expenses of the Issue 65

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Page Item 10. Additional Information 65 Memorandum and Articles of Association 65 Material Contracts 68 Exchange Controls 70 Taxation 70 Documents on Display 74 Item 11. Quantitative and Qualitative Disclosures About Market Risk 74 Item 12. Description of Securities Other Than Equity Securities 76

PART II Item 13. Defaults, Dividend Arrearages and Delinquencies 76 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 76 Item 15. Controls and Procedures 76 Item 16. [Reserved] 77 Item 16A. Audit Committee Financial Expert 77 Item 16B. Code of Ethics 77 Item 16C. Principal Accountant Fees and Services 77 Item 16D. Exemptions from the Listing Standards for Audit Committees 78 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 78

PART III Item 17. Financial Statements 78 Item 18. Financial Statements 79 Item 19. Exhibits 79

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INTRODUCTION As used in this document, except as the context otherwise requires, the terms: “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; “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; following that date until June 4, 2007 to the ordinary shares of 113/7 pence each in IHG; and following June 4, 2007 to the ordinary shares of 1329/47 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. References in this document to the “Companies Act” mean the Companies Act 1985, as amended, of Great Britain; references to the “EU” mean the European Union; references in this document to “UK” refer to the United Kingdom of Great Britain and Northern Ireland. The Company publishes its Consolidated Financial Statements expressed in UK pounds sterling. In this document, references to “US dollars”, “US$”, “$” or “¢” are to United States (“US”) currency, references to “euro” or “€” are to the euro, the currency of the European Economic and Monetary Union, references to “pounds sterling”, “sterling”, “£”, “pence” or “p” are to UK currency and references to “A$” are to Australian (“A”) currency. Solely for convenience, this Annual Report on Form 20-F contains translations of certain pound sterling amounts into US dollars at specified rates. These translations should not be construed as representations that the pound sterling amounts actually represent such US dollar amounts or could be converted into US dollars at the rates indicated. Unless otherwise indicated, the translations of pounds sterling into US dollars have been made at the rate of £1.00 = $2.01, the noon buying rate in The City of New York for cable transfers in pounds sterling as certified for customs purposes by the Federal Reserve Bank of New York (the “Noon Buying Rate”) on December 31, 2007. On March 14, 2008 the Noon Buying Rate was £1.00 = $2.03. For information regarding rates of exchange between pounds sterling and US dollars from fiscal 2003 to the present, see “Item 3. Key Information — Exchange Rates”. The Company’s fiscal year ends on December 31. The December 31 fiscal year end is in line with the calendar accounting year ends of the majority of comparable US and European companies. IHG will continue to report

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on a December 31 fiscal year end basis, as the Group believes this facilitates more meaningful comparisons with other key participants in the industry. References in this document to a particular year are to the fiscal year unless otherwise indicated. For example, references to the year ended December 31, 2007 are shown as 2007 and references to the year ended December 31, 2006 are shown as 2006, unless otherwise specified, and references to other fiscal years are shown in a similar manner. The Company’s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with IFRS as adopted by the European Union (“EU”). IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences have no impact on the Company’s Consolidated Financial Statements for the years presented. IHG believes that the reporting of profit and earnings measures before exceptional items provides additional meaningful information on underlying returns and trends to shareholders. The Group’s key performance indicators used in budgets, monthly reporting, forecasts, long-term planning and incentive plans for internal financial reporting focus primarily on profit and earnings measures before exceptional items. Throughout this document earnings per share is also calculated excluding the effect of all exceptional operating items, exceptional interest, exceptional tax and gain on disposal of assets and is referred to as adjusted earnings per share. The Company furnishes JP Morgan Chase Bank, N.A., as Depositary, with annual reports containing Consolidated Financial Statements and an independent auditor’s opinion thereon. These Financial Statements are prepared on the basis of IFRS. The Company also furnishes to the Depositary all notices of shareholders’ meetings and other reports and communications that are made generally available to shareholders of the Company. The Depositary makes such notices, reports and communications available for inspection by registered holders of ADRs and mails to all registered holders of ADRs notices of shareholders’ meetings received by the Depositary. During 2007, the Company reported interim financial information at June 30, 2007 in accordance with the Listing Rules of the UK Listing Authority. In addition, it provided quarterly financial information at March 31, 2007 and at September 30, 2007 and intends to continue to provide quarterly financial information during fiscal 2008. The Financial Statements may be found on the Company’s website at www.ihg.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Form 20-F contains certain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 with respect to the financial condition, results of operations and business of InterContinental Hotels Group and certain plans and objectives of the Board of Directors of InterContinental Hotels Group PLC with respect thereto. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward- looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, or other words of similar meaning. These statements are based on assumptions and assessments made by InterContinental Hotels Group’s management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Such statements in the Form 20-F include, but are not limited to, statements under the following headings; (i) “Item 4. Information on the Company”; (ii) Item 5. Operating and Financial Review and Prospects”; (iii) “Item 8. Financial Information”; and (iv) “Item 11. Quantitative and Qualitative Disclosures About Market Risk”. Specific risks faced by the Company are described under “Item 3. Key Information — Risk Factors” commencing on page 11.

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By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed in, or implied by, such forward-looking statements, including, but not limited to: the risks involved with the Group’s reliance on the reputation of its brands and protection of its intellectual property rights; the risks relating to identifying, securing and retaining management and franchise agreements; the effect of political and economic developments; the ability to recruit and retain key personnel; events that adversely impact domestic or international travel, including terrorist incidents; the risks involved in the Group’s reliance upon its proprietary reservation system and increased competition in reservation infrastructure; the risks involved with the Group’s reliance on technologies and systems; the risks of the hotel industry supply and demand cycle; the possible lack of selected development opportunities; risks related to corporate responsibility; the risk of litigation; the risks associated with the Group’s ability to maintain adequate insurance; the Group’s ability to borrow and satisfy debt covenants; compliance with data privacy regulations; and the risks associated with funding the defined benefits under its pension plans.

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable.

ITEM 3. KEY INFORMATION

SELECTED CONSOLIDATED FINANCIAL INFORMATION Summary The selected consolidated financial data set forth below for the years ended December 31, 2007, 2006, 2005 and 2004 has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with IFRS as adopted by the European Union (“EU”), and is derived from the Consolidated Financial Statements of the Group which have been audited by its independent registered public accounting firm, Ernst & Young LLP. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences have no impact on the Company’s Consolidated Financial Statements for the years presented. The selected consolidated financial data set forth below should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report.

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Consolidated Income Statement Data Years ended December 31, 2007(1) 2007 2006 2005(2) 2004(2) $ £ £ £ £ (in millions, except per share and ADS amounts) Revenue: Continuing operations 1,771 883 786 697 607 Discontinued operations 79 40 174 1,213 1,597 1,850 923 960 1,910 2,204 Total operating profit before exceptional operating items: Continuing operations 474 237 200 175 125 Discontinued operations 17 8 31 164 221 491 245 231 339 346 Exceptional operating items: Continuing operations 60 30 27 (15 ) (24 ) Discontinued operations — — — (7 ) (25 ) 60 30 27 (22 ) (49 ) Total operating profit: Continuing operations 534 267 227 160 101 Discontinued operations 17 8 31 157 196 551 275 258 317 297 Financial income 18 9 26 30 70 Financial expenses (108 ) (54 ) (37 ) (63 ) (103 ) Profit before tax 461 230 247 284 264 Tax: On profit before exceptional items (90 ) (45 ) (53 ) (88 ) (56 ) On exceptional items — — (6 ) — 22 Exceptional tax 60 30 100 8 161 (30 ) (15 ) 41 (80 ) 127 Profit after tax 431 215 288 204 391 Gain on disposal of assets, net of tax 32 16 117 311 19 Profit for the year 463 231 405 515 410 Attributable to: Equity holders of the parent 463 231 405 496 383 Minority equity interest — — — 19 27 Profit for the year 463 231 405 515 410 Earnings per ordinary share: Continuing operations: Basic 131.3¢ 65.6p 69.1p 21.9p 36.3p Diluted 127.7¢ 63.8p 67.4p 21.4p 35.9p Total operations: Basic 144.7¢ 72.2p 104.1p 95.2p 53.9p Diluted 140.7¢ 70.2p 101.5p 93.1p 53.3p Footnotes on page 9.

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Consolidated Balance Sheet Data

December 31, 2007(3) 2007 2006 2005 2004 $ £ £ £ £ (in millions) Goodwill and intangible assets 556 277 263 238 206 Property, plant and equipment 1,934 962 997 1,356 1,926 Investments and other financial assets 253 126 128 155 122 Retirement benefit assets 65 32 — — — Current assets 710 353 455 707 598 Non-current assets classified as held for sale 115 57 50 279 1,826 Total assets 3,633 1,807 1,893 2,735 4,678 Current liabilities 1,226 610 643 794 926 Long-term debt 1,748 869 303 410 1,156 Net assets 98 49 686 1,104 1,938 Share capital 163 81 66 49 723 IHG shareholders’ equity 92 46 678 1,084 1,821 Number of Shares in issue at period end (millions) 295 356 433 622

(1) US dollar amounts have been translated at the weighted average rate for the year of £1.00 = $2.01. (2) 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. (3) US dollar amounts have been translated at the Noon Buying Rate on December 31, 2007 of £1.00 = $2.01 solely for convenience.

Dividends InterContinental Hotels Group PLC paid an interim dividend of 5.7 pence per share on October 5, 2007. The IHG board has proposed a final dividend of 14.9 pence per share, payable on June 6, 2008, if approved by shareholders at the Annual General Meeting to be held on May 30, 2008, bringing the total IHG dividend for the year ended December 31, 2007 to 20.6 pence per share. The table below sets forth the amounts of interim, final and total dividends on each ordinary share in respect of each fiscal year indicated. Comparative dividends per share have been restated using the aggregate of the weighted average number of shares of InterContinental Hotels Group PLC (as IHL then was) and Six Continents PLC (as Six Continents then was), adjusted to equivalent shares of InterContinental Hotels Group PLC. For the purposes of showing the dollar amounts per ADS, such amounts are translated into US dollars per ADS at the Noon Buying Rate on each of the respective UK payment dates.

Ordinary dividend

Pence per ordinary share $ per ADS Interim Final Total Interim Final Total 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 0.355 2007 5.70 14.90 20.60 0.115 0.292(2) 0.407

(1) Restated to reflect an equivalent number of shares in InterContinental Hotels Group PLC. (2) The 2007 final dividend payable to ADS holders will be paid in USD and was set using the closing USD/GBP spot rate of £1.00:$1.96 on February 15, 2008.

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Special Dividend

Pence per ordinary share $ per ADS December 2004 72.00 1.39 June 2006 118.00 2.17 June 2007 200.00 4.00

Return of Capital

Pence per ordinary share $ per ADS June 2005 165.00 2.86

Exchange Rates The following tables show, for the periods and dates indicated, certain information regarding the exchange rate for pounds sterling, based on the Noon Buying Rate for pounds sterling expressed in US dollars per £1.00. The exchange rate on March 14, 2008 was £1.00 = $2.03.

Month’s Month’s highest lowest Month exchange rate exchange rate September 2007 2.04 1.99 October 2007 2.08 2.03 November 2007 2.11 2.05 December 2007 2.07 1.98 January 2008 1.99 1.95 February 2008 1.99 1.94 March 2008 (through March 14, 2008) 2.03 1.99

Period Average end rate(1) High Low 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 2.01 2.01 2.11 1.92 2008 (through March 14, 2008) 2.03 2.00 2.03 1.94

(1) The average of the Noon Buying Rate on the last day of each full month during the period. A significant portion of the Group’s assets, liabilities and revenues are denominated in currencies other than pounds sterling, principally the US dollar and the euro. For a discussion of the impact of exchange rate movements, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

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RISK FACTORS This section describes some of the risks that could materially affect the Group’s business. The factors below should be considered in connection with any financial and forward-looking information in this Form 20-F and the cautionary note regarding forward-looking statements contained on pages 5 and 6. The risks below are not the only ones that the Group faces. Some risks are not yet known to IHG and some that IHG does not currently believe to be material could later turn out to be material. All of these risks could materially affect the Group’s business, revenue, operating profit, earnings, net assets and liquidity and/or capital resources.

The Group is reliant on the reputation of its brands and the protection of its intellectual property rights Any event that materially damages the reputation of one or more of the Group’s brands and/or failure to sustain the appeal of the Group’s brands to its customers could have an adverse impact on the value of that brand and subsequent revenues from that brand or business. In addition, the value of the Group’s brands is influenced by a number of other factors, some of which may be outside the Group’s control, including commoditisation (whereby price/quality becomes relatively more important than brand identifications due, in part, to the increased prevalence of third-party intermediaries), consumer preference and perception, failure by the Group or its franchisees to ensure compliance with the significant regulations applicable to hotel operations (including fire and life safety requirements), or other factors affecting consumers’ willingness to purchase goods and services, including any factor which adversely affects the reputation of those brands. In particular, where the Group is unable to enforce adherence to its operating and quality standards, or the significant regulations applicable to hotel operations, pursuant to its management and franchise contracts, there may be further adverse impact upon brand reputation or customer perception and therefore the value of the hotel brands. Given the importance of brand recognition to the Group’s business, the Group has invested considerable effort in protecting its intellectual property, including registration of trademarks and domain names. However, the laws of certain foreign countries in which the Group operates do not protect the Group’s proprietary rights to the same extent as the laws in the United States and the European Union. This is particularly relevant in China where, despite recent improvements in intellectual property rights, the relative lack of protection increases the risk that the Group will be unable to prevent infringements of its intellectual property in this key growth market. Any widespread infringement or misappropriation could materially harm the value of the Group’s brands and its ability to develop the business.

The Group is exposed to a variety of risks related to identifying, securing and retaining management and franchise agreements The Group’s growth strategy depends on its success in identifying, securing and retaining management and franchise agreements. Competition with other hotel companies may generally reduce the number of suitable management, franchise and investment opportunities offered to the Group and increase the bargaining power of property owners seeking to engage a manager or become a franchisee. The terms of new management or franchise agreements may not be as favourable as current arrangements and the Group may not be able to renew existing arrangements on the same terms. There can also be no assurance that the Group will be able to identify, retain or add franchisees to the Group system or to secure management contracts. For example, the availability of suitable sites, planning and other local regulations or the availability and affordability of finance may all restrict the supply of suitable hotel development opportunities under franchise or management agreements. There are also risks that significant franchisees or groups of franchisees may have interests that conflict, or are not aligned, with those of the Group including, for example, the unwillingness of franchisees to support brand improvement initiatives. In connection with entering into management or franchise agreements, the Group may be required to make investments in or guarantee the obligations of third parties or guarantee minimum income to third parties. Changes in legislation or regulatory changes may be implemented that have the effect of favoring franchisees relative to brand owners.

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The Group is exposed to the risks of political and economic developments The Group is exposed to the risks of global and regional adverse political, economic and financial market developments, including recession, inflation and currency fluctuations that could lower revenues and reduce income. A recession in one country or more widely tends to reduce leisure and business travel to and from affected countries and would adversely affect room rates and/or occupancy levels and other income-generating activities resulting in deterioration of results of operations and potentially reducing the value of properties in affected economies. The owners or potential owners of hotels managed or franchised by one group face similar risks which could adversely affect IHG’s ability to secure management or franchise agreements. More specifically, the Group is highly exposed to the US market and, accordingly, is particularly susceptible to adverse changes in the US economy. Further political or economic factors or regulatory action could effectively prevent the Group from receiving profits from, or selling its investments in, certain countries, or otherwise adversely affect operations. For example, changes to tax rates or legislation in the jurisdictions in which the Group operates could decrease the proportion of profits the Group is entitled to retain, or the Group’s interpretation of various tax laws and regulations may prove to be incorrect, resulting in higher than expected tax charges. In addition, fluctuations in currency exchange rates between sterling, the currency in which the Group reports its financial statements, and the US dollar and other currencies in which the Group’s international operations or investments do business, could adversely affect the Group’s reported earnings and the value of its business. Fluctuations of this type have been experienced over recent years with the significant strengthening of sterling against the US dollar. As the majority of the Group’s profits are generated in the United States, such fluctuations may have a significant impact on the Group’s reported results.

The Group is dependent upon recruiting and retaining key personnel and developing their skills In order to develop, support and market its products, the Group must hire and retain highly skilled employees with particular expertise. The implementation of the Group’s strategic business plans could be undermined by failure to recruit or retain key personnel, the unexpected loss of key senior employees, failures in the Group’s succession planning and incentive plans, or a failure to invest in the development of key skills. Some of the markets in which the Group operates are experiencing rapid economic growth and the Group must compete against a number of companies inside and outside the hospitality industry for suitably qualified or experienced employees. Failure to attract and retain these employees may threaten the success of the Group’s operations in these markets. Additionally, unless skills are supported by a sufficient infrastructure to enable knowledge and skills to be passed on, the Group risks losing accumulated knowledge if key employees leave the Group.

The Group is exposed to the risk of events that adversely impact domestic or international travel The room rates and occupancy levels of the Group could be adversely impacted by events that reduce domestic or international travel, such as actual or threatened acts of terrorism or war, epidemics, travel-related accidents, travel-related industrial action, increased transportation and fuel costs and natural disasters resulting in reduced worldwide travel or other local factors impacting individual hotels. A decrease in the demand for hotel rooms as a result of such events may have an adverse impact on the Group’s operations and financial results. In addition, inadequate preparedness, contingency planning or recovery capability in relation to a major incident or crisis may prevent operational continuity and consequently impact the value of the brand or the reputation of the Group.

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 The value of the brands of the Group is partly derived from the ability to drive reservations through its proprietary HolidexPlus reservation system, an electronic booking and delivery channel directly linked to travel agents, hotels and internet networks. Inadequate disaster recovery arrangements, or inadequate continued investment in this technology, leading to loss of key communications linkages, particularly in relation to HolidexPlus, internet reservation channels and other key parts of the IT infrastructure for a prolonged period, or permanently, may result in significant business interruption and subsequent impact on revenues. The Group is also exposed to the risk of competition from third-party intermediaries who provide reservation infrastructure. In particular, any significant increase in the use of these reservation channels in preference to

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proprietary channels may impact the Group’s ability to control the supply, presentation and price of its room inventory.

The Group is exposed to certain risks in relation to technology and systems To varying degrees, the Group is reliant upon certain technologies and systems (including IT systems) for the running of its business, particularly those which are highly integrated with business processes. Disruption to those technologies or systems could adversely affect the efficiency of the business, notwithstanding business continuity or disaster recovery processes. The Group may have to make substantial additional investments in new technologies or systems to remain competitive. Failing to keep pace with developments in technologies or systems may put the Group at a competitive disadvantage. The technologies or systems that the Group chooses may not be commercially successful or the technology or system strategy employed may not be sufficiently aligned to the needs of the business or responsive to changes in business strategy. As a result, the Group could lose customers, fail to attract new customers or incur substantial costs or face other losses. Additionally, failure to develop an appropriate e-commerce strategy and select the right partners could erode the Group’s market share.

The Group is exposed to the risks of the hotel industry supply and demand cycle The future operating results of the Group could be adversely affected by industry over-capacity (by number of rooms) and weak demand due, in part, to the cyclical nature of the hotel industry, or other differences between planning assumptions and actual operating conditions. Reductions in room rates and occupancy levels would adversely impact the results of Group operations.

The Group may experience a lack of selected development opportunities While the strategy of the Group is to extend the hotel network through activities that do not involve significant capital, in some cases the Group may consider it appropriate to acquire new land or locations for the development of new hotels. If the availability of suitable sites becomes limited, this could adversely affect its results of operations.

The Group is exposed to risks related to corporate responsibility The reputation of the Group and the value of its brands are influenced by a wide variety of factors, including the perception of key stakeholders and the communities in which the Group operates. The social and environmental impacts of business are under increasing scrutiny, and the Group is exposed to the risk of damage to its reputation if it fails to demonstrate sufficiently responsible practices in a number of areas such as sustainability, responsible tourism, environmental management, human rights and support for the local community.

The Group is exposed to the risk of litigation The Group could be at risk of litigation from its guests, customers, joint venture partners, suppliers, employees, regulatory authorities, franchisees and/or the owners of hotels managed by it for breach of its contractual or other duties. Claims filed in the United States may include requests for punitive damages as well as compensatory damages. Exposure to litigation or fines imposed by regulatory authorities may affect the reputation of the Group even though the monetary consequences are not significant.

The Group may face difficulties insuring its business Historically, the Group has maintained insurance at levels determined by it to be appropriate in light of the cost of cover and the risk profiles of the business in which it operates. However, forces beyond the Group’s control including market forces, may limit the scope of coverage the Group can obtain as well as the Group’s ability to obtain coverage at reasonable rates. Other forces beyond the Group’s control, such as terrorist attacks or natural disasters may be uninsurable or simply too expensive to insure against. Inadequate or insufficient insurance could expose the Group to large claims or could result in the loss of capital invested in properties, as well as the anticipated future revenue from properties, and could leave the Group responsible for guarantees, debt or other financial obligations related to such properties.

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The Group is exposed to a variety of risks associated with its ability to borrow and satisfy debt covenants The Group is reliant on having access to borrowing facilities to meet its expected capital requirements and to maintain an efficient balance sheet. The majority of the Group’s borrowing facilities are only available if the financial covenants in the facilities are complied with. If the Group is not in compliance with the covenants, the lenders may demand the repayment of the funds advanced. If the Group’s financial performance does not meet market expectations it may not be able to refinance its existing facilities on terms it considers favorable. The availability of funds for future financing is in part dependent on conditions and liquidity in the capital markets.

The Group is required to comply with data privacy regulations Existing and emerging data privacy regulations limit the extent to which the Group can use customer information for marketing or promotional purposes. Compliance with these regulations in each jurisdiction in which the Group operates may require changes in marketing strategies and associated processes which could increase operating costs or reduce the success with which products and services can be marketed to existing or future customers. In addition, non-compliance with privacy regulations may result in fines, damage to reputation or restrictions on the use or transfer of information.

The Group is exposed to funding risks in relation to the defined benefits under its pension plans The Group is required by law to maintain a minimum funding level in relation to its ongoing obligation to provide current and future pensions for members of its pension plans who are entitled to defined benefits. In addition, if the UK Plan of the Group is wound-up or a participating employer ceases to have contributing members, the Group could become statutorily liable to make an immediate payment to the trustees to bring the funding of these defined benefits to a level which is higher than this minimum. The contributions payable by the Group must be set with a view to making prudent provision for the benefits accruing under the plans of the Group. Some of the issues which could adversely affect the funding of these defined benefits (and materially affect the Group’s funding obligations) include: • poor investment performance of pension fund investments; longer life expectancy than assumed in the plans’ actuarial valuations (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. The trustees of the UK defined benefits plan can demand increases to the contribution rates relating to the funding of this pension plan, which would oblige the relevant members of the Group to contribute extra amounts to such pension funds. The trustees must consult the plan’s actuary and principal employer before exercising this power. In practice, contribution rates are agreed between the Group and the trustees on actuarial advice, and are set for three-year terms. The last such review was as at March 31, 2006.

ITEM 4. INFORMATION ON THE COMPANY

SUMMARY Group Overview The Group is a worldwide owner, manager and franchisor of hotels and resorts. Through its various subsidiaries it owned, leased, managed, or franchised hotels and guest rooms in nearly 100 countries around the world, as at December 31, 2007. The Group’s brands include InterContinental Hotels & Resorts (“InterContinental”), Hotels & Resorts (“Crowne Plaza”), Hotels & Resorts (“Holiday Inn”), (or Express by Holiday Inn outside of the Americas), , and . The Group also manages the hotel loyalty program, Priority Club Rewards.

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With the disposal of the Group’s interests in Britvic, a manufacturer and distributor of soft drinks in the United Kingdom, by way of an initial public offering (“IPO”) in December 2005, the Group is now focused solely on hotel franchising, management and ownership. The Group’s revenue and earnings are derived from (i) hotel operations, which include operation of the Group’s owned hotels, management and other fees paid under management contracts, where the Group operates third-parties’ hotels, and franchise and other fees paid under franchise agreements and (ii) until December 14, 2005, the manufacture and distribution of soft drinks. On March 14, 2008, InterContinental Hotels Group PLC had a market capitalization of approximately £2.3 billion, and was included in the list of FTSE 100 companies, a list of the 100 largest companies by market capitalization on the London Stock Exchange. Following a capital restructuring in June 2005, InterContinental Hotels Group PLC became the holding company for the Group. Six Continents Limited (formerly Six Continents PLC), which was formed in 1967, is the principal subsidiary company. The Company’s corporate headquarters are in the United Kingdom, and the registered address is: InterContinental Hotels Group PLC 67 Alma Road Windsor Berkshire SL4 3HD Tel: +44 (0) 1753 410 100 Internet address: www.ihg.com InterContinental Hotels Group PLC was incorporated in Great Britain on May 21, 2004 and registered in, and operates under, the laws of England and Wales. Operations undertaken in countries other than England and Wales are subject to the laws of those countries in which they reside.

Group History and Recent Developments The Group, formerly known as Bass and, more recently, Six Continents, was historically a conglomerate operating as, among other things, a brewer, soft drinks manufacturer, hotelier, leisure operator, and restaurant, pub and bar owner. In the last several years, the Group has undergone a major transformation in its operations and organization, as a result of the Separation (as discussed below) and a number of significant disposals during this period, which has narrowed the scope of its business. On April 15, 2003, following shareholder and regulatory approval, Six Continents PLC (as it then was) separated into two new listed groups, InterContinental Hotels Group PLC (as it then was) comprising the Hotels and Soft Drinks businesses and Mitchells & Butlers plc comprising the Retail and Standard Commercial Property Developments businesses (the “Separation”). The Group disposed of its interests in the soft drinks business by way of an initial public offering (“IPO”) of Britvic, a manufacturer and distributor of soft drinks in the United Kingdom, in December 2005.

Acquisitions and Dispositions Since the Separation, 181 hotels with a net book value of £2.9 billion have been sold, generating aggregate proceeds of £3.0 billion. Of these 181 hotels, 162 have remained in the IHG global system (the number of hotels and rooms owned, leased, managed or franchised by the Group) through either franchise or management agreements. As of March 14, 2008 the Group had on the market a further three hotels. The following are the more significant transactions which have occurred since January 1, 2007: During 2007, the Group disposed of (i) the Crowne Plaza Santiago on May 16, 2007 for $21 million before transaction costs, approximately $9 million above the net book value, retaining a 10 year franchise contract; (ii) its 74.11% share of the InterContinental Montreal on July 12, 2007 for £17 million before transaction costs, approximately £5 million above book value, retaining a 30 year management contract on the hotel; and (iii) the

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Holiday Inn Disney, Paris on November 30, 2007 for £14 million before transaction costs, approximately £2 million above net book value, retaining a five year franchise contract. The Group also divested a number of equity interests of which proceeds totaled £57 million, including a 33.3% interest in the Crowne Plaza London The City for £19 million and a 15% interest in the InterContinental Chicago for £11 million. The asset disposal program which commenced in 2003 has significantly reduced the capital requirements of the Group whilst largely retaining the hotels in the IHG system through management and franchise agreements. Capital expenditure in 2007 totaled £93 million compared with £124 million in 2006 and £183 million in 2005. Capital expenditure in 2007 included the completion of the major refurbishment of the InterContinental London, Park Lane and renovation works at the InterContinental Hong Kong. At December 31, 2007 capital committed, being contracts placed for expenditure on property, plant and equipment not provided for in the financial statements, totaled £10 million. On October 24, 2007 the Group announced a worldwide relaunch of its Holiday Inn brand family. In support of this, the Group will make a non recurring revenue investment of up to £30 million which it is anticipated will be charged to the income statement as an exceptional item during 2008. Following the completion of the hotel disposals in 2007, the Group owns 18 hotels.

FIGURE 1

Asset disposal program detail Number of hotels Proceeds Net book value (£ billion) Disposed since April 2003 181 3.0 2.9 Remaining owned and leased hotels 18 — 0.9

Return of Funds Since March 2004, the Group has announced the return of £3.6 billion of funds to shareholders by way of special dividends, share repurchase programs and capital returns and has returned £3.5 billion to shareholders as at March 14, 2008 (see Figure 2). A third £250 million share repurchase program was completed in 2007 and the £150 million share repurchase program announced on February 20, 2007 was commenced. At December 31, 2007 £92 million of this share repurchase was outstanding. During the year 7.7 million shares were repurchased at an average price of 1046 pence per share (total £80.7 million). The precise timing of share purchases will be dependent upon, amongst other things, market conditions. By March 14, 2008, a total of 6.3 million shares had been repurchased under the £150 million repurchase program at an average price per share of 926 pence per share (approximately £58 million). Purchases are made under the existing authority from shareholders which will be renewed at the Company’s Annual General Meeting. Any shares repurchased under these programs will be canceled. Information relating to the purchases of equity securities can be found in Item 16E. On February 20, 2007, IHG announced a special dividend of approximately £700 million with share consolidation. £709 million was returned to shareholders in June 2007 by way of a special dividend of 200 pence per ordinary share held on June 1, 2007.

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FIGURE 2

Return of funds program Timing Total return Returned to date(i) Still to be returned £501 million special dividend Paid in December 2004 £501m £501m Nil First £250 million share buyback Completed in 2004 £250m £250m Nil £996 million capital return Paid in July 2005 £996m £996m Nil Second £250 million share buyback Completed in 2006 £250m £250m Nil £497 million special dividend Paid in June 2006 £497m £497m Nil Third £250 million share buyback Completed in 2007 £250m £250m Nil £709 million special dividend Paid in June 2007 £709m £709m Nil £150 million share buyback Under way £150m £58m £92m Total £3,603m £3,511m £92m

(i) As at March 14, 2008.

Hotels IHG owns a number of hotel brands including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites and Hotel Indigo. As at December 31, 2007, IHG’s brands comprised 3,949 franchised, managed, owned or leased hotels and 585,094 rooms in nearly 100 countries.

Soft Drinks In December 2005 IHG disposed of its interests in Britvic, one of the two leading manufacturers of soft drinks by value and volume in Great Britain, by way of an IPO. IHG received aggregate proceeds of approximately £371 million (including two additional dividends, one of £47 million received in November 2005 and another of £89 million received in May 2005, before any commissions or expenses). The Group results for fiscal 2005 include the results of Soft Drinks for the period up until the IPO of Britvic on December 14, 2005.

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SEGMENTAL INFORMATION Geographic Segmentation The following table shows revenue and operating profit before exceptional operating items in pounds sterling and percentage by geographical area, for the following periods: years ended December 31, 2007, 2006 and 2005.

Year ended December 31, 2007 2006 2005 (£ million) Revenue(1) Americas 450 422 376 Europe, the Middle East and Africa 245 198 192 Asia Pacific 130 111 87 Central(4) 58 55 42 Continuing operations 883 786 697 Americas 31 41 69 Europe, the Middle East and Africa 9 133 1,090 Asia Pacific — — 54 Discontinued operations(3) 40 174 1,213 Total 923 960 1,910 Operating profit before exceptional operating items(1)(2) Americas 220 215 186 Europe, the Middle East and Africa 67 37 33 Asia Pacific 31 29 21 Central(4) (81 ) (81 ) (65 ) Continuing operations 237 200 175 Americas 8 6 12 Europe, the Middle East and Africa — 25 141 Asia Pacific — — 11 Discontinued operations(3) 8 31 164 Total 245 231 339

Footnotes on page 19.

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Year ended December 31, 2007 2006 2005 (%) Revenue Americas 48.8 44.0 19.7 Europe, the Middle East and Africa 26.5 20.6 10.0 Asia Pacific 14.1 11.6 4.6 Central 6.3 5.7 2.2 Continuing operations 95.7 81.9 36.5 Americas 3.3 4.3 3.6 Europe, the Middle East and Africa 1.0 13.8 57.1 Asia Pacific — — 2.8 Discontinued operations 4.3 18.1 63.5 Total 100.0 100.0 100.0 Operating profit before exceptional operating items Americas 89.8 93.1 54.9 Europe, the Middle East and Africa 27.3 16.0 9.7 Asia Pacific 12.7 12.6 6.2 Central (33.1 ) (35.1 ) (19.2 ) Continuing operations 96.7 86.6 51.6 Americas 3.3 2.6 3.5 Europe, the Middle East and Africa — 10.8 41.6 Asia Pacific — — 3.3 Discontinued operations 3.3 13.4 48.4 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 £1 = $2.01 (2006 £1 = $1.84, 2005 £1 = $1.83) . In the case of the euro, the translation rate is £1 = €1.46 (2006 £1 = €1.47, 2005 £1 = €1.46). (2) Operating profit before exceptional operating items does not include exceptional operating items for all periods presented. Exceptional operating items (credit unless otherwise noted) by region are the Americas £9 million (2006 £25 million, 2005 £5 million charge); Europe, the Middle East and Africa £10 million (2006 £2 million, 2005 £12 million charge); Asia Pacific £8 million (2006 £nil, 2005 £5 million charge); and Central £3 million (2006 £nil, 2005 £nil). (3) Europe, the Middle East and Africa includes discontinued operations for Hotels £nil (2006 £25 million, 2005 £71 million) and Soft Drinks £nil (2006 £nil, 2005 £70 million). The Americas and Asia Pacific discontinued operations all relate to Hotels. Hotels discontinued operations were all owned and leased. (4) 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.

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Activity Segmentation The following table shows revenue and operating profit before exceptional operating items in pounds sterling by activity and the percentage contribution of each activity for the following periods: years ended December 31, 2007, 2006 and 2005.

Year ended December 31, 2007 2006 2005 (£ million) Revenue(1) Hotels Americas 450 422 376 Europe, the Middle East and Africa 245 198 192 Asia Pacific 130 111 87 Central(4) 58 55 42 Continuing operations 883 786 697 Hotels(3) Americas 31 41 69 Europe, the Middle East and Africa 9 133 419 Asia Pacific — — 54 Soft Drinks — — 671 Discontinued operations 40 174 1,213 Total 923 960 1,910 Operating profit before exceptional operating items(1)(2) Hotels Americas 220 215 186 Europe, the Middle East and Africa 67 37 33 Asia Pacific 31 29 21 Central(4) (81 ) (81 ) (65 ) Continuing operations 237 200 175 Hotels(3) Americas 8 6 12 Europe, the Middle East and Africa — 25 71 Asia Pacific — — 11 Soft Drinks — 70 Discontinued operations 8 31 164 Total 245 231 339

Footnotes on page 21.

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Year ended December 31, 2007 2006 2005 (%) Revenue Hotels Americas 48.8 44.0 19.7 Europe, the Middle East and Africa 26.5 20.6 10.0 Asia Pacific 14.1 11.6 4.6 Central 6.3 5.7 2.2 Continuing operations 95.7 81.9 36.5 Hotels Americas 3.3 4.3 3.6 Europe, the Middle East and Africa 1.0 13.8 22.0 Asia Pacific — — 2.8 Soft Drinks — — 35.1 Discontinued operations 4.3 18.1 63.5 Total 100.0 100.0 100.0 Operating profit before exceptional operating items Hotels Americas 89.8 93.1 54.9 Europe, the Middle East and Africa 27.3 16.0 9.7 Asia Pacific 12.7 12.6 6.2 Central (33.1 ) (35.1 ) (19.2 ) Continuing operations 96.7 86.6 51.6 Hotels Americas 3.3 2.6 3.5 Europe, the Middle East and Africa — 10.8 20.9 Asia Pacific — — 3.3 Soft Drinks — — 20.7 Discontinued operations 3.3 13.4 48.4 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 £1=$2.01 (2006 £1 = $1.84, 2005 £1 = $1.83). In the case of the euro, the translation rate is £1 = €1.46 (2006 £1 = €1.47, 2005 £1 = €1.46). (2) Operating profit before exceptional operating items does not include exceptional operating items for all periods presented. Exceptional operating items (credit unless otherwise noted) by region are the Americas £9 million (2006 £25 million, 2005 £5 million charge); Europe, the Middle East and Africa £10 million (2006 £2 million, 2005 £12 million charge); Asia Pacific £8 million (2006 £nil, 2005 £5 million charge); and Central £3 million (2006 £nil, 2005: £nil). (3) Hotels discontinued operations were all owned and leased. (4) 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.

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HOTELS Overview InterContinental Hotels Group is an international hotel business which owns a portfolio of established and diverse hotel brands, including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites and Hotel Indigo, with 3,949 franchised, managed, owned and leased hotels and 585,094 guest rooms in nearly 100 countries as at December 31, 2007. Approximately 580,000 rooms or 99% of the Group’s rooms are operated under managed and franchised models. The Group operates in the global hotel market, which has an estimated total room capacity of 18 million rooms. Room capacity has been growing at approximately 3% per annum over the last five years. Competitors in the market include other large hotel companies and independently owned hotels. The market remains fragmented, with an estimated seven million branded hotel rooms (approximately 40% of the total market). The Group has an estimated 8% share of the branded market (approximately 3% of the total market). The top six major companies, including IHG, together control approximately 38% of the branded rooms, only 15% of total hotel rooms. Geographically, the market is more concentrated with the top 20 countries accounting for 80% of global hotel rooms. Within this, the United States is dominant (more than 25% of global hotel rooms) with China, Japan and Italy being the next largest markets. The Group’s brands have a leadership position (top three by room numbers) in each of the six largest geographic markets, a greater representation than any other major hotel company. US market data indicates a steady increase in hotel industry revenues, broadly in line with Gross Domestic Product, with growth of approximately 1-1.5% per annum in real terms since 1967. Hotel revenue growth in the United States and other key markets has been impacted by a number of underlying trends, including: 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; • globalization 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.

FIGURE 3

Branded hotel rooms by region as a percentage of the total market 2006 United States 67% Europe, Middle East and Africa (“EMEA”) 35% Asia Pacific 28%

Source: IHG Analysis, Northstar Travel Management Within the global market, a relatively low proportion of hotel rooms are branded, however, there has been an increasing trend towards branded rooms. Branded companies are therefore gaining market share at the expense of unbranded companies. The Group is well positioned to benefit from this trend. Hotel owners are increasingly recognising the benefits of working with a group such as IHG which can offer a portfolio of brands to suit the different real estate opportunities an owner may have, together with effective revenue delivery through global reservation channels. Furthermore, hotel ownership is increasingly being separated from hotel operations, encouraging hotel owners to use third parties such as IHG to manage or franchise their hotels. Potential negative trends impacting hotel industry growth include increased terrorism, environmental considerations and economic factors such as high oil prices, risk of recession and global credit restrictions.

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Supply growth in the industry is cyclical, averaging between zero and 5% per annum historically. The Group’s fee- based profit is partly protected from changes in supply due to its model of third party ownership of hotels under IHG management and franchise contracts.

Operations The Group currently operates an ‘asset-light’ business model and owns only a small number of hotels deemed to be strategically important to the brands they represent. Through three distinct business models which offer different growth, return, risk and reward opportunities, IHG achieves growth through its partnerships with financial participants who may provide capital in exchange for, among other things, IHG’s expertise and brand value. The models are summarized as follows: franchised, where Group companies neither own nor manage the hotel, but license the use of a Group brand and provide access to reservation systems, loyalty schemes and know-how. The Group derives revenues from a brand royalty or licensing fee, based on a percentage of room revenue. At the end of 2007, 76% of the Group’s rooms were franchised, with 89% of rooms in the Americas operating under this model. managed, where in addition to licensing the use of a Group brand, a Group company manages the hotel for third party owners. The Group derives revenues from base and incentive management fees and provides the system infrastructure necessary for the hotel to operate. Management contract fees are linked to total hotel revenue and may have an additional incentive fee linked to profitability and/or cash flow. The terms of these agreements vary, but are often long term (for example, 10 years or more). The Group’s responsibilities under the management agreement typically include hiring, training and supervising the managers and employees that operate the hotels under the relevant brand standards. The Group prepares annual budgets for the hotels that it manages, and the property owners are responsible for funding periodic maintenance and repair on a basis to be agreed with the Group. In order to gain access to central reservation systems, global and regional brand marketing and brand standards and procedures, the owners are typically required to make a further contribution. In certain cases, property owners may require performance targets, with consequences for management fees and sometimes the contract itself (including on occasion, the right of termination) if those targets are not met. At the end of 2007, 23% of the Group’s rooms were operated under management contracts. owned and leased (“O & L”), where a Group company both owns (or leases) and operates the hotel and, in the case of ownership, takes all the benefits and risks associated with ownership. The Group has sold a significant proportion of its owned and leased portfolio and in future expects to own only hotels where it is considered strategically important to do so. Rooms owned or leased by the Group at the end of 2007 represented 1% of the Group’s rooms. In addition, the Group also makes equity investments in hotel ownership entities, where its equity investment is less than 100% and it participates in a share of the benefits and risks of ownership. A management contract is generally entered into as well as the equity investment. The following table shows the number of hotels and rooms owned, leased, managed or franchised by IHG as at December 31, 2007, 2006 and 2005.

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 2007 18 6,396 539 134,883 3,392 443,815 3,949 585,094 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 The Group sets quality and service standards for all of its hotel brands (including those operated under management contracts or franchise arrangements) and operates a customer satisfaction and hotel quality measurement system to ensure those standards are met or exceeded. The quality measurement system includes an assessment of both physical property and customer service standards.

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Strategy IHG seeks to deliver enduring top quartile shareholder returns, when measured against a broad global hotel peer group. The Group’s underlying strategy is that by putting the guest first, it will grow a portfolio of differentiated hospitality brands in core strategic countries and global key cities to maximise scale advantage. With a clear target for room growth and a number of brands with market premiums offering excellent returns for owners, the Group is well placed to execute the following strategic priorities: brand performance — to operate a portfolio of brands attractive to both owners and guests that have clear market • positions and differentiation in the eyes of the guest; 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 organization — to create a more efficient organization with strong core capabilities. IHG has set an organic growth target of at least 50,000 to 60,000 net rooms to be added by the end of 2008, with specific growth targets for the InterContinental brand (15-25 net InterContinental hotel additions) and within the Chinese market (125 hotels in China). As at December 31, 2007, IHG had achieved organic growth of 47,419 net rooms against the target set in June 2005, together with 13 net InterContinental hotel additions and 81 hotels in China. IHG’s future growth will be achieved predominantly by managing and franchising rather than owning hotels. Approximately 580,000 rooms operating under Group brands are managed and franchised. The managed and franchised fee-based model is attractive because it enables the Group to achieve its goals with limited capital investment at an accelerated pace. For this reason, the Group has executed a disposal program for most of its owned hotels, releasing capital and enabling returns of funds to shareholders as well as targeted investment in the business. A key characteristic of the managed and franchised business is that it generates more cash than is required for investment in the business, with a high return on capital employed. During the year ended December 31, 2007, 86% of continuing earnings before interest, tax, exceptional operating items and regional and central overheads was derived from managed and franchised operations. The Group aims to deliver its growth targets through the strongest operating system in the industry which includes: a strong brand portfolio across the major markets, where IHG’s brands achieved revenue per available room • (“RevPAR”) growth premiums within respective key market segments during 2007; • market coverage — a presence in nearly 100 countries; • scale — 3,949 hotels, 585,094 rooms and 137 million room nights per annum; IHG global reservation channels delivering $6.8 billion of global system room revenue in 2007, including • $2.6 billion from the internet; • a loyalty program, Priority Club Rewards, contributing $5.2 billion of global system room revenue in 2007; and a strong web presence — holidayinn.com is one of the industry’s most visited sites, with around 75 million total site • visits per annum. With a clear target for rooms growth and a number of brands with market premiums offering excellent returns to owners, the Group is well placed to execute its strategy and achieve its goals.

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Segmental Results The following table shows revenue and operating profit before exceptional operating items in sterling of the IHG continuing Hotels business by activity and the percentage contribution of each activity for the following periods: years ended December 31, 2007, 2006 and 2005.

Year ended December 31, 2007 2006 2005 (£ million) Continuing revenue(1) Americas Owned and leased 128 104 98 Managed 78 77 65 Franchised 244 241 213 450 422 376 EMEA Owned and leased 121 92 102 Managed 84 71 55 Franchised 40 35 35 245 198 192 Asia Owned and leased 73 71 59 Managed 49 36 25 Franchised 8 4 3 130 111 87 Central(3) 58 55 42 Total 883 786 697 Continuing operating profit before exceptional operating items(1)(2) Americas Owned and leased 20 12 14 Managed 21 27 20 Franchised 212 208 186 Regional overheads (33 ) (32 ) (34 ) 220 215 186 EMEA Owned and leased 17 (4 ) (3 ) Managed 43 37 31 Franchised 29 24 26 Regional overheads (22 ) (20 ) (21 ) 67 37 33 Asia Pacific Owned and leased 18 17 11 Managed 23 21 16 Franchised 3 3 2 Regional overheads (13 ) (12 ) (8 ) 31 29 21 Central(3) (81 ) (81 ) (65 ) Total 237 200 175

Footnotes on page 26.

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Year ended December 31, 2007 2006 2005 (%) Continuing revenue Americas Owned and leased 14.5 13.2 14.1 Managed 8.8 9.8 9.3 Franchised 27.6 30.7 30.6 50.9 53.7 54.0 EMEA Owned and leased 13.7 11.7 14.6 Managed 9.5 9.0 7.9 Franchised 4.5 4.5 5.0 27.7 25.2 27.5 Asia Pacific Owned and leased 8.3 9.0 8.5 Managed 5.6 4.6 3.6 Franchised 0.9 0.5 0.4 14.8 14.1 12.5 Central 6.6 7.0 6.0 Total 100.0 100.0 100.0 Continuing operating profit before exceptional operating items Americas Owned and leased 8.4 6.0 8.0 Managed 8.9 13.5 11.4 Franchised 89.5 104.0 106.3 Regional overheads (13.9 ) (16.0 ) (19.4 ) 92.9 107.5 106.3 EMEA Owned and leased 7.2 (2.0 ) (1.7 ) Managed 18.1 18.5 17.7 Franchised 12.2 12.0 14.8 Regional overheads (9.3 ) (10.0 ) (12.0 ) 28.2 18.5 18.8 Asia Pacific Owned and leased 7.6 8.5 6.3 Managed 9.7 10.5 9.1 Franchised 1.3 1.5 1.1 Regional overheads (5.5 ) (6.0 ) (4.5 ) 13.1 14.5 12.0 Central (34.2 ) (40.5 ) (37.1 ) 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 £1 = $2.01 (2006 £1 = $1.84, 2005 £1 = $1.83). In the case of the euro, the translation rate is £1 = €1.46 (2006 £1 = €1.47, 2005 £1 = €1.46). (2) Operating profit before exceptional operating items does not include exceptional operating items for all periods presented. Exceptional operating items (credit unless otherwise noted) by region are the Americas £9 million (2006 £25 million, 2005 £5 million charge); Europe, the Middle East and Africa £10 million (2006 £2 million, 2005 £12 million charge); Asia Pacific £8 million (2006 £nil, 2005 £5 million charge); and Central £3 million (2006 £nil, 2005 £nil). (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.

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The following table shows revenue and operating profit before exceptional operating items in US dollars of the IHG continuing Hotels business by activity and the percentage contribution of each activity for the following periods: years ended December 31, 2007, 2006 and 2005.

Year ended December 31, 2007 2006 2005 ($ million) Continuing revenue(1) Americas Owned and leased 257 192 180 Managed 156 143 118 Franchised 489 443 389 902 778 687 EMEA Owned and leased 244 169 187 Managed 167 131 100 Franchised 81 63 64 492 363 351 Asia Pacific Owned and leased 145 131 108 Managed 99 65 45 Franchised 16 8 6 260 204 159 Central(3) 117 101 77 Total 1,771 1,446 1,274 Continuing operating profit before exceptional operating items(1)(2) Americas Owned and leased 40 22 26 Managed 41 50 36 Franchised 425 382 340 Regional overheads (66 ) (59 ) (62 ) 440 395 340 EMEA Owned and leased 33 (7 ) (5 ) Managed 87 68 56 Franchised 58 44 48 Regional overheads (44 ) (36 ) (39 ) 134 69 60 Asia Pacific Owned and leased 36 31 20 Managed 46 39 29 Franchised 6 5 5 Regional overheads (25 ) (23 ) (15 ) 63 52 39 Central(3) (163 ) (149 ) (118 ) Total 474 367 321

Footnotes on page 28.

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Year ended December 31, 2007 2006 2005 (%) Continuing revenue Americas Owned and leased 14.5 13.3 14.1 Managed 8.8 9.9 9.3 Franchised 27.6 30.6 30.5 50.9 53.8 53.9 EMEA Owned and leased 13.8 11.7 14.7 Managed 9.4 9.0 7.9 Franchised 4.6 4.4 5.0 27.8 25.1 27.6 Asia Pacific Owned and leased 8.2 9.0 8.5 Managed 5.6 4.5 3.5 Franchised 0.9 0.6 0.5 14.7 14.1 12.5 Central 6.6 7.0 6.0 Total 100.0 100.0 100.0 Continuing operating profit before exceptional operating items Americas Owned and leased 8.4 6.0 8.1 Managed 8.6 13.6 11.2 Franchised 89.7 104.0 105.9 Regional overheads (13.9 ) (16.0 ) (19.3 ) 92.8 107.6 105.9 EMEA Owned and leased 7.0 (1.9 ) (1.6 ) Managed 18.4 18.5 17.4 Franchised 12.2 12.0 15.0 Regional overheads (9.3 ) (9.8 ) (12.1 ) 28.3 18.8 18.7 Asia Owned and leased 7.6 8.5 6.2 Managed 9.7 10.6 9.0 Franchised 1.3 1.4 1.6 Regional overheads (5.3 ) (6.3 ) (4.6 ) 13.3 14.2 12.2 Central (34.4 ) (40.6 ) (36.8 ) 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 £1 = $2.01 (2006 £1 = $1.84, 2005 £1 = $1.83). In the case of the euro, the translation rate is £1 = €1.46 (2006 £1 = €1.47, 2005 £1 = €1.46). (2) Operating profit before exceptional operating items does not include exceptional operating items for all periods presented. Exceptional operating items (credit unless otherwise noted) by region are the Americas £9 million (2006 £25 million, 2005 £5 million charge); Europe, the Middle East and Africa £10 million (2006 £2 million, 2005 £12 million charge); Asia Pacific £8 million (2006 £nil, 2005 £5 million charge); and Central 2007 £3 million (2006 £nil, 2005 £nil). (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.

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Global System The Group supports revenue delivery into its hotels through its global reservation channels and global loyalty program (Priority Club Rewards) which is paid for by assessments from each hotel in the Group. The elements of the global system include: Priority Club Rewards: The Group operates the Priority Club Rewards loyalty program. Members enjoy a variety of privileges and rewards as they stay at the Group’s hotels around the world. Global system rooms sales generated from Priority Club Rewards members during 2007 were $5.2 billion and represented approximately 35% of IHG global system rooms sales. Central Reservation System Technology: The Group operates the HolidexPlus reservation system. The HolidexPlus system receives reservation requests entered on terminals located at most of its reservation centers, as well as from global distribution systems operated by a number of major corporations and travel agents. Where local hotel systems allow, the HolidexPlus system immediately confirms reservations or indicates alternative accommodation available within IHG’s network. Confirmations are transmitted electronically to the hotel for which the reservation is made. Reservation Call Centers: The Group operates 12 reservation centers around the world which enable it to sell in local languages in many countries and offer a high quality service to customers. Internet: The Group introduced electronic hotel reservations in 1995. The Internet continues to be an important communications, branding and distribution channel for the Group’s sales. During 2007, the internet channel continued to show strong growth, with global system rooms sales booked through the internet increasing by 27% to $2.6 billion. Approximately 17% of IHG global system rooms sales is via the internet through various branded websites, such as www..com and www.holidayinn.com, as well as certified third parties (up from 16% in 2006). IHG has established standards for working with third party intermediaries — on-line travel distributors — who sell or re-sell IHG hotel rooms via their internet sites. Under the standards, certified distributors are required to respect IHG’s trademarks, ensure reservations are guaranteed through an automated and common confirmation process, and clearly present fees to customers. About 85% of IHG global system rooms sales booked on the web is now booked directly through the Group’s own brand sites. The Group estimates that, during 2007, global system rooms sales booked through these reservation systems (which include company reservation centers, global distribution systems and internet reservations) rose by approximately 19% to $6.8 billion, and the proportion of IHG global system rooms sales booked through IHG’s reservation channels increased from 44% to 45%.

Sales and Marketing IHG targets its sales and marketing expenditure in each region on driving revenue and brand awareness or, in the case of sales investments, targeting segments such as corporate accounts, travel agencies and meeting organizers. The majority of IHG’s sales and marketing expenditure is funded by contractual fees paid by most hotels in the system. The strategic goals for the global system as a whole include: • adding further locations and improving guest satisfaction for its brands; • continuing the focus on enrolments in Priority Club Rewards and increasing their share of the total hotel spend; • continuing to improve the direct channels; and • improving pricing structure.

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Global Brands Brands Overview The Group’s portfolio includes seven established and diverse brands. These brands cover several market segments and in the case of InterContinental, Crowne Plaza, Holiday Inn and Express, operate internationally.

December 31, 2007 Brands Room numbers Hotels InterContinental 50,762 149 Crowne Plaza 83,170 299 Holiday Inn 256,699 1,381 Holiday Inn Express 156,531 1,808 Staybridge Suites 13,466 122 Candlewood Suites 16,825 158 Hotel Indigo 1,501 11 Other 6,140 21 Total 585,094 3,949

InterContinental

Americas Americas EMEA EMEA Asia Pacific total O & L total O & L total Average room rate $(1) 169.83 260.63 190.85 449.58 173.22 Room numbers(2) 16,624 1,914 20,012 1,288 14,126

(1) For the year ended December 31, 2007; quoted at constant US$ exchange rate. Average room rate is for comparable InterContinental hotels. (2) As at December 31, 2007. InterContinental hotels are located in major cities and leisure destinations in over 60 countries. Each hotel offers high- class facilities and services aimed at the discerning business and leisure traveller. The brand strives to provide guests with memorable experiences which also give a sense of each hotel’s location. These hotels blend luxury with a celebration of local culture and heritage which is reflected in everything from décor to dining. InterContinental hotels are principally managed by the Group. As at December 31, 2007, there were 149 InterContinental hotels which represented 9% of IHG’s total hotel rooms. During 2007, five InterContinental hotels were added to the portfolio while four hotels were removed.

Crowne Plaza

Americas EMEA EMEA Asia Pacific total total O & L total Average room rate $(1) 115.01 150.73 117.61 100.23 Room numbers(2) 47,893 17,326 233 17,951

(1) For the year ended December 31, 2007; quoted at constant US$ exchange rate. Average room rate is for comparable Crowne Plaza hotels. (2) As at December 31, 2007. Crowne Plaza is one of the fastest growing upscale hotel brands in the world, located in more than 50 countries. Crowne Plaza offers simple elegance and full-service facilities for business and leisure travellers alike. Mainly sited in principal cities, these hotels offer high quality accommodation for leisure and business travellers who appreciate style, a sociable environment, excellent meeting facilities and state-of-the-art business technology. The majority of Crowne Plaza hotels are operated under franchise agreements. As at December 31, 2007, there were 299 Crowne Plaza hotels which represented 14% of IHG’s total hotel rooms. During 2007, 38 Crowne Plaza hotels were added to the portfolio while 14 hotels were removed.

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Holiday Inn

Americas Americas EMEA Asia Pacific total O & L total total Average room rate $(1) 95.97 96.04 119.64 81.18 Room numbers(2) 177,999 1,882 52,842 25,858

(1) For the year ended December 31, 2007; quoted at constant US$ exchange rate. Average room rate is for comparable Holiday Inn hotels. (2) As at December 31, 2007. Friendly service and great value are the hallmarks of the Holiday Inn brand. One of the world’s most recognized brands, Holiday Inn was relaunched in 2007 to improve our ability to meet guest needs for contemporary high-quality and consistent facilities. The relaunch includes a new identity and logo. Aimed at both business travellers and families on holiday, the brand continues to grow around the world. Holiday Inn hotels are predominantly operated under franchise agreements. As at December 31, 2007, there were 1,381 Holiday Inn hotels which represented 44% of IHG’s total hotel rooms and of which 69% were located in the Americas. During 2007, 69 new Holiday Inn hotels were added to the portfolio, while 83 hotels were removed.

Holiday Inn Express

Americas EMEA Asia Pacific total total total Average room rate $(1) 94.10 104.73 72.75 Room numbers(2) 134,551 19,380 2,600

(1) For the year ended December 31, 2007; quoted at constant US$ exchange rate. Average room rate is for comparable Holiday Inn Express hotels. (2) As at December 31, 2007. Convenience, comfort and value make Holiday Inn Express a popular choice with guests and hotel owners. Contemporary guest rooms and bathrooms, a complimentary breakfast and easily accessible locations make this limited service Holiday Inn an ideal choice for people on the road. Holiday Inn Express was also relaunched in 2007. Holiday Inn Express hotels are almost entirely operated under franchise agreements. As at December 31, 2007, there were 1,808 Holiday Inn Express hotels worldwide which represented 27% of IHG’s total hotel rooms and of which 86% were located in the Americas. During 2007, 177 new Holiday Inn Express hotels were added to the portfolio, while 55 hotels were removed.

Staybridge Suites

Americas total Average room rate $(1) 105.06 Room numbers(2) 13,466

(1) For the year ended December 31, 2007; quoted at constant US$ exchange rate. Average room rate is for comparable Staybridge Suite’s hotels. (2) As at December 31, 2007. Staybridge Suites is a high-end brand offering guests a home from home for extended hotel stays. Residential in style, they provide studios and suites, kitchens, living rooms and work areas, and high-speed internet access for business and leisure guests. The “Just Like Home” theatre and new buffet kitchen are communal areas where guests can meet and relax. The brand will develop outside the United States during 2008. The Staybridge Suites brand is principally operated under management contracts and franchise agreements. As at December 31, 2007, there were 122 Staybridge Suites hotels, all located in the Americas, which represented 2% of IHG’s total hotel rooms. During 2007, 25 hotels were added to the portfolio.

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Candlewood Suites

Americas total Average room rate $(1) 70.14 Room numbers(2) 16,825

(1) For the year ended December 31, 2007; quoted at constant US$ exchange rate. Average room rate is for comparable Candlewood Suites hotels. (2) As at December 31, 2007. Created for guest stays of a week or longer, Candlewood Suites offer studios and one bedroom suites with well equipped kitchens, spacious work areas and an array of convenient amenities. This extended stay brand continues to grow rapidly in the Americas and recently launched a new bedding collection. The Candlewood Suites brand is operated under management contracts and franchise agreements. Hospitality Properties Trust (“HPT”) is a major owner of Candlewood Suites properties and the Group manages all 76 of HPT’s Candlewood Suites properties under a 20 year agreement. As at December 31, 2007, there were 158 Candlewood Suites hotels which represented 3% of IHG’s total rooms. During 2007, 29 hotels were added to the portfolio and one was removed.

Hotel Indigo Hotel Indigo is the industry’s first branded boutique hotel. The brand is aimed at style-conscious guests who want peaceful and affordable luxury combined with all the knowledge, experience and operating systems that an international hotel company can offer. Inspired by lifestyle retailing, it features seasonal changes, inviting service, inspiring artwork, casual dining, airy guest rooms and 24-hour business amenities. The first Hotel Indigo opened in Atlanta, Georgia in the United States in October 2004. As at December 31, 2007, there were 11 Hotel Indigo hotels with five hotels added to the portfolio during the year.

Americas total Average room rate $(1) 116.54 Room numbers(2) 1,501

(1) For the year ended December 31, 2007; quoted at constant US$ exchange rate. Average room rate is for comparable Hotel Indigo hotels. (2) As at December 31, 2007.

Geographical Analysis Although it has worldwide hotel operations, the Group is most dependent on the Americas for operating profit, reflecting the structure of the branded global hotel market. The Americas region generated 69% of the Group’s continuing operating profit before central overheads and exceptional operating items during 2007. The geographical analysis, split by number of rooms and operating profit, is set out in the table below.

Americas EMEA Asia Pacific (% of total) Room numbers(1) 70 19 11 Regional operating profit (before central overheads and exceptional operating items)(2) 69 21 10

(1) As at December 31, 2007. (2) For the year ended December 31, 2007.

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The following table shows information concerning the geographical locations and ownership of IHG’s hotels as at December 31, 2007.

Owned and leased Managed Franchised Total Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Americas InterContinental 4 1,914 23 8,313 23 6,397 50 16,624 Crowne Plaza — — 19 6,620 153 41,273 172 47,893 Holiday Inn 5 1,882 29 9,654 918 166,463 952 177,999 Holiday Inn Express — — 1 252 1,614 134,299 1,615 134,551 Staybridge Suites 2 233 41 5,142 79 8,091 122 13,466 Candlewood Suites — — 78 9,410 80 7,415 158 16,825 Hotel Indigo — — 2 305 9 1,196 11 1,501 Total 11 4,029 193 39,696 2,876 365,134 3,080 408,859 EMEA InterContinental 3 1,288 53 17,077 6 1,647 62 20,012 Crowne Plaza 1 233 20 5,234 51 11,859 72 17,326 Holiday Inn — — 86 15,452 249 37,390 335 52,842 Holiday Inn Express 1 153 12 1,310 169 17,917 182 19,380 Total 5 1,674 171 39,073 475 68,813 651 109,560 Asia Pacific InterContinental 1 495 28 11,256 8 2,375 37 14,126 Crowne Plaza — — 50 15,833 5 2,118 55 17,951 Holiday Inn 1 198 78 23,242 15 2,418 94 25,858 Holiday Inn Express — — 10 2,463 1 137 11 2,600 Other — — 9 3,320 12 2,820 21 6,140 Total 2 693 175 56,114 41 9,868 218 66,675 Total InterContinental 8 3,697 104 36,646 37 10,419 149 50,762 Crowne Plaza 1 233 89 27,687 209 55,250 299 83,170 Holiday Inn 6 2,080 193 48,348 1,182 206,271 1,381 256,699 Holiday Inn Express 1 153 23 4,025 1,784 152,353 1,808 156,531 Staybridge Suites 2 233 41 5,142 79 8,091 122 13,466 Candlewood Suites — — 78 9,410 80 7,415 158 16,825 Hotel Indigo — — 2 305 9 1,196 11 1,501 Other — — 9 3,320 12 2,820 21 6,140 Total 18 6,396 539 134,883 3,392 443,815 3,949 585,094

Americas In the Americas, the largest proportion of rooms is operated under the franchise business model primarily in the midscale segment (Holiday Inn and Holiday Inn Express). Similarly, in the upscale segment, Crowne Plaza is predominantly franchised, whereas the majority of the InterContinental brand is operated under franchise and management agreements. With 3,080 hotels, the Americas represented 78% of the Group’s hotels and 69% of the Group’s continuing operating profit before central costs and exceptional operating items during the year ended December 31, 2007. The key profit producing region is the United States, although IHG is also represented in each of Latin America, Canada, Mexico and the Caribbean.

EMEA Comprising 651 hotels at the end of 2007, EMEA represented approximately 21% of the Group’s continuing operating profit before central costs and exceptional operating items during the year ended December 31, 2007.

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Profits are primarily generated from hotels in the United Kingdom, Continental European gateway cities and the Middle East portfolio.

Asia Pacific Comprising 218 hotels as at December 31, 2007, Asia Pacific represents approximately 10% of the Group’s operating profit before central costs and exceptional operating items during the year ended December 31, 2007. Greater China is expected to generate significant growth in the hotel and tourism industry over the next decade. As at December 31, 2007 the Group had 81 hotels in Greater China and a further 107 hotels in development.

Room Count and Pipeline During 2007, the IHG global system (the number of hotels and rooms which are owned, leased, managed or franchised by the Group) increased by 208 hotels (28,848 rooms, or 5.2%) to 3,949 hotels (585,094 rooms). The record growth level was driven, in particular, by continued expansion in the United States, the United Kingdom, China and Japan, resulting in openings of 366 hotels (52,846 rooms). Holiday Inn Express represented 58.7% of the net hotel growth, demonstrating strong market demand in the midscale, limited service sector. The extended stay portfolio, comprising Staybridge Suites and Candlewood Suites hotels, expanded by 53 hotels (5,189 rooms), indicating owner confidence in this sector. The net decline in the Holiday Inn hotel and room count (14 hotels and 3,771 rooms) primarily reflects IHG’s continued strategy to reinvigorate the Holiday Inn brand through the removal of lower quality, non-brand conforming hotels in the United States. This strategy is further supported by the worldwide brand relaunch of the Holiday Inn brand family, announced in October 2007, which entails the consistent delivery of best-in-class service and physical quality in all Holiday Inn and Holiday Inn Express hotels. At the end of 2007, the IHG pipeline (contracts signed for hotels and rooms yet to enter the IHG global system) totaled 1,674 hotels (225,872 rooms). In the year, record room signings across all regions of 125,533 rooms led to pipeline growth of 67,881 rooms (or 43.0%). This level of growth demonstrates strong demand for IHG brands across all regions and represents a key driver of future profitability. There are no assurances that all of the hotels in the pipeline will open or enter the system. The construction, conversion and development of hotels is dependent upon a number of factors, including meeting brand standards, obtaining the necessary permits relating to construction and operation, the cost of constructing, converting and equipping such hotels and the ability to obtain suitable financing at acceptable interest rates. The supply of capital for hotel development in the United States and major economies may not continue at previous levels and consequently the system pipeline could decrease.

Americas The Americas hotel and room count grew by 150 hotels (13,950 rooms) to 3,080 hotels (408,859 rooms). The growth included openings of 274 hotels (31,744 rooms) led by continued demand for Holiday Inn Express of 156 hotels (13,908 rooms). Franchised hotels contributed over 98% of net growth, reflecting the sustained demand for the franchised model. Net growth also included removals of 124 hotels (17,794 rooms), of which Holiday Inn hotels represented 54.0% (69.2% rooms). The Americas pipeline continued to achieve high growth levels and totaled 1,330 hotels (141,157 rooms) at December 31, 2007. During the year, 75,279 room signings were completed, compared with 61,673 room signings in 2006. These signing levels outpaced the prior year as demand for Holiday Inn and Holiday Inn Express continued to accelerate. Furthermore, the extended stay brands, Staybridge Suites and Candlewood Suites, contributed 24.3% of the region’s room signings.

EMEA During 2007, EMEA hotel and room count increased by 28 hotels (2,960 rooms) to 651 hotels (109,560 rooms). The net growth included the opening of 55 hotels (7,956 rooms) and the removal of 27 hotels (4,996 rooms).

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System growth was led by openings in the United Kingdom of 22 hotels (2,522 rooms). Holiday Inn was the largest contributor of room openings, adding over 50% of the region’s total. The pipeline in EMEA increased by 44 hotels (10,832 rooms) to 187 hotels (32,889 rooms). The growth included a record level of 19,153 room signings, driven by exceptional demand in the Middle East, particularly in the United Arab Emirates and Saudi Arabia. Across the region, sustained demand for the Holiday Inn brand led to 6,004 room signings during the year whilst the region also experienced a significant increase in room signings for the InterContinental and Crowne Plaza brands. The EMEA pipeline included 10 Staybridge Suites hotels (1,229 rooms), of which the first hotels are expected to open in the United Kingdom and the Middle East during 2008.

Asia Pacific Asia Pacific hotel and room count increased by 30 hotels (11,938 rooms) to 218 hotels (66,675 rooms). The net growth included 16 hotels (7,827 rooms) in Greater China reflecting continued expansion in one of IHG’s strategic markets, together with 15 hotels (3,542 rooms) in Japan that joined the system as part of the IHG ANA joint venture. The pipeline in Asia Pacific increased by 71 hotels (21,577 rooms) to 157 hotels (51,826 rooms). Demand in the Greater China market continued throughout the year and represented 82.3% of the region’s room signings. From a brand perspective, Crowne Plaza attracted significant interest, contributing over half of the total room signings.

FIGURE 4

Hotels Rooms Change Change Global hotel and room count at December 31 2007 2006 over 2006 2007 2006 over 2006 Analyzed by brand: InterContinental 149 148 1 50,762 49,599 1,163 Crowne Plaza 299 275 24 83,170 75,632 7,538 Holiday Inn 1,381 1,395 (14 ) 256,699 260,470 (3,771 ) Holiday Inn Express 1,808 1,686 122 156,531 143,582 12,949 Staybridge Suites 122 97 25 13,466 10,953 2,513 Candlewood Suites 158 130 28 16,825 14,149 2,676 Hotel Indigo 11 6 5 1,501 893 608 Other 21 4 17 6,140 968 5,172 Total 3,949 3,741 208 585,094 556,246 28,848 Analyzed by ownership type: Owned and leased 18 25 (7 ) 6,396 8,460 (2,064 ) Managed 539 512 27 134,883 125,214 9,669 Franchised 3,392 3,204 188 443,815 422,572 21,243 Total 3,949 3,741 208 585,094 556,246 28,848

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FIGURE 5

Hotels Rooms Change Change Global pipeline at December 31 2007 2006 over 2006 2007 2006 over 2006 Analyzed by brand: InterContinental 62 36 26 20,013 13,211 6,802 Crowne Plaza 118 60 58 36,362 17,113 19,249 Holiday Inn 365 299 66 56,945 44,774 12,171 Holiday Inn Express 712 574 138 70,142 55,520 14,622 Staybridge Suites 157 120 37 17,150 12,605 4,545 Candlewood Suites 207 128 79 18,605 11,723 6,882 Hotel Indigo 52 24 28 6,565 3,045 3,520 Other 1 — 1 90 — 90 Total 1,674 1,241 433 225,872 157,991 67,881 Analyzed by ownership type: Managed 247 139 108 71,814 41,648 30,166 Franchised 1,427 1,102 325 154,058 116,343 37,715 Total 1,674 1,241 433 225,872 157,991 67,881

Seasonality Although the performance of individual hotels and geographic markets might be highly seasonal due to a variety of factors such as the tourist trade and local economic conditions, the geographical spread of the Group’s hotels in nearly 100 countries and the relative stability of the income stream from management and franchising activities diminish the effect of seasonality on the results of the Group.

Competition The Group’s hotels compete with a wide range of facilities offering various types of lodging options and related services to the public. The competition includes several large and moderate sized hotel chains offering upper, mid and lower priced accommodation and also includes independent hotels in each of these market segments, particularly outside of North America where the lodging industry is much more fragmented. Major hotel chains which compete with the Group include , Inc., Starwood Hotels & Resorts Worldwide, Inc., Choice Hotels International, Inc., Best Western International, Inc., Hilton Hotels Corporation, Wyndham Worldwide, Four Seasons Hotels Inc. and Accor S.A.

Key Relationships IHG maintains effective business relationships across all aspects of its operations. The Group’s operations are not dependent upon any single customer, supplier or hotel owner due to the extent of its brands, market segments and geographical coverage. For example, IHG’s largest third-party hotel owner controls less than 4% of the Group’s total room count. To promote effective owner relationships, the Group’s management meets with owners of IHG branded hotels on a regular basis. In addition, IHG has an important relationship with the IAHI — The Owners’ Association (“IAHI”). The IAHI is an independent worldwide association for owners of the Crowne Plaza, Holiday Inn, Holiday Inn Express, Hotel Indigo, Staybridge Suites and Candlewood Suites brands. IHG and the IAHI work together to support and facilitate the continued development of IHG’s brands and systems, with specific emphasis during 2007 on the relaunch of the Holiday Inn brand family. Additionally, IHG and the IAHI began working together to develop and facilitate key corporate responsibility initiatives within the Group’s brands. Many jurisdictions and countries regulate the offering of franchise agreements and recent trends indicate an increase in the number of countries adopting franchise legislation. As a significant percentage of the Group’s

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revenues is derived from franchise fees, the Group’s continued compliance with franchise legislation is important to the successful deployment of the Group’s strategy.

RevPAR The following tables present RevPAR statistics for the years ended December 31, 2007 and 2006. RevPAR is a key performance indicator which measures underlying hotel revenue with year-on-year performance being measured by the RevPAR movement against the prior year. Owned and leased, managed and franchised statistics are for comparable hotels, and include only those hotels in the IHG system as of December 31, 2007 and owned and leased, managed or franchised by the Group since January 1, 2006. The comparison with 2006 is at constant US$ exchange rates.

Owned & leased Managed Franchised Change vs Change vs Change vs 2007 2006 2006 2007 2006 2006 2007 2006 2006 Americas InterContinental Occupancy 83.6 % 81.7 % 1.9 %pts 70.5 % 68.0 % 2.5 %pts 64.7 % 64.9 % (0.2 )%pts Average daily rate $ 260.63 $ 241.21 8.05 % $ 172.28 $ 161.33 6.79 % $ 126.53 $ 116.51 8.60 % RevPAR $ 217.86 $ 196.97 10.61 % $ 121.51 $ 109.64 10.83 % $ 81.87 $ 75.64 8.24 % Crowne Plaza Occupancy 0 0 0 74.9 % 74.7 % 0.2 %pts 64.1 % 63.0 % 1.1 %pts Average daily rate 0 0 0 $ 142.46 $ 133.33 6.85 % $ 109.16 $ 103.22 5.75 % RevPAR 0 0 0 $ 106.71 $ 99.55 7.19 % $ 69.96 $ 65.00 7.63 % Holiday Inn Occupancy 72.9 % 69.2 % 3.7 %pts 68.9 % 67.6 % 1.3 %pts 63.1 % 63.5 % (0.4 )%pts Average daily rate $ 96.04 $ 93.67 2.53 % $ 106.53 $ 100.86 5.62 % $ 95.26 $ 90.52 5.24 % RevPAR $ 70.01 $ 64.79 8.06 % $ 73.45 $ 68.19 7.71 % $ 60.12 $ 57.44 4.67 % Holiday Inn Express Occupancy 0 0 0 75.8 % 74.8 % 1.0 %pts 68.1 % 68.7 % (0.6 )%pts Average daily rate 0 0 0 $ 148.58 $ 133.55 11.25 % $ 93.96 $ 87.32 7.60 % RevPAR 0 0 0 $ 112.67 $ 99.91 12.77 % $ 63.98 $ 59.95 6.72 % Staybridge Suites Occupancy 73.7 % 74.8 % (1.1 )%pts 74.9 % 76.5 % (1.6 )%pts 73.4 % 73.3 % 0.1 %pts Average daily rate $ 100.56 $ 94.61 6.29 % $ 108.83 $ 104.53 4.11 % $ 101.81 $ 96.24 5.79 % RevPAR $ 74.12 $ 70.73 4.79 % $ 81.56 $ 79.92 2.05 % $ 74.77 $ 70.53 6.01 % Candlewood Suites Occupancy 0 0 0 74.5 % 75.7 % (1.2 )%pts 66.3 % 69.2 % (2.9 )%pts Average daily rate 0 0 0 $ 69.81 $ 66.50 4.98 % $ 71.14 $ 68.99 3.12 % RevPAR 0 0 0 $ 52.02 $ 50.31 3.40 % $ 47.19 $ 47.71 (1.09 )% Hotel Indigo Occupancy 0 0 0 68.4 % 66.3 % 2.1 %pts 53.2 % 41.1 % 12.1 %pts Average daily rate 0 0 0 $ 142.78 $ 143.74 (0.67 )% $ 88.12 $ 78.37 12.44 % RevPAR 0 0 0 $ 97.72 $ 95.25 2.59 % $ 46.89 $ 32.25 45.40 %

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Owned & leased Managed Franchised Change vs Change vs Change vs 2007 2006 2006 2007 2006 2006 2007 2006 2006 EMEA InterContinental Occupancy 81.7 % 79.2 % 2.5 %pts 68.4 % 65.3 % 3.1 %pts 67.1 % 64.5 % 2.6 %pts Average daily rate $ 449.58 $ 406.56 10.58 % $ 176.96 $ 164.13 7.82 % $ 281.93 $ 242.64 16.19 % RevPAR $ 367.30 $ 322.17 14.01 % $ 121.06 $ 107.18 12.95 % $ 189.31 $ 156.44 21.01 % Crown Plaza Occupancy 70.9 % 70.1 % 0.8 %pts 78.5 % 77.2 % 1.3 %pts 69.6 % 68.6 % 1.0 %pts Average daily rate $ 117.61 $ 122.04 (3.63 )% $ 169.52 $ 153.74 10.26 % $ 141.89 $ 135.03 5.08 % RevPAR $ 83.43 $ 85.60 (2.54 )% $ 133.01 $ 118.71 12.05 % $ 98.79 $ 92.67 6.60 % Holiday Inn Occupancy 0 0 0 74.5 % 73.9 % 0.6 %pts 67.6 % 66.3 % 1.3 %pts Average daily rate 0 0 0 $ 127.69 $ 120.05 6.36 % $ 115.87 $ 110.27 5.08 % RevPAR 0 0 0 $ 95.07 $ 88.73 7.15 % $ 78.38 $ 73.10 7.22 % Holiday Inn Express Occupancy 72.5 % 70.1 % 2.4 %pts 68.3 % 63.5 % 4.8 %pts 73.8 % 72.8 % 1.0 %pts Average daily rate $ 81.92 $ 84.81 (3.41 )% $ 87.88 $ 82.29 6.79 % $ 106.19 $ 101.78 4.33 % RevPAR $ 59.39 $ 59.49 (0.17 )% $ 60.02 $ 52.28 14.80 % $ 78.34 $ 74.04 5.81 %

Owned & leased Managed Franchised Change vs Change vs Change vs 2007 2006 2006 2007 2006 2006 2007 2006 2006 Asia Pacific InterContinental Occupancy 69.9 % 72.5 % (2.6 )%pts 73.8 % 70.2 % 3.6 %pts 73.2 % 70.8 % 2.4 %pts Average daily rate $ 377.22 $ 339.09 11.24 % $ 154.45 $ 150.48 2.64 % $ 184.82 $ 157.63 17.25 % RevPAR $ 263.77 $ 245.88 7.28 % $ 114.03 $ 105.68 7.90 % $ 135.32 $ 111.60 21.25 % Crowne Plaza Occupancy 0 0 0 75.7 % 75.3 % 0.4 %pts 84.9 % 85.4 % (0.5 )%pts Average daily rate 0 0 0 $ 97.60 $ 92.57 5.43 % $ 120.67 $ 108.69 11.02 % RevPAR 0 0 0 $ 73.87 $ 69.67 6.03 % $ 102.41 $ 92.80 10.36 % Holiday Inn Occupancy 76.7 % 78.6 % (1.9 )%pts 76.0 % 75.7 % 0.3 %pts 71.1 % 70.8 % 0.3 %pts Average daily rate $ 116.17 $ 106.32 9.26 % $ 81.87 $ 75.43 8.54 % $ 72.78 $ 68.49 6.26 % RevPAR $ 89.16 $ 83.56 6.70 % $ 62.22 $ 57.13 8.91 % $ 51.72 $ 48.48 6.68 % Holiday Inn Express Occupancy 0 0 0 84.9 % 82.7 % 2.2 %pts 55.4 % 65.4 % (10.0 )%pts Average daily rate 0 0 0 $ 75.05 $ 67.58 11.05 % $ 56.47 $ 53.52 5.51 % RevPAR 0 0 0 $ 63.68 $ 55.88 13.96 % $ 31.28 $ 35.01 (10.65 )% Other Occupancy 0 0 0 59.3 % 56.4 % 2.9 %pts 0 0 0 Average daily rate 0 0 0 $ 119.27 $ 113.80 4.81 % 0 0 0 RevPAR 0 0 0 $ 70.74 $ 64.22 10.15 % 0 0 0

Regulation Both in the United Kingdom and internationally, the Group’s hotel operations are subject to regulation, including health and safety, zoning and similar land use laws as well as regulations that influence or determine wages, prices, interest rates, construction procedures and costs.

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SOFT DRINKS The Group disposed of its interest in Britvic by way of an IPO in December 2005. The Group received aggregate proceeds of approximately £371 million (including two additional dividends, one of £47 million received in November 2005, and another of £89 million, received in May 2005, before any commissions or expenses). The Group results for fiscal 2005 include the results of Soft Drinks for the period up until the IPO of Britvic on December 14, 2005. Britvic generated operating profits before other operating income and expenses of £70 million on revenues of £671 million in the period up to December 14, 2005.

TRADEMARKS Group companies own a substantial number of service brands and product brands and the Group believes that its significant trademarks are protected in all material respects in the markets in which it currently operates.

ORGANIZATIONAL STRUCTURE Principal operating subsidiary undertakings InterContinental Hotels Group PLC was the beneficial owner of all (unless specified) of the equity share capital, either itself or through subsidiary undertakings, of the following companies during the year. Unless stated otherwise, the following companies were incorporated in Great Britain, registered in England and Wales and operate principally within the United Kingdom. The companies listed below include those which principally affect the amount of profit and assets of the Group. Six Continents Limiteda Hotel Inter-Continental London Limiteda Six Continents Hotels, Inc.b InterContinental Hotels Corporationb Barclay Operating Corporationb IHG Resources Inc.b InterContinental Hong Kong Limitedc Société Nouvelle du-Grand Hotel, SAd

(a) Incorporated in Great Britain and registered in England and Wales.

(b) Incorporated in the United States.

(c) Incorporated in Hong Kong.

(d) Incorporated in France.

PROPERTY, PLANT AND EQUIPMENT Group companies own and lease properties throughout the world. The table below analyzes the net book value of land and buildings (excluding assets classified as held for sale) at December 31, 2007. Approximately 37% of the properties by value were directly owned, with 53% held under leases having a term of 50 years or longer.

Europe, Net book value of land and buildings as the Middle East at December 31, 2007 and Africa Americas Asia Pacific Total (£ million)

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Hotels 318 251 166 735

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Group properties comprise hotels. Approximately 85% of the Group’s property values relate to the top five owned and leased hotels (in terms of value) of a total of 18 hotels. At December 31, 2007, a previously recorded impairment charge of £3 million was reversed following an impairment review of hotel assets based on current market conditions.

ENVIRONMENT IHG is committed to all its operating companies having a responsibility to act in a way that respects the environment in which they operate. The Group’s strong presence in the United States and European Union markets mean that it is affected by and is familiar with highly developed environmental laws and controls. IHG regularly considers environmental matters and seeks to embed good practice into its business strategies and operations. IHG is a member of the FTSE4Good Index Series. The Group has a wide range of environmental responsibilities and a unique opportunity to lead the world’s hospitality industry in environmental innovation. As IHG pursues its strategic growth and continues to develop its environmental practice, the Group aims to minimise negative effects on the environment. The Group is committed to providing updated information to stakeholders on: • developments in global environmental policy; • how it establishes management responsibility and accountability for environmental performance; • how it evaluates and manages the Group’s hotels’ environmental footprint; • new projects and developments; and • performance benchmarking against best practice. In 2006 IHG improved data collection and reporting to increase energy efficiency. The Group’s hotels already take steps to conserve resources, including energy and water, and to manage waste and recycling effectively. In 2007, these achievements were benchmarked across the Group’s business so that clear targets for improvement can be set. The Group’s immediate priorities for action are environmental management and support for the communities in which it operates. The travel and tourism industry is coming under increasing pressure to address its impact on the environment and society and become more sustainable. Addressing this challenge is a priority. IHG believes that travel and tourism should be operated responsibly and that the benefits of taking this approach far outweigh the costs. Tourism provides opportunities for local economic development, new business and much needed jobs, especially in developing countries. It also opens the door to improved learning, better communication, greater diversity and richer, more fulfilling social experiences. The Group accepts that there are actions that hotel operators can take to minimise travel and tourism’s negative effects still further. The following new initiatives were launched in 2007: • an online tool which will enable IHG to measure its water, waste and energy across the globe was piloted; • a carbon and environmental footprint, the first by a major hotel group was completed; compact fluorescent light bulbs were distributed as replacements for incandescent bulbs. It is estimated that this • initiative will result in over $2 million of annual energy savings; and a range of environmental initiatives were implemented at IHG’s corporate offices, including recycling and • improved waste management. IHG encourages owners and guests to support these activities. IHG will continue to concentrate its efforts on supporting local communities and seek to develop protocols to assess the responsible management of our supply chain. IHG has developed a more integrated corporate responsibility (“CR”) strategy and created a global team, representing all parts of the business, to manage the CR agenda and to develop detailed future plans.

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ITEM 4A. UNRESOLVED STAFF COMMENTS None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS INTRODUCTION Business and Overview InterContinental Hotels Group is an international hotel business which owns a portfolio of established and diverse hotel brands, including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites and Hotel Indigo, with 3,949 franchised, managed, owned and leased hotels and 585,094 guest rooms in nearly 100 countries as at December 31, 2007. The Group also manages the hotel loyalty program, Priority Club Rewards. The Group’s revenue and earnings are derived from (i) hotel operations, which include operation of the Group’s owned hotels, management and other fees paid under management contracts, where the Group operates third-parties’ hotels, and franchise and other fees paid under franchise agreements and (ii) until December 14, 2005, the manufacture and distribution of soft drinks.

Operational Performance For the year ended December 31, 2007, the Hotels business reported growth in all regions at the revenue and operating profit lines for continuing operations. The growth was driven by strong underlying RevPAR gains across all regions, hotel expansion in key markets and profit uplift from owned and leased assets. The performance of the Hotels business is evaluated primarily on a regional basis. The regional operations are split by similar product or services: franchise agreement, management contract, and owned and leased operations. All three income types are affected by occupancy and room rates achieved by hotels, the ability to manage costs and the change in the number of available rooms through acquisition, development and disposition. Results are also impacted by economic conditions and capacity. The Group’s segmental results are shown before exceptional operating items, interest expense, interest income and income taxes. The Group believes the period-over-period movement in RevPAR to be a meaningful indicator for the performance of the Hotels business.

CRITICAL ACCOUNTING POLICIES The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and costs and expense during the reporting periods. On an ongoing basis, management evaluates its estimates and judgments, including those relating to revenue recognition, bad debts, investments, property, plant and equipment, goodwill and intangible assets, income taxes, guest program liability, self insurance claims payable, restructuring costs, retirement benefits and contingencies and litigation. Management bases its estimates and judgments on historical experience and on other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions and conditions.

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The Company’s critical accounting policies are set out below.

Revenue recognition Revenue is derived from the following sources: owned and leased properties; management fees; franchise fees and other revenues which are ancillary to the Company’s operations. Generally, revenue represents sales (excluding VAT and similar taxes) of goods and services, net of discounts, provided in the normal course of business and recognized when services have been rendered. The following is a description of the composition of revenues of the Company. Owned and leased — primarily derived from hotel operations, including the rental of rooms and food and beverage sales from owned and leased hotels operated under the Company’s brand names. Revenue is recognized when rooms are occupied and food and beverages are sold. Management fees — earned from hotels managed by the Company, usually under long-term contracts with the hotel owner. Management fees include a base fee, which is generally a percentage of hotel revenue, and an incentive fee, which is generally based on the hotel’s profitability or cash flows. Revenue is recognized when earned and realized or realizable under the terms of the contract. Franchise fees — received in connection with the license of the Company’s brand names, usually under long-term contracts with the hotel owner. The Company charges franchise royalty fees as a percentage of room revenue. Revenue is recognized when earned and realized or realizable under the terms of the agreement. The Company participates in three funds established to collect and administer assessments from hotel owners for specific use in marketing, the Priority Club loyalty program and the global reservation system. The Company acts, in substance, as an agent with regard to the funds and all assessments are designated for specific purposes and result in no profit for the Group. Accordingly, the revenues, expenses and cash flows of the funds are not included in the Consolidated Income Statement or Consolidated Cash Flow Statement.

Goodwill, intangible assets, and property, plant and equipment Goodwill arising on acquisitions prior to October 1, 1998 was eliminated against equity. From October 1, 1998 to December 31, 2003, acquired goodwill was capitalized and amortized over a period not exceeding 20 years. Since January 1, 2004, goodwill continued to be capitalized but amortization ceased as at that date, replaced by an impairment review on an annual basis or more frequently if there are indicators of impairment. Goodwill is allocated to cash-generating units for impairment testing purposes. Intangible assets and property, plant and equipment are capitalized and amortized over their expected useful lives, and reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable. Assets that do not generate independent cash flows are combined into cash-generating units. The impairment testing of individual assets or cash-generating units requires an assessment of the recoverable amount of the asset or cash-generating unit. If the carrying value of the asset or cash-generating unit exceeds its estimated recoverable amount, the asset or cash-generating unit is written down to its recoverable amount. Recoverable amount is the greater of fair value less cost to sell and value in use. Value in use is assessed based on estimated future cash flows discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The outcome of such an assessment is subjective, and the result sensitive to the assumed future cashflows to be generated by the assets and discount rates applied in calculating the value in use, both of which will be dependent on the type of asset and its location. Any impairment arising is charged to the income statement.

Income taxes The Company provides for deferred tax in accordance with IAS 12 “Income Taxes” in respect of temporary differences between the tax base and carrying value of assets and liabilities including accelerated capital allowances, unrelieved tax losses, unremitted profits from overseas where the Company does not control remittance, gains rolled over into replacement assets, gains on previously revalued properties and other short-

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term temporary differences. Deferred tax assets are recognized to the extent that it is regarded as probable that the deductible temporary differences can be realized. The Company estimates deferred tax assets and liabilities based on current tax laws and rates, and in certain cases, business plans. Changes in these estimates may affect the amount of deferred tax liabilities or the valuation of deferred tax assets. Accruals for tax contingencies require judgments on the expected outcome of tax exposures which may be subject to significant uncertainty, and therefore the actual results may vary from expectations resulting in adjustments to contingencies and cash tax settlements.

Loyalty program The hotel loyalty program, Priority Club Rewards enables members to earn points, funded through hotel assessments, during each stay at an InterContinental Hotels Group hotel and redeem the points at a later date for free accommodation or other benefits. The future redemption liability is included in trade and other payables in the consolidated balance sheet and is estimated using actuarial methods based on statistical formulas that project the timing of future point redemptions based on historical levels to give eventual redemption rates and points values. The future redemption liability amounted to £212 million at December 31, 2007.

Pensions and other post-employment benefit plans Accounting for pensions and other post-employment benefit plans requires the Company to make assumptions including, but not limited to, future asset returns, discount rates, rates of inflation, life expectancies and health care costs. The use of different assumptions, in any of the above calculations, could have a material effect on the accounting values of the relevant assets and liabilities which could result in a material change to the cost of such liabilities as recognized in the income statement over time. These assumptions are subject to periodic review. A sensitivity analysis to changes in various assumptions is included in Note 3 of Notes to the Consolidated Financial Statements.

OPERATING RESULTS Accounting Principles The following discussion and analysis is based on the Consolidated Financial Statements of the Company, which are prepared in accordance with IFRS. For the year ended December 31, 2007 the results include exceptional items totaling a net credit of £76 million (2006 £238 million, 2005 £297 million). For comparability of the periods presented, some performance indicators in this Operating and Financial Review and Prospects discussion have been calculated after eliminating these exceptional items. Such indicators are prefixed with “adjusted”. A reconciliation to the amounts under IFRS including such exceptional items is included in Note 5 of Notes to the Consolidated Financial Statements.

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Year ended Year ended Year ended December 31, December 31, December 31, 2007 2006 2005 (£ million) GROUP RESULTS Revenue: Continuing operations Hotels 883 786 697 Discontinued operations Hotels 40 174 542 Soft Drinks — — 671 Total revenue 923 960 1,910 Operating profit before exceptional operating items: Continuing operations Hotels 237 200 175 Discontinued operations Hotels 8 31 94 Soft Drinks — — 70 Total operating profit before exceptional operating items 245 231 339 Exceptional operating items 30 27 (22 ) Operating profit 275 258 317 Net financial expenses (45 ) (11 ) (33 ) Profit before tax 230 247 284 Tax (15 ) 41 (80 ) Profit after tax 215 288 204 Gain on disposal of assets, net of tax 16 117 311 Profit available for the year 231 405 515 Earnings per ordinary share: Basic 72.2p 104.1p 95.2p Adjusted 48.4p 42.9p 38.2p Adjusted — continuing operations 46.9p 38.0p 23.2p

Year ended December 2007 compared with year ended December 2006 IHG revenue from continuing operations for the year ended December 31, 2007 was £883 million (2006 £786 million). Operating profit before exceptional operating items from continuing operations for the year ended December 31, 2007 was £237 million (2006 £200 million). The growth was driven by strong underlying RevPAR gains across all regions, hotel expansion in key markets and profit uplift from owned and leased assets. Including discontinued operations, total revenue decreased by 3.9% to £923 million whilst operating profit before exceptional operating items increased by 6.1% to £245 million, reflecting the year-on-year impact of asset disposals. Discontinued operations represent the results from operations that have been sold, or are held for sale, and where there is a coordinated plan to dispose of the operations under IHG’s asset disposal programme, including owned and leased hotels in the United States and Continental Europe that have been sold or placed on the market from January 1, 2006.

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As the weighted average US dollar exchange rate to sterling has weakened during 2007 (2007 $2.01: £1, 2006 $1.84: £1), growth rates for results expressed in US dollars are higher than those in sterling. Continuing operating profit before exceptional items was $474 million, ahead of 2006 by 29.2%. Including discontinued operations, operating profit before exceptional items was $491 million, 15.8% higher than 2006. Translated at constant currency, applying 2006 exchange rates, continuing revenue increased by 19.6% and continuing operating profit increased by 30.0%.

Exceptional operating items Exceptional operating items of £30 million included an £18 million gain on the sale of financial assets and an £11 million gain on the sale of associate investments. Exceptional operating items are treated as exceptional items by reason of their size or nature and are excluded from the calculation of adjusted earnings per share in order to provide a more meaningful comparison of performance.

Net financial expenses Net financial expenses increased from £11 million in 2006 to £45 million in 2007, as a result of higher debt levels following payment of the £709 million special dividend in June 2007. Financing costs included £10 million (2006 £10 million) of interest costs associated with Priority Club Rewards where interest is charged on the accumulated balance of cash received in advance of the redemption points awarded. Financing costs in 2007 also included £9 million (2006 £4 million) in respect of the InterContinental Boston finance lease.

Taxation The effective rate of tax on profit before tax, excluding the impact of exceptional items, was 22% (2006 24%). By also excluding the impact of prior year items, which are included wholly within continuing operations, the equivalent tax rate would be 36% (2006 36%). Prior year items relate, primarily, to the adjustment of prior year tax accruals in line with filed tax returns and the release of provisions relating to tax matters which were settled during the year, or in respect of which the statutory limitation period had expired. This rate is higher than the UK statutory rate of 30% due mainly to certain overseas profits (particularly in the United States) being subject to statutory rates higher than the UK statutory rate and disallowable expenses. Taxation within exceptional items totaled a credit of £30 million (2006 £94 million credit) in respect of continuing operations. This represented, primarily, the release of exceptional provisions relating to tax matters which were settled during the year, or in respect of which the statutory limitation period had expired. In 2006, taxation exceptional items, in addition to such provision releases, included £12 million for the recognition of a deferred tax asset in respect of tax losses. Net tax paid in 2007 totaled £69 million (2006 £49 million) including £32 million (2006 £6 million) in respect of disposals.

Earnings per share Basic earnings per share in 2007 were 72.2 pence, compared with 104.1 pence in 2006. Adjusted earnings per share were 48.4 pence, against 42.9 pence in 2006. Adjusted continuing earnings per share were 46.9 pence, 23.4% up on last year.

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Highlights for the year ended December 31, 2007 The following is a discussion of the year ended December 31, 2007 compared with the year ended December 31, 2006.

Continuing Hotels Results

Year ended Year ended December 31, December 31, 2007 2006 Change (£ million) % Revenue: Americas 450 422 6.6 EMEA 245 198 23.7 Asia Pacific 130 111 17.1 Central 58 55 5.5 883 786 12.3 Operating profit before exceptional operating items: Americas 220 215 2.3 EMEA 67 37 81.1 Asia Pacific 31 29 6.9 Central (81 ) (81 ) — 237 200 18.5

Revenue from continuing operations increased by 12.3% to £883 million and continuing operating profit increased by 18.5% to £237 million during the 12 months ended December 31, 2007. The growth was driven by strong underlying RevPAR gains across all regions, hotel expansion in key markets and profit uplift from owned and leased assets. Furthermore, strong revenue conversion led to a 1.4 percentage point increase in continuing operating profit margins to 26.8%.

Americas Continuing Americas Results

Year ended Year ended December 31, December 31, 2007 2006 Change ($ million) % Revenue: Owned and leased 257 192 33.9 Managed 156 143 9.1 Franchised 489 443 10.4 902 778 15.9 Operating profit before exceptional operating items: Owned and leased 40 22 81.8 Managed 41 50 (18.0) Franchised 425 382 11.3 506 454 11.5 Regional overheads (66 ) (59 ) (11.9) Total $ million 440 395 11.4 Sterling equivalent £ million(i) 220 215 2.3

(i) The results have been translated into pounds sterling at weighted average rates of exchange for the year. The translation rates are fiscal 2007: £1 = $2.01 (2006 £1 = $1.84).

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Revenue and operating profit from continuing operations increased by 15.9% to $902 million and 11.4% to $440 million respectively. The region achieved healthy RevPAR growth across all ownership types and RevPAR premiums to the US market segments for hotels operating under the InterContinental, Crowne Plaza, Holiday Inn and Holiday Inn Express brands. During the fourth quarter, consistent with the US market, the region was impacted by a marginal softening in RevPAR growth due to a slight decline in occupancy levels. Continuing owned and leased revenue increased by 33.9% to $257 million and operating profit increased by 81.8% to $40 million. Positive underlying trading was driven by RevPAR growth of 9.7%, led by the InterContinental brand with growth of 10.6%. The results were favourably impacted by trading performance at the InterContinental Boston which became fully operational during the first half of the year (year-on-year profit increase of $11 million) and trading at the InterContinental New York where robust market conditions lifted average occupancy levels to over 90%. Managed revenues increased by 9.1% to $156 million during the year, driven by strong RevPAR growth, particularly in Latin America where rate-led RevPAR growth exceeded 20%. Robust brand performance resulted in RevPAR growth premiums, compared to respective US market segments, for InterContinental, Crowne Plaza and Holiday Inn. Growth in the extended stay segment was impacted by an increase in market supply. Managed revenues included $86 million (2006 $80 million) from properties that are structured, for legal reasons, as operating leases but with the same characteristics as management contracts. Managed operating profit decreased by 18.0% to $41 million, including $6 million (2006 $9 million) from managed properties held as operating leases. The decline in profit principally reflects increased revenue investment to support growth in contract signings, the impact of fewer hotels under management contracts following the restructuring of the FelCor agreement in 2006, foreign exchange losses in Latin America and lower ancilliary revenues together with higher costs at one of the hotels held as an operating lease. These items reduced operating profit margins in the managed estate by 8.7 percentage points to 26.3% and reduced continuing operating profit margins in the region by 2.0 percentage points to 48.8%. Franchised revenue and operating profit increased by 10.4% to $489 million and 11.3% to $425 million respectively, compared to 2006. The increase was driven by RevPAR growth of 5.8%, net room count growth of 4.0% and fees associated with growth in signings. Regional overheads were affected positively in 2006 by lower claims in the Group-funded employee healthcare programme. Excluding this, regional overheads were in line with the prior period.

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Europe, Middle East and Africa Continuing EMEA Results

Year ended Year ended December 31, December 31, 2007 2006 Change (£ million) % Revenue: Owned and leased 121 92 31.5 Managed 84 71 18.3 Franchised 40 35 14.3 245 198 23.7 Operating profit before exceptional operating items: Owned and leased 17 (4 ) 525.0 Managed 43 37 16.2 Franchised 29 24 20.8 89 57 56.1 Regional overheads (22 ) (20 ) (10.0 ) Total £ million 67 37 81.1 Dollar equivalent $ million(i) 134 69 94.2

(i) The results have been translated into US dollars at weighted average rates of exchange for the year. The translation rates are fiscal 2007: $1 = £0.50 (2006: $1 = £0.54). Revenue and operating profit from continuing operations increased by 23.7% to £245 million and 81.1% to £67 million, respectively. During the year, the region achieved RevPAR growth of 8.6% driven by substantial gains across all brands and ownership types. From a regional perspective, RevPAR levels benefited from the positive market conditions in the Middle East, France and the United Kingdom. The region’s continuing operating profit margins increased by 8.6 percentage points to 27.3% as a result of improved revenue conversion in the owned and leased portfolio and increased scalability in the franchised operations. In the owned and leased estate, continuing revenue increased by 31.5% to £121 million as a result of trading at the InterContinental London Park Lane which became fully operational during the first half of 2007, together with strong rate- led RevPAR growth at the InterContinental Paris Le Grand. Effective revenue conversion led to an increase in continuing operating profit of £21 million to £17 million, including operating profit growth of £14 million at the InterContinental London Park Lane. EMEA managed revenues increased by 18.3% to £84 million and operating profit increased by 16.2% to £43 million. The growth was driven by management contracts negotiated in 2006 as part of the hotel disposal programme in Europe and strong underlying trading in markets such as the Middle East, the United Kingdom, Spain and Russia. Franchised revenue and operating profit increased by 14.3% to £40 million and 20.8% to £29 million respectively. The growth was principally driven by RevPAR gains and room count expansion in the United Kingdom and Continental Europe.

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Asia Pacific Continuing Asia Pacific Results

Year ended Year ended December 31, December 31, 2007 2006 Change ($ million) % Revenue: Owned and leased 145 131 10.7 Managed 99 65 52.3 Franchised 16 8 100.0 260 204 27.5 Operating profit before exceptional operating items: Owned and leased 36 31 16.1 Managed 46 39 17.9 Franchised 6 5 20.0 88 75 17.3 Regional overheads (25 ) (23 ) (8.7 ) Total $ million 63 52 21.2 Sterling equivalent £ million(i) 31 29 6.9

(i) The results have been translated into pounds sterling at weighted average rates of exchange for the year. The translation rates are fiscal 2007: £1 = $2.01 (2006 £1 = $1.84). Asia Pacific revenue increased by 27.5% to $260 million whilst operating profit increased by 21.2% to $63 million. The region achieved strong RevPAR growth across all brands and ownership types and continued its strategic expansion in China and Japan. Strong growth in total profit was achieved; however, revenue conversion was impacted by continued investment to support expansion, resulting in a 1.3 percentage point reduction in operating profit margins to 24.2%. In the owned and leased estate, revenue increased by 10.7% to $145 million due to the combined impact of strong room and food and beverage trading at the InterContinental Hong Kong, despite the impact of renovation works throughout a significant part of the year. The hotel’s revenue growth combined with profit margin gains drove the estate’s operating profit growth of 16.1% to $36 million. Managed revenues increased by 52.3% to $99 million as a result of the full year contribution from the hotels which joined the system in 2006 as part of the IHG ANA joint venture in Japan, continued organic expansion in China and solid RevPAR growth across Southern Asia and Australia. Operating profit increased by 17.9% to $46 million as revenue gains were offset by integration and ongoing costs associated with the ANA joint venture and continued infrastructure investment in China. Franchised revenues doubled from £8 million to $16 million, primarily driven by hotels in the IHG ANA joint venture. Similar to the managed operations, growth in profitability was impacted by ANA integration and ongoing costs. Regional overheads increased by $2 million to $25 million primarily as a result of investments in technology and corporate infrastructure in China and Japan and included the favourable impact of a legal settlement.

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Central

Year ended Year ended December 31, December 31, 2007 2006 Change (£ million) % Revenue 58 55 5.5 Gross central costs (139 ) (136 ) 2.2 Net central costs £ million (81 ) (81 ) — Dollar equivalent $ million(i) (163 ) (149 ) 9.4

(i) The results have been translated into US dollars at weighted average rates of exchange for the year. The translation rates are fiscal 2007: $1 = £0.50 (2006 $1 = £0.54). During 2007, net central costs were flat on 2006 but increased in line with inflation when translated at constant currency exchange rates.

Highlights for the 12 months ended December 31, 2006 The following is a discussion of the year ended December 31, 2006 compared with the year ended December 31, 2005.

Group results Revenue from continuing operations increased by 12.8% to £786 million and continuing operating profit increased by 14.3% to £200 million during the 12 months ended December 31, 2006

Americas Revenue and operating profit from continuing operations increased by 13.2% to $778 million and 16.2% to $395 million respectively during 2006. Underlying trading performance across all ownership types was strong, although the pace of RevPAR growth achieved in the first half of the year was not maintained throughout the second half of the year. Continuing owned and leased revenue increased by 6.7% to $192 million. Owned and leased InterContinental branded hotels achieved RevPAR growth in excess of 13% over 2005, driven by gains in both daily rates and occupancy levels. The owned and leased results were impacted, as expected, by a $6 million loss at the recently opened InterContinental Boston. Excluding this loss, the combined impact of RevPAR growth and operating efficiencies led to a 7.7% increase in operating profit from continuing owned and leased hotels. Managed revenues increased by 21.2% to $143 million during the year as a result of strong underlying trading, restructured management agreements, an increased number of hotels under management contracts and the full year benefit of contracts negotiated during 2005 as part of the hotel disposal programme. RevPAR growth in the managed hotels was strong across most brands. Holiday Inn growth levels were impacted during the fourth quarter by hotel refurbishments (nine of the 28 hotels). Managed revenues include $80 million (2005 $70 million) from properties that are structured, for legal reasons, as operating leases but with the same characteristics as management contracts. Managed operating profit increased by 38.9% to $50 million including $9 million (2005 $9 million) from the managed properties held as operating leases and $3 million from the receipt of business interruption proceeds following hurricane damage in 2005. As a consequence of the 2005 hurricane season, ongoing insurance costs increased significantly, reducing managed operating profit in 2006 by an incremental $3 million. Franchised revenue and operating profit increased by 13.9% to $443 million and 12.4% to $382 million respectively, driven by RevPAR growth of 9.2%, net room count growth of 4% and fees associated with record levels of signings. The RevPAR gains were achieved across all brands despite high prior year comparables. Holiday Inn Express and Crowne Plaza both reported double digit RevPAR growth, driven by higher daily rates.

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The Americas regional overheads were 4.8% lower in 2006, primarily as a result of lower claims in the Group-funded employee healthcare programme.

Europe, Middle East and Africa Revenue from continuing operations of £198 million was 3.1% ahead of 2005 whilst continuing operating profit increased by 12.1% to £37 million. In the owned and leased estate, continuing revenues declined by £10 million to £92 million as a result of the major refurbishment at the InterContinental London Park Lane. The hotel reopened in November 2006 following a 13 month closure and did not become fully operational until July 2007. Excluding the impact of the InterContinental London Park Lane in 2005 and 2006, the continuing owned and leased operating profit increased by £4 million, driven by enhanced trading performance at the InterContinental Paris Le Grand where RevPAR growth was more than 25% over 2005. Managed revenues and operating profit increased by 29.1% to £71 million and 19.4% to £37 million respectively. The growth was driven by the impact of management contracts negotiated in 2005 and 2006 as part of the hotel disposal programme in the United Kingdom and Europe, together with strong RevPAR growth in key regions including Continental Europe and the Middle East. Franchised revenue of £35 million was in line with 2005 revenues, whilst operating profit decreased by £2 million to £24 million. The prior year included £7 million in liquidated damages for the termination of franchise contracts in South Africa. Excluding the impact of this, franchised operating profit increased by 26.3% as a result of strong RevPAR growth across the United Kingdom and Continental Europe and increased room count. The increased room count was driven by the negotiation of franchise contracts in Continental Europe as part of the hotel disposal programme and further expansion in the region.

Asia Pacific Revenue and operating profit from continuing operations increased by 28.3% to $204 million and 33.3% to $52 million respectively during 2006. Continuing owned and leased operating profit increased by 55.0% to $31 million driven by trading at the InterContinental Hong Kong which achieved rate-led RevPAR growth of over 30.0%. The hotel also benefited from a rooms refurbishment programme and the prior year repositioning of its food and beverage operations. The managed estate achieved revenue growth of 44.4%, increasing from $45 million to $65 million, due to the retention of management contracts on the 10 owned and leased hotels sold in 2005 combined with strong underlying trading in Greater China where comparable RevPAR increased by 12.1% over 2005. Regional overheads increased by $8 million to $23 million. The increase reflects infrastructure and development costs including additional headcount, office facility and IT costs, all associated with ongoing expansion in the region.

Central Net central costs increased by £16 million to £81 million and included significant investment in new global research, designed to enable higher quality brand development and enhance IHG’s franchising capability; the increase also included higher IT infrastructure costs.

LIQUIDITY AND CAPITAL RESOURCES Sources of Liquidity The Company is financed by a £1.1 billion Syndicated Facility which has a maturity of November 2009. Short-term borrowing requirements are met from drawings under bilateral bank facilities. At December 31, 2007, gross debt was £877 million (£883 million after derivative transactions). The currency denomination of gross debt, after derivative transactions, was £275 million of sterling denominated borrowings,

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£121 million of euro denominated borrowings, £439 million of US dollar denominated borrowings and £48 million of borrowings denominated in other currencies mainly Hong Kong dollars. At December 31, 2007 committed bank facilities amounted to £1,154 million of which £377 million were unutilized. Uncommitted facilities totaled £25 million. In the Company’s opinion, the available facilities are sufficient for the Company’s present requirements. The Company also held short term deposits and investments at December 31, 2007 amounting to £52 million (£58 million after the effect of derivative transactions). Credit risk on treasury transactions is minimized by operating a policy on investment of surplus funds that generally restricts counterparties to those with an A credit rating or better or those providing adequate security. Limits are also set on the amounts invested with individual counterparties. Most of the Company’s surplus funds are held in the United Kingdom or United States and there are no material funds where repatriation is restricted as a result of foreign exchange regulations. The Company is in compliance with its financial covenants in its loan documentation none of which represent a material restriction on funding or investment policy in the foreseeable future. Details of exchange and interest rate risk and financial instruments are disclosed in “Item 11. Quantitative and Qualitative Disclosures about Market Risk”.

Cash From Operating Activities Net cash from operating activities totaled £232 million for the year ended December 31, 2007 (2006 £236 million). The decrease includes the impact of higher interest payments and special pension contributions of £30 million. Cash flow from operating activities is the principal source of cash used to fund the ongoing operating expenses, interest payments, maintenance capital expenditure and dividend payments of the Group. The Group believes that the requirements of its existing business and future investment can be met from cash generated internally, disposition of assets and businesses and external finance expected to be available to it.

Cash From Investing Activities Net cash outflows from investing activities totaled £19 million (2006 £614 million inflow). The decrease is primarily due to a lower level of asset disposals in 2007.

Cash Used in Financing Activities Net cash used in financing activities totaled £344 million (2006 £1,002 million). Cash outflows associated with shareholder returns in 2007 totaled £854 million and included £81 million of share repurchases and a special dividend of £709 million. Borrowings increased by £553 million. As of December 31, 2007, the Company had committed contractual capital expenditure of £10 million. Contracts for expenditure on fixed assets are not authorized by the directors on an annual basis, as divisional capital expenditure is controlled by cash flow budgets. Authorization of major projects occurs shortly before contracts are placed.

Off-Balance Sheet Arrangements As at December 31, 2007, the Company had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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Contractual Obligations The Company had the following contractual obligations outstanding as of December 31, 2007:

Total amounts Less than After committed 1 year 1-3 Years 3-5 years 5 years (£ million) Long-term debt(i) 777 — 777 — — Finance lease obligations(ii) 1,729 8 16 16 1,689 Operating lease obligations 196 28 35 25 108 Agreed pension scheme contributions 28 18 10 — — Capital contracts placed 10 10 — — — 2,740 64 838 41 1,797

(i) Repayment period classified according to the related facility maturity date. (ii) Represents the minimum lease payments related to the 99 year lease on the InterContinental Boston. The Company may provide performance guarantees to third-party owners to secure management contracts. The maximum exposure under such guarantees is £121 million (2006 £142 million). It is the view of the directors that, other than to the extent that liabilities have been provided for in the Consolidated Financial Statements, such guarantees are not expected to result in financial loss to the Group. As of December 31, 2007, the Company had outstanding letters of credit of £31 million mainly relating to self- insurance programs. The Company may guarantee loans made to facilitate third-party ownership of hotels in which the Company has an equity interest and also a management contract. As of December 31, 2007, the Company was a guarantor of loans which could amount to a maximum exposure of £14 million. The Company has given warranties in respect of the disposal of certain of its former subsidiaries. The Company believes that, other than to the extent that liabilities have been provided for in the Consolidated Financial Statements, such warranties are not expected to result in financial loss to the Company.

Pension Plan Commitments IHG operates the InterContinental Hotels UK Pension Plan and, in the United States, the InterContinental Hotels Pension Plan and the InterContinental Hotels non-qualified plans. The InterContinental Hotels UK Pension Plan was established with effect from April 1, 2003. On an IAS 19 “Employee Benefits” basis, at December 31, 2007 the Plan had a surplus of £30 million. The defined benefits section of this Plan is generally closed to new members. In addition, there are unfunded UK pension arrangements for certain members affected by the lifetime allowance; at December 31, 2007, these arrangements had an IAS 19 deficit of £23 million. In 2008, the Company expects to make regular contributions to the UK pension plan of £6 million. In addition, the Company has agreed to pay special contributions of £20 million to the UK pension plan; £10 million in 2008 and £10 million in 2009. The US-based plans are closed to new members and pensionable service no longer accrues for current employee members. On an IAS 19 basis, at December 31, 2007 the plans had a combined deficit of $45 million. In 2008, the Company expects to make regular contributions to these plans of $4 million. The Company is exposed to the funding risks in relation to the defined benefit sections of the InterContinental Hotels UK Pension Plan and the US-based InterContinental Hotels Pension Plan, as explained in “Item 3. Key Information — Risk Factors”.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT Overall strategic direction of the Group is provided by the board of directors, comprising executive and non-executive directors, and by members of the executive committee. The directors and officers of InterContinental Hotels Group PLC as at March 14, 2008 are:

Directors

Initially Date of next appointed to reappointment Name Title the board by shareholders Andrew Cosslett(3) Director and Chief Executive 2005 2008 David Kappler(1)(3) Director and Senior Independent Director 2004 2008 Ralph Kugler(1)(3) Director 2003 2008 Jennifer Laing(1) Director 2005 2009 Robert C. Larson(1)(2) Director 2003 2008 Jonathan Linen(1) Director 2005 2009 Stevan Porter Director and President, The Americas 2003 2009 Sir David Prosser(1)(5) Director 2003 — Richard Solomons Director and Finance Director 2003 2010 David Webster Chairman 2003 2010 Ying Yeh(1)(4) Director 2007 2008

(1) Non-executive independent director. (2) Robert C. Larson, having served for over 9 years as a director, is required to retire and stand for re-election at each Annual General Meeting, if he wishes to continue to serve as a director. He is planning to retire as a director on December 31, 2008. (3) Andrew Cosslett, David Kappler and Ralph Kugler are required, under the Company’s Articles of Association, to stand for re-election at the 2008 Annual General Meeting. (4) Ying Yeh is required to stand for election by shareholders for the first time since her appointment as a director in December 2007. (5) Sir David Prosser is planning to retire as a director on May 31, 2008.

Officers

Name Title Initially appointed Tom Conophy Executive Vice President and Chief Information 2006 Officer Peter Gowers President, Asia Pacific 2003 Kirk Kinsell President, EMEA 2007 Tracy Robbins Executive Vice President, Global Human 2005 Resources Tom Seddon Executive Vice President and Chief Marketing 2007 Officer Richard Winter Executive Vice President, Corporate Services, 2003 General Counsel and Company Secretary

Former Directors and Officers Richard Hartman served as Director and President, EMEA from 2003 until September 2007. Patrick Imbardelli served as President, Asia Pacific, from 2003 until June 2007. Anthony South, a senior employee of the Company, served as acting Chief Executive, Asia Pacific, from June 2007 to November 2007, at which time Peter Gowers assumed the role of President, Asia Pacific.

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Directors and Officers David Webster Appointed Deputy Chairman and Senior Independent Director of InterContinental Hotels Group on the separation of Six Continents PLC in April 2003. Appointed Non-Executive Chairman on 1 January 2004. Also Non-Executive Chairman of Makinson Cowell Limited, a capital markets advisory firm, and a member of the Appeals Committee of the Panel on Takeovers and Mergers. Formerly Chairman of Safeway plc and a Non-Executive Director of Reed Elsevier PLC. Chairman of the Nomination Committee. Age 63.

Andrew Cosslett Appointed Chief Executive in February 2005, joining the Group from Cadbury Schweppes plc where he was most recently President, Europe, Middle East & Africa. During his career at Cadbury Schweppes he held a variety of senior regional management and marketing roles in UK and Asia Pacific. Also has over 11 years’ experience in brand marketing with Unilever. Non-Executive Chairman of Duchy Originals Limited. Age 52.

Richard Solomons Qualified as a chartered accountant in 1985, followed by seven years in investment banking, based in London and New York. Joined the Group in 1992 and held a variety of senior finance and operational roles. Appointed Finance Director of the Hotels business in October 2002 in anticipation of the separation of Six Continents PLC in April 2003. Responsible for corporate and regional finance, Group financial control, strategy, investor relations, tax and treasury. Age 46.

Stevan Porter Previously 13 years with Hilton Corporation in a variety of senior management positions. Joined the Group in 2001 as Chief Operating Officer, The Americas. Subsequently, as President, The Americas, he was appointed an Executive Director in April 2003. Responsible for business development and performance of all the hotel brands and properties in the Americas region. Additionally, has responsibility for the development and deployment of best practice in franchising, globally. Age 53.

David Kappler Appointed a Director and Senior Independent Director in June 2004. Non-Executive Chairman of Premier Foods plc and a Non-Executive Director of Shire plc. A qualified accountant and formerly Chief Financial Officer of Cadbury Schweppes plc until April 2004. Also served as a Non-Executive Director of Camelot Group plc and of HMV Group plc. Chairman of the Audit Committee. Age 61.

Ralph Kugler Appointed a Director in April 2003, he is President, Unilever Home and Personal Care, and joined the boards of Unilever plc and Unilever NV in May 2005. Held a variety of senior positions globally for Unilever and has experience of regional management in Asia, Latin America and Europe, with over 25 years’ experience of general management and brand marketing. Will step down from the Unilever boards in May 2008. Will become Chairman of the Remuneration Committee following the retirement of Sir David Prosser on 31 May 2008. Age 52.

Jennifer Laing Appointed a Director in August 2005, she was Associate Dean, External Relations at London Business School, until 2007. A fellow of the Marketing Society and of the Institute of Practitioners in Advertising, she has over 30 years’ experience in advertising including 16 years with Saatchi & Saatchi, to whom she sold her own agency. Also serves as a Non-Executive Director of Hudson Highland Group Inc., a US human resources company. Age 61.

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Robert C Larson Appointed a Director in April 2003, he is a Managing Director of Lazard Alternative Investments LLC and Chairman of Lazard Real Estate Partners, LLC. Also Chairman of Larson Realty Group and Non-Executive Chairman of UDR, Inc. Served as a Non-Executive Director of Six Continents PLC (formerly Bass PLC) from 1996 until April 2003. Will retire from the Board on 31 December 2008. Age 73.

Jonathan Linen Appointed a Director in December 2005, he was formerly Vice Chairman of the American Express Company, having held a range of senior positions throughout his career of over 35 years with American Express. Also serves as a Non-Executive Director of Yum! Brands, Inc. and on a number of US Councils and advisory boards. Age 64.

Sir David Prosser Qualified actuary with over 40 years’ experience in financial services. Appointed a Director in April 2003, he was formerly Group Chief Executive of Legal & General Group Plc. Also a Non-Executive Director of Investec plc and of Investec Limited, a Director of the Royal Automobile Club Limited and of Epsom Downs Racecourse Limited. Chairman of the Remuneration Committee. Will retire from the Board on 31 May 2008. Age 64.

Ying Yeh Appointed a Director in December 2007, she is Chairman and President, North Asia Region, President, Business Development, Asia Pacific Region and Vice President, Eastman Kodak Company. Also a Non-Executive Director of AB Volvo. Prior to joining Kodak in 1997 she was, for 15 years, a diplomat with the US Foreign Service in Hong Kong and Beijing. Age 59.

Other members of the Executive Committee Richard Winter Solicitor, qualified in 1973 with over 20 years’ commercial law experience in private practice. Joined the Group in 1994 as Director of Group Legal and was appointed Company Secretary in 2000. Now responsible for corporate governance, corporate responsibility, risk management, insurance, internal audit, data privacy, company secretariat and Group legal matters. Age 59.

Tom Conophy Has over 27 years’ experience in the IT industry, including management and development of new technology solutions within the travel and hospitality business. Joined the Group in February 2006 from Starwood Hotels & Resorts International where he held the position of Executive Vice President & Chief Technology Officer. Responsible for global technology, including IT systems and information management throughout the Group. Age 47.

Peter Gowers Joined the Group in 1999. Following appointments as Executive Vice President, Global Brand Services in 2003, and as Chief Marketing Officer in 2005, he was appointed President, Asia Pacific in November 2007. Now has responsibility for the business development and performance of all the hotel brands and properties in the Asia Pacific region. Has previous international experience in management consultancy, based in London and Singapore. Age 35.

Kirk Kinsell Has over 25 years’ experience in the hospitality industry, including senior franchise positions with Holiday Inn Corporation and ITT Sheraton, prior to joining the group in 2002 as Senior Vice President, Chief Development Officer for the Americas region. Promoted to the role of President, EMEA and joined the Executive Committee in

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September 2007. Responsible for the business development and performance of all the hotel brands and properties in the EMEA region. Age 53.

Tracy Robbins Has over 22 years’ experience in line and HR roles in service industries. Joined the Group in December 2005 from Compass Group PLC, a world leading food service company, where she was Group Human Resources Leadership & Development Director. Previously Group HR Director for Forte Hotels Group. Responsible for global talent management and leadership development, reward strategy and implementation. Age 44.

Tom Seddon Has over 15 year’s experience in sales and marketing in the hospitality industry, including with IHG’s predecessor parent companies from 1994 to 2004. Rejoined the Group in November 2007, from restaurant business SUBWAY® where he was responsible for worldwide sales and marketing activities. Has in the past held senior positions in management consulting and at Motorola. Has responsibility for worldwide brand management; reservations, e-commerce, global sales, relationship and distribution marketing and loyalty programmes. Age 39.

There are no family relationships between any of the persons named above. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person named above was selected as a director or member of senior management.

COMPENSATION In fiscal 2007, the aggregate compensation (including pension contributions, bonus and awards under the long term incentive plans) of the directors and officers of the Company was £10.06 million. The aggregate amount set aside or accrued by the Company in fiscal 2007 to provide pension retirement or similar benefits for those individuals was £656,000. An amount of £2.04 million was charged in fiscal 2007 in respect of bonuses payable to them under performance related cash bonus schemes and long term incentive plans. Note 3 of Notes to the Financial Statements sets out the individual compensation of the directors. The following are details of the Company’s principal share schemes, in which the directors of the Company participated during the period.

Share Plans Under the terms of the Separation, holders of options under the Six Continents Executive Share Option Schemes were given the opportunity to exchange their Six Continents options for equivalent value new options over IHG PLC shares. At December 31, 2007 2,696,883 such options were outstanding.

Short Term Deferred Incentive Plan The IHG Short Term Deferred Incentive Plan (STDIP), now called the Annual Bonus Plan, enables eligible employees, including Executive Directors, to receive all or part of their bonus in the form of shares together with, in certain cases, a matching award of free shares up to half the deferred amount. The bonus and matching shares in the 2004 and 2005 plans are deferred and released in three equal tranches on the first, second and third anniversaries of the award date. The bonus and matching shares in the 2006 and 2007 plans are released on the third anniversary of the award date. Under the 2006 and 2007 plans a percentage of the award (Board members — 100% other eligible employees — 50%) must be taken in shares and deferred. Participants may defer the remaining amount on the same terms or take it in cash. The awards in all of the plans are conditional on the participants remaining in the employment of a participating company. Participation in the STDIP is at the discretion of the Remuneration Committee. The number of shares is calculated by dividing a specific percentage of the participant’s annual performance related bonus by the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A number of executives participated in the plan during the year and conditional rights over 675,515 shares were awarded to participants.

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Long Term Incentive Plan The Long Term Incentive Plan (LTIP), previously called the Performance Restricted Share Plan (PRSP), allows Executive Directors and eligible employees to receive share awards, subject to the satisfaction of a performance condition, set by the Remuneration Committee, which is normally measured over a three year period. Awards are normally made annually and, except in exceptional circumstances, will not exceed three times salary for Executive Directors and four times salary in the case of other eligible employees. During the year, conditional rights over 3,538,535 shares were awarded to employees under the plan. The plan provides for the grant of nil cost options’ to participate as an alternative to conditional share awards.

Executive Share Option Plan For options granted, the option price is not less than the market value of an ordinary share, or the nominal value if higher. The market value is the quoted price on the business day preceding the date of grant, or the average of the middle market quoted prices on the three consecutive dealing days immediately preceding the date of the grant. A performance condition has to be met before options can be exercised. The performance condition is set by the Remuneration Committee. The plan was not operated during 2007 and no options were granted in the year under the plan. The latest date that any options may be exercised is April 2015.

Sharesave Plan The Sharesave Plan is a savings plan whereby employees contract to save a fixed amount each month with a savings institution for three or five years. At the end of the savings term, employees are given the option to purchase shares at a price set before savings began. The Sharesave Plan is available to all UK employees (including Executive Directors) employed by participating Group companies provided that they have been employed for at least one year. The plan provides for the grant of options to subscribe for ordinary shares at the higher of nominal value and not less than 80% of the middle market quotations of the ordinary shares on the three dealing days immediately preceding the invitation date. The plan was not operated during 2007 and no options were granted in the year under the plan. The latest date that any options may be exercised under the three-year plan is 29 February 2008 and under the five-year plan is 28 February 2010.

Options and Ordinary Shares held by Directors Details of the directors’ interests in the Company’s shares are set out on page 62 and pages F-36 to F-40.

BOARD PRACTICES Contracts of Service The Remuneration Committee’s policy is for Executive Directors to have rolling contracts with a notice period of 12 months. Andrew Cosslett, Stevan Porter and Richard Solomons have service agreements with a notice period of 12 months. All new appointments are intended to have 12-month notice periods. However, on occasion, to complete an external recruitment successfully, a longer initial period reducing to 12 months may be useful. David Webster’s appointment as non-executive Chairman, effective from January 1, 2004, is subject to six months’ notice. Non-executive directors, Ralph Kugler, Robert C Larson and Sir David Prosser signed letters of appointment effective from the listing of IHG in April 2003. These were renewed, effective from completion of the capital reorganisation of the Group and the listing of new IHG shares on June 27, 2005. David Kappler signed a letter of appointment effective from his date of original appointment to the Board on June 21, 2004. This was also renewed, effective from June 27, 2005. Jennifer Laing and Jonathan Linen signed letters of appointment effective from their appointment dates, respectively August 25, 2005 and December 1, 2005. Ying Yeh signed a letter of appointment effective from her appointment date of December 1, 2007.

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Directors’ Contracts

Contract Unexpired term/ Directors date notice period Andrew Cosslett 2.3.05 12 months Stevan Porter 4.15.03 12 months Richard Solomons 4.15.03 12 months Each of the Executive Directors signed a letter of appointment, effective from completion of the capital reorganization of the Company and the listing of new IHG shares on June 27, 2005. The terms of each appointment were as set out in each executive director’s original service agreement. See Note 3 of the Notes to the Consolidated Financial Statements for details of directors’ service contracts.

Payments on Termination No provisions for compensation for termination following change of control, or for liquidated damages of any kind, are included in the current directors’ contracts. In the event of any early termination of an executive director’s contract the policy is to seek to minimize any liability. Upon retirement, and under certain other specified circumstances on termination of his employment, a director will become eligible to receive benefit from his participation in a Company pension plan. See Note 3 of Notes to the Financial Statements for details of directors’ pension entitlements at December 31, 2007.

Committees Each Committee of the Board has written terms of reference which have been approved by the Board.

Executive Committee The Executive Committee is chaired by the Chief Executive. It consists of the executive directors and senior executives from the Group and the regions and usually meets monthly. Its role is to consider and manage a range of important strategic and business issues facing the Group. It is responsible for monitoring the performance of the regional Hotels businesses. It is authorised to approve capital and revenue investment within levels agreed by the Board. It reviews and recommends to the Board the most significant investment proposals.

Audit Committee The Audit Committee is chaired by David Kappler who has significant recent and relevant financial experience and is the Committee’s financial expert. During 2007, the other Audit Committee members were Sir David Prosser, Ralph Kugler and Jennifer Laing. All Audit Committee members are independent. The Audit Committee is scheduled to meet at least four times a year and met six times in 2007. The Audit Committee’s principal responsibilities are to: 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;

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assume responsibility for the appointment, compensation, resignation, dismissal and the overseeing of the external • auditor, including review of the external audit, its cost and effectiveness; pre-approve non-audit work to be carried out by the external auditor and the fees to be paid for that work along with • the monitoring of the external auditor’s independence; and • oversee the Group’s Code of Ethics and Business Conduct and associated procedures for monitoring adherence. The Audit Committee discharges its responsibilities through a series of Committee meetings during the year at which detailed reports are presented for review. The Audit Committee commissions reports, either from external advisers, the Head of Internal Audit, or Group management, after consideration of the major risks to the Group or in response to developing issues. The external auditor attends its meetings as does the Head of Internal Audit, both of whom have the opportunity to meet privately with the Audit Committee, in the absence of Group management, at the conclusion of each meeting. All proposals for the provision of non-audit services by the external auditor are pre-approved by the Audit Committee or its delegated member, the overriding consideration being to ensure that the provision of non-audit services does not impact the external auditors independence and objectivity.

Remuneration Committee The Remuneration Committee, chaired by Sir David Prosser, also comprises the following non-executive, directors: David Kappler, Robert C Larson, Jonathan Linen and, from December 1 , 2007, Ying Yeh. It meets at least three times a year. The Remuneration Committee advises the Board on overall remuneration policy. The Remuneration Committee also determines, on behalf of the Board, and with the benefit of advice from external consultants and members of the Human Resources department, the remuneration packages of the executive directors and other members of the Executive Committee. No member of the Remuneration Committee has any personal financial interest, other than as a shareholder, in the matters to be decided by the Remuneration Committee. It met six times in the year.

Nomination Committee The Nomination Committee comprises any three Non-Executive Directors although, where possible, all Non- Executive Directors are present. It is chaired by the Chairman of the Company. Its terms of reference reflect the principal duties proposed as good practice and referred to in the Combined Code. The Nomination Committee nominates, for approval by the Board, candidates for appointment to the Board. The Nomination Committee generally engages external consultants to advise on candidates for Board appointments and did so in connection with the appointment of Ying Yeh. Candidate profiles and objective selection criteria are prepared in advance of any engagements. The Nomination Committee also has responsibility for succession planning and assists in identifying and developing the role of the Senior Independent Director. The Nomination Committee met seven times during the year.

Disclosure Committee The Disclosure Committee, chaired by the Group’s Financial Controller, and comprising the Company Secretary and other senior executives, reports to the Chief Executive and the Finance Director, and to the Audit Committee. Its duties include ensuring that information required to be disclosed in reports pursuant to UK and US accounting, statutory or listing requirements, fairly represents the Group’s position in all material respects.

General Purposes Committee The General Purposes Committee comprises any one Executive Committee member together with a senior officer from an agreed and restricted list of senior executives. It is always chaired by an Executive Committee member. It attends to business of a routine nature and to the administration of matters, the principles of which have been agreed previously by the Board or an appropriate committee.

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A description of the significant ways in which the Company’s actual corporate governance practices differ from the New York Stock Exchange corporate governance requirements followed by US companies can be found on the Company’s website at www.ihg.com.

EMPLOYEES The Group employed an average of 10,366 people worldwide in the year ended December 31, 2007. Of these, approximately 94% were employed on a full-time basis and 6% were employed on a part-time basis. The table below analyzes the distribution of the average number of employees for the last three fiscal periods by division and by geographic region.

EMEA Americas Asia Pacific Central Total 2007 2,739 3,761 2,716 1,150 10,366 2006 4,437 3,771 2,225 1,023 11,456 2005: Hotels 10,477 5,832 1,737 949 18,995 Soft Drinks(i) 2,991 — — — 2,991 Total 13,468 5,832 1,737 949 21,986

(i) With effect from December 14, 2005, the Group no longer employed any individuals in the Soft Drinks Sector. Under EU law, many employees of Group companies are now covered by the Working Time Regulations which came into force in the United Kingdom on October 1, 1998. These regulations implemented the European Working Time Directive and parts of the Young Workers Directive, and lay down rights and protections for employees in areas such as maximum working hours, minimum rest time, minimum days off and paid leave. In the United Kingdom there is in place a national minimum wage under the National Minimum Wage Act. At December 31, 2007, the minimum wage for individuals between 18 and under the age of 22 was £4.60 per hour and £5.52 per hour for individuals age 22 and above. This particularly impacts businesses in the hospitality and retailing sectors. Compliance with the National Minimum Wage Act is being monitored by the Low Pay Commission, an independent statutory body established by the UK Government. Less than 5% of the Group’s UK employees are covered by collective bargaining agreements with trade unions. Continual attention is paid to the external market in order to ensure that terms of employment are appropriate. The Group believes the Group companies will be able to conduct their relationships with trade unions and employees in a satisfactory manner.

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SHARE OWNERSHIP The interests of the directors and officers of the Company at March 14, 2008 were as follows:

Ordinary shares % of shares of 1329/47 pence outstanding Directors Andrew Cosslett 240,229 0.08 David Kappler 1,400 N/A Ralph Kugler 1,169 N/A Jennifer Laing 1,404 N/A Robert C. Larson(1) 10,269 N/A Jonathan Linen(1) 7,343 N/A Stevan Porter 230,303 0.08 Sir David Prosser 2,402 N/A Richard Solomons 225,287 0.07 David Webster 31,938 0.01 Ying Yeh Nil N/A Officers Tom Conophy 35,112 0.01 Peter Gowers 139,790 0.05 Tracy Robbins 32,833 0.01 Richard Winter 139,088 0.05 Kirk Kinsell 61,910 0.02 Tom Seddon 24,000 N/A

(1) Held in the form of American Depositary Receipts The above shareholdings are all beneficial interests. The percentage of ordinary share capital owned by each of the directors is negligible. The directors’ interests in options to subscribe for shares in InterContinental Hotels Group PLC as at December 31, 2007 are set out on page F-39. The directors do not have different voting rights from other shareholders of the Company.

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS As far as is known to management, IHG is not directly or indirectly owned or controlled by another corporation or by any government. Under the provisions of the Companies Act, the Company has been advised of the following interests in its shares, being greater than 3% of its issued share capital as of March 14, 2008:

March 2008 March 2007 March 2006 Number of Percent Number of Percent Number of Percent Identity of person or groupshares/ADSs of class shares/ADSs of class shares/ADSs of class Ellerman Corporation Limited 29,921,742 10.00% 25,286,950 7.13 % (1) (1) Morgan Stanley Investment Management Limited 16,494,690 5.60 % (1) (1) (1) (1) Cedar Rock Capital Limited 14,923,417 5.07 % (1) (1) (1) (1) Morgan Stanley Institutional Securities Group & Global Wealth Management 13,551,634 4.60 % (1) (1) (1) (1) Legal & General Group Plc 12,179,257 4.09 % 11,927,715 3.37 % 13,753,588 3.17 % Lloyds TSB Group Plc 13,619,563 3.84 % 13,619,563 3.84 % 19,534,651 4.51 %

(1) No notification of an above 3% shareholding received. The Company’s major shareholders do not have different voting rights from other shareholders of the Company. The Company does not know of any arrangements the operation of which may result in a change in its control. As of March 14, 2008, 19,909,509 ADSs equivalent to 19,909,509 ordinary shares, or approximately 6.8% of the total ordinary shares in issue, were outstanding and were held by 916 holders. Since certain ordinary shares are registered in the names of nominees, the number of shareholders of record may not be representative of the number of beneficial owners. As of March 14, 2008, there were a total of 62,133 record holders of ordinary shares, of whom 287 had registered addresses in the United States and held a total of 904,114 ordinary shares (0.3% of the total issued).

RELATED PARTY TRANSACTIONS The Company has not entered into any related party transactions or loans for the period beginning January 1, 2007 up to March 14, 2008.

ITEM 8. FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION Financial Statements See “Item 18. Financial Statements”.

Legal Proceedings Group companies have extensive operations in the United Kingdom, as well as internationally, and are involved in a number of legal and arbitration proceedings incidental to those operations. It is the Company’s view that such proceedings, either individually or in the aggregate, have not in the recent past and are not likely to have a significant effect on the Group’s financial position or profitability.

Dividends See “Item 3. Key Information — Dividends”.

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SIGNIFICANT CHANGES None.

ITEM 9. THE OFFER AND LISTING The principal trading market for the Company’s ordinary shares is the London Stock Exchange on which Six Continents shares were traded since its incorporation in 1967 until Separation in 2003 and on which InterContinental Hotels Group shares have been traded since Separation. The ordinary shares are also listed on the New York Stock Exchange trading in the form of ADSs evidenced by ADRs. Each ADS represents one ordinary share. InterContinental Hotels Group has a sponsored ADR facility with JPMorgan Chase Bank, N.A. as Depositary. The following tables show, for the fiscal periods indicated, the reported high and low middle market quotations (which represent an average of closing bid and ask prices) for the ordinary shares on the London Stock Exchange, as derived from the Daily Official List of the UK Listing Authority, and the highest and lowest sales prices of the ADSs as reported on the New York Stock Exchange composite tape.

£ 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 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 13.42 12.06 30.81 27.17 Second quarter(2) 14.20 12.41 32.59 24.78 Third quarter 13.16 9.19 26.59 18.52 Fourth quarter 11.20 8.73 23.34 17.37 2008 First quarter (through March 14, 2008) 8.61 6.44 16.88 13.26

(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. (2) Prices adjusted for the share consolidation effective June 4, 2007. Unadjusted prices for the quarter were £14.13 and £12.16 and $28.18 and $24.17 respectively.

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£ per ordinary share $ per ADS Month ended High Low High Low September 2007 10.38 9.19 21.06 18.52 October 2007 11.20 9.93 23.34 20.39 November 2007 11.06 9.04 22.87 18.63 December 2007 9.64 8.73 19.66 17.37 January 2008 8.61 6.44 16.88 13.26 February 2008 8.47 7.24 16.82 14.24 March 2008 (through to March 14, 2008) 7.96 7.62 15.85 15.15 Fluctuations in the exchange rates between pounds sterling and the US dollar will affect the dollar equivalent of the pounds sterling price of the ordinary shares on the London Stock Exchange and, as a result, are likely to affect the market price of ADSs. On June 4, 2007, the share capital of the Company was consolidated on the basis of 47 new ordinary shares for every 56 existing ordinary shares.

PLAN OF DISTRIBUTION Not applicable.

SELLING SHAREHOLDERS Not applicable.

DILUTION Not applicable.

EXPENSES OF THE ISSUE Not applicable.

ITEM 10. ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF ASSOCIATION The following summarizes material rights of holders of the Company’s ordinary shares under the material provisions of the Company’s memorandum and articles of association and English law. This summary is qualified in its entirety by reference to the Companies Act and the Company’s memorandum and articles of association. The Company’s memorandum and articles of association are filed as an exhibit to this 20-F. The Company’s shares may be held in certificated or uncertificated form. No holder of the Company’s shares will be required to make additional contributions of capital in respect of the Company’s shares in the future. In the following description, a “shareholder” is the person registered in the Company’s register of members as the holder of the relevant share.

Principal Objects The Company is incorporated under the name InterContinental Hotels Group PLC and is registered in England and Wales with registered number 5134420. The Company’s memorandum of association provides that its objects include to acquire certain predecessor companies and carry on business as an investment holding company, licensed victuallers, to deal in commodities, to acquire and operate breweries, hotels and restaurants, as well as to carry on any other business

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document which the Company may judge capable of enhancing the value of the Company’s property or rights. The memorandum grants to the Company a range of corporate capabilities to effect these objects.

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Directors Under the Company’s articles of association, a director may not vote in respect of any proposal in which he, or any person connected with him, has any material interest other than by virtue of his interests in securities of, or otherwise in or through, the Company. This is subject to certain exceptions relating to proposals (a) indemnifying him in respect of obligations incurred on behalf of the Company, (b) indemnifying a third party in respect of obligations of the Company for which the director has assumed responsibility under an indemnity or guarantee, (c) relating to an offer of securities in which he will be interested as an underwriter, (d) concerning another body corporate in which the director is beneficially interested in less than one percent of the issued shares of any class of shares of such a body corporate, (e) relating to an employee benefit in which the director will share equally with other employees and (f) relating to liability insurance that the Company is empowered to purchase for the benefit of directors of the Company in respect of actions undertaken as directors (or officers) of the Company. The directors are empowered to exercise all the powers of the Company to borrow money, subject to the limitation that the aggregate amount of all moneys borrowed by the Company and its subsidiaries shall not exceed an amount equal to three times the Company’s share capital and consolidated reserves, unless sanctioned by an ordinary resolution of the Company. Directors are not required to hold any shares of the Company by way of qualification.

Rights Attaching to Shares Under English law, dividends are payable on the Company’s ordinary shares only out of profits available for distribution, as determined in accordance with accounting principles generally accepted in the United Kingdom and by the Companies Act. Holders of the Company’s ordinary shares are entitled to receive such dividends as may be declared by the shareholders in general meeting, rateably according to the amounts paid up on such shares, provided that the dividend cannot exceed the amount recommended by the directors. The Company’s board of directors may pay shareholders such interim dividends as appear to them to be justified by the Company’s financial position. If authorized by an ordinary resolution of the shareholders, the board of directors may also direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid up shares or debentures of any other company). Any dividend unclaimed after six years from the date the dividend was declared, or became due for payment, will be forfeited and will revert to the Company.

Voting Rights Voting at any general meeting of shareholders is by a show of hands unless a poll, which is a written vote, is duly demanded. On a show of hands, every shareholder who is present in person or by proxy at a general meeting has one vote regardless of the number of shares held. On a poll, every shareholder who is present in person or by proxy has one vote for every 1329/47 pence in nominal amount of the shares held by that shareholder. A poll may be demanded by any of the following: • the chairman of the meeting; • at least five shareholders present in person or by proxy and 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. A proxy form will be treated as giving the proxy the authority to demand a poll, or to join others in demanding one.

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The necessary quorum for a general meeting is three persons carrying a right to vote upon the business to be transacted, whether present in person or by proxy. Matters are transacted at general meetings of the Company by the proposing and passing of resolutions, of which there are three kinds: an ordinary resolution, which includes resolutions for the election of directors, the approval of financial statements, • the cumulative annual payment of dividends, the appointment of auditors, the increase of authorized share capital or the grant of authority to allot shares; a special resolution, which includes resolutions amending the Company’s memorandum and articles of association, • disapplying statutory pre-emption rights or changing the Company’s name; and an extraordinary resolution, which includes resolutions modifying the rights of any class of the Company’s shares at • a meeting of the holders of such class or relating to certain matters concerning the Company’s winding up. An ordinary resolution requires the affirmative vote of a majority of the votes of those persons voting at a meeting at which there is a quorum. Special and extraordinary resolutions require the affirmative vote of not less than three-fourths of the persons voting at a meeting at which there is a quorum. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting is entitled to cast the deciding vote in addition to any other vote he may have. Annual General Meetings must be convened upon advance written notice of 21 days. Other meetings must be convened upon advance written notice of 21 days for the passing of a special resolution and 14 days for any other resolution, depending on the nature of the business to be transacted. The days of delivery or receipt of the notice are not included. The notice must specify the nature of the business to be transacted. The board of directors may if they choose make arrangements for shareholders who are unable to attend the place of the meeting to participate at other places. Each Director shall retire every three years at the Annual General Meeting and unless otherwise decided by the Directors, shall be eligible for re-election.

Variation of Rights If, at any time, the Company’s share capital is divided into different classes of shares, the rights attached to any class may be varied, subject to the provisions of the Companies Act, with the consent in writing of holders of three-fourths in nominal value of the issued shares of that class or upon the adoption of an extraordinary resolution passed at a separate meeting of the holders of the shares of that class. At every such separate meeting, all of the provisions of the articles of association relating to proceedings at a general meeting apply, except that the quorum is to be the number of persons (which must be two or more) who hold or represent by proxy not less than one-third in nominal value of the issued shares of the class.

Rights in a Winding-up Except as the Company’s shareholders have agreed or may otherwise agree, upon the Company’s winding up, the balance of assets available for distribution: 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; is to be distributed among the holders of ordinary shares according to the amounts paid-up on the shares held by them. This distribution is generally to be made in cash. A liquidator may, however, upon the adoption of an extraordinary resolution of the shareholders, divide among the shareholders the whole or any part of the Company’s assets in kind.

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Limitations on Voting and Shareholding There are no limitations imposed by English law or the Company’s memorandum or articles of association on the right of non-residents or foreign persons to hold or vote the Company’s ordinary shares or ADSs, other than the limitations that would generally apply to all of the Company’s shareholders.

MATERIAL CONTRACTS The following contracts have been entered into otherwise than in the course of ordinary business by members of the Group either (i) in the two years immediately preceding the date of this document in the case of contracts which are or may be material or (ii) which contain provisions under which any Group member has any obligation or entitlement which is material to the Group as at the date of this document. To the extent that these agreements include representations, warranties and indemnities, such provisions are considered standard in an agreement of that nature, save to the extent identified below.

IHG Facility Agreement On November 9, 2004, InterContinental Hotels Limited signed a five year £1,600 million bank facility agreement (the “IHG Facility Agreement”) with The Bank of Tokyo-Mitsubishi, Ltd., Barclays Capital, Citigroup Global Markets Limited, HSBC Bank plc, J.P. Morgan plc, Lloyds TSB Bank plc, The Royal Bank of Scotland plc, SG Corporate & Investment Banking (the corporate and investment banking division of Société Generale) and WestLB AG, London Branch, all acting as mandated lead arrangers and underwriters and HSBC Bank plc as agent bank. The facility was split into a £1.1 billion five year revolving credit facility and a £500 million 364 day revolving credit facility. The latter was canceled in November 2005. The interest margin payable on borrowings under the IHG Facility Agreement is linked to IHG’s consolidated net debt to consolidated EBITDA ratio; initially the margin was set at LIBOR + 0.375% p.a. The margin can vary between LIBOR + 0.325% and LIBOR + 0.60% depending on the level of the ratio. As part of this refinancing the Group repurchased its euro and sterling denominated bonds. The Group’s new parent company InterContinental Hotels Group PLC, acceded to the IHG Facility Agreement in July 2005, following a capital restructuring in June 2005.

Disposal to Hospitality Properties Trust On December 17, 2004, BHR Texas L.P., InterContinental Hotels Group Resources, Inc., Crowne Plaza LAX, LLC, Crowne Plaza Hilton Head Holding Company, Holiday Pacific Partners Limited Partnership, 220 Bloor Street Hotel Inc. and Staybridge Markham, Inc. (together, the “Vendors”) entered into a Purchase and Sale Agreement (as amended and restated on February 9, 2005) with HPT IHG — 2 Properties Trust (“HPT IHG-2”), pursuant to which HPT IHG-2 purchased from the Vendors 12 hotels situated in the United States and Canada. On the same date, Six Continents International Holdings B.V. (“SIH”), entered into a Stock Purchase Agreement (as amended and restated on February 9, 2005) with HPT IHG-2, pursuant to which HPT IHG-2 purchased from SIH all of the shares in Crowne Plaza (Puerto Rico) Inc., which is the owner of a hotel in Puerto Rico. The total consideration payable by HPT IHG-2 for the sales amounted to US$425 million, before transaction costs, equivalent to net book value (of which US$395 million was received upon the main completion of the sale on February 16, 2005, with the remaining US$30 million received upon the completion of the sale of the InterContinental Hotel in Austin, on June 1, 2005). The Group continues to manage the hotels. Under the Purchase and Sale Agreement and Stock Purchase Agreement, the Vendors have given certain customary warranties and indemnities to HPT IHG-2. In connection with the disposals referred to above, IHG has agreed to guarantee certain amounts payable to HPT IHG and HPT IHG-2 in relation to the managed hotels sold by the Group to HPT IHG and HPT IHG-2. The guarantee is for a maximum amount of $125 million and requires amounts to be paid by IHG to HPT IHG and/or

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HPT IHG-2 (and/or their designated affiliate) irrespective of the revenue generated by the relevant hotels. The guarantee may be terminated if certain financial tests are met.

UK Hotels Disposal A Share Purchase Agreement (the “SPA”) was entered into on March 10, 2005 between Six Continents, IHC London (Holdings) Limited (“IHC Holdings”) and LRG. Pursuant to the SPA, Six Continents and IHC Holdings (the “Sellers”) agreed to sell all of the issued ordinary share capital of Six Continents Hotels & Holidays Limited, Holiday Inn Limited, NAS Cobalt No. 2 Limited and London Forum Hotel Limited respectively (together, the “LRG Shares”) to LRG and to transfer to LRG certain contractual rights to the extent they related to the hotels LRG indirectly acquired under the SPA (the “LRG Hotels”) and which remained to be completed or performed, or remained in force, after completion of the sale of the LRG Shares to LRG. The agreed sale price for the LRG Shares was £1 billion. Proceeds of £40 million were deferred and are contingent upon certain pre-agreed performance targets being reached. Following completion, the Group continues to manage the LRG Hotels. Under the SPA, the Sellers gave certain warranties in relation to the assets disposed of and LRG gave certain warranties in relation to its authority to enter into the SPA and its capacity to perform its obligations under the SPA. Certain indemnities were also given by the Sellers.

Australasian Hotels Disposals On September 1, 2005, Holiday Inn Holdings (Australia) Pty Limited, SPHC Group Pty Limited and HIA(T) Pty Limited (for the Australian assets) and Hale International Limited (for the New Zealand asset), all three of which are members of the Group, (“IHG”) entered into two sale and purchase agreements with HANZ (Australia) Pty Limited (for the Australian assets) and HANZ Holdings (New Zealand) Limited (for the New Zealand asset), both companies being subsidiaries of the Hotel Alternative (Australia and New Zealand) Private Syndicate managed by Eureka Funds Management Limited (“Eureka”) pursuant to which Eureka purchased from IHG nine hotels situated in Australia and New Zealand for AUS$390 million in cash (before transaction costs) which is AUS$75 million above the net book value of AUS$315 million. IHG gave to Eureka normal warranties in relation to the hotels and an indemnity for pre-completion tax liabilities. The transaction completed on October 31, 2005. The Group continues to manage the hotels for Eureka under ten year management contracts entered into at the time of the transaction, with an option to extend for ten further years at the Group’s discretion.

Disposal to Dabicam SAS On September 8, 2005, a sale and purchase agreement (“SPA”) was entered into between BHR Holdings BV, a wholly owned subsidiary of IHG, and Dabicam SAS, an affiliate of GIC Real Estate Pte. Ltd. Under the SPA the seller agreed to sell the InterContinental Hotel Paris. The agreed sale price for the hotel was €315 million. The hotel is no longer operated under an IHG brand. Under the SPA the sellers gave certain customary warranties and indemnities to the purchaser. Following receipt of shareholder approval, in connection with the sale, at an Extraordinary General Meeting of IHG on October 26, 2005 the sale was completed on November 1, 2005.

Britvic Underwriting Agreement An Underwriting Agreement was entered into on November 25, 2005 between, inter alia, Britvic, IHG in its capacity as a selling shareholder, 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). This set out the mechanics for the Britvic initial public offering and included customary termination rights. Britvic gave customary warranties, indemnities and undertakings in the context of an agreement of this sort. IHG also gave customary warranties and indemnities in its capacity as a selling shareholder. Under this agreement, each of the selling shareholders paid a commission equal to 2% of the offer price multiplied by the number of shares sold by that selling shareholder to the joint Underwriters.

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Disposal to Westbridge On March 10, 2006 a Sale and Purchase Agreement (“SPA”) was entered into between BHR Luxembourg S.a.r.l. and other wholly owned subsidiaries of IHG as sellers (BHR Luxembourg S.a.r.l. being the principal seller) and Cooperatie Westbridge Europe I U.A. as purchaser and Westbridge Hospitality Fund L.P. as the purchaser’s guarantor. Under the SPA the sellers agreed to sell 23 hotels situated across Europe in France, Germany, Belgium, the Netherlands, Austria, Italy and Spain. The agreed sale price was €352 million. IHG’s share of the proceeds was €345.2 million (before transaction costs), in cash and the assumption of debt, and the balance of €6.8 million relates to third-party minority interests. The hotels continue to be operated by the purchaser under the same IHG brands under 15 year franchise agreements. Under the SPA the sellers gave certain customary warranties and indemnities to the purchaser.

Disposal to Morgan Stanley Real Estate Funds On July 13, 2006 a sale and purchase agreement (“SPA”) was entered into between BHR Holdings BV and other wholly owned subsidiaries of IHG as sellers (BHR Holdings BV being the principal seller) and a subsidiary of Morgan Stanley Real Estate Funds MSREF VI Danube BV. Under the SPA the sellers agreed to sell seven InterContinental branded hotels situated across Europe in France, Germany, the Netherlands, Austria, Hungary, Italy and Spain. The agreed sale price for the seven hotels was €634 million. IHG retained 30 year management contracts on the hotels, with two ten year renewals at IHG’s discretion, giving a total potential contract length of 50 years. Under the SPA the sellers gave certain customary warranties and indemnities to the purchaser.

EXCHANGE CONTROLS There are no restrictions on dividend payments to US citizens. Although there are currently no UK foreign exchange control restrictions on the export or import of the capital or the payment of dividends on the ordinary shares or the ADSs, from time to time English law imposes restrictions on the payment of dividends to persons resident (or treated as so resident) in or governments of (or persons exercising public functions in) certain countries (each of the foregoing, a “Prohibited Person”). There are no restrictions under the articles of association or under English law that limit the right of non-resident or foreign owners to hold or vote the ordinary shares. However, under current English law, ordinary shares or ADSs may not be owned by a Prohibited Person. In addition, the Company’s articles of association contain certain limitations on the voting and other rights of any holder of ordinary shares, whose holding may, in the opinion of the directors, result in the loss or failure to secure the reinstatement of any license or franchise from any US governmental agency held by Six Continents Hotels Inc or any subsidiary thereof.

TAXATION This section provides a summary of the material US federal income tax and UK tax consequences to US holders, as defined below, of owning and disposing of ordinary shares or ADSs of the Company. This section addresses only the tax position of a US holder who holds ordinary shares or ADSs as capital assets. This section does not, however, discuss the tax consequences of members of special classes of holders subject to special rules, such as • certain financial institutions; • insurance companies; • dealers and traders in securities or foreign currencies; persons holding ordinary shares or ADSs as part of a hedge, straddle, conversion transaction, integrated transaction • or similar transaction;

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• persons whose functional currency for US federal income tax purposes is not the US dollar; • partnerships or other entities classified as partnerships for US 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; • holders that, directly or indirectly, hold 10% or more of the Company’s voting stock. This section does not generally deal with the position of a US holder who is resident or ordinarily resident in the United Kingdom for UK tax purposes or who is subject to UK taxation on capital gains or income by virtue of carrying on a trade, profession or vocation in the United Kingdom through a branch, agency or permanent establishment and such ADSs or ordinary shares are or have been used, held or acquired for the purposes of such trade, profession or vocation. A US holder is a beneficial owner of shares or ADSs that is for US federal income tax purposes (i) a citizen or resident of the US, (ii) a US domestic corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; or (iii) an estate whose income is subject to US federal income tax regardless of its source, or (iv) a trust if a US court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust. This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, and on UK tax laws and published practice of the UK HM Revenue and Customs, all as of the date hereof, and on the current Double Taxation Convention between the United States and the United Kingdom (the “Treaty”). These laws are subject to change, possibly on a retroactive basis. This section is further based in part upon the representations of the Depositary and assumes that each obligation in the Company ADR Deposit Agreement and any related agreement will be performed in accordance with its terms. For US federal income tax purposes, a holder of ADRs evidencing ADSs will be treated as the owner of the shares represented by those ADRs. Generally, exchanges of ordinary shares for ADRs, and ADRs for ordinary shares, will not be subject to US federal income tax or UK taxation on capital gains. The US Treasury has expressed concerns that parties to whom ADRs are pre-released may be taking actions that are inconsistent with the claiming of foreign tax credits for US holders of ADRs. Such actions would also be inconsistent with the claiming of the reduced rate of tax, described below, for qualified dividend income. Accordingly, the analysis of the availability of the reduced rate of tax for qualified dividend income described below could be affected by actions taken by parties to whom the ADRs are pre-released. 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 Under current UK tax law, the Company will not be required to withhold tax at source from dividend payments it makes. A US holder who is not resident or ordinarily resident for United Kingdom tax purposes in the United Kingdom will generally not be liable for UK taxation on dividends received in respect of the ADSs or ordinary shares.

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United States Federal Income Taxation Subject to the passive foreign investment company (“PFIC”) rules discussed below, a US holder is subject to US federal income taxation on the gross amount of any dividend paid by the Company out of its current or accumulated earnings and profits (as determined for US federal income tax purposes). Subject to applicable limitations and the discussion above regarding concerns expressed by the US Treasury, dividends paid to a non-corporate US holder in taxable years beginning before January 1, 2011 that constitute qualified dividend income will be taxable to the holder at a maximum tax rate of 15%. The Company expects that dividends paid by the Company with respect to the shares or ADSs will constitute qualified dividend income. If the preferential rates apply and the special dividend of June 2007 exceeds 10 percent of a US holder’s adjusted basis in its ordinary shares or ADSs (or, if the preferential rates apply and the special dividend and any other dividends with ex-dividend dates during the same period of 365 consecutive days in the aggregate exceed 20 percent of such basis), any loss on the sale or exchange of such ordinary shares of ADSs would be treated as long-term capital loss to the extent of such dividend(s). U.S. Holders should consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to be taxed at this favorable rate. Dividends must be included in income when the US holder, in the case of shares, or the Depositary, in the case of ADSs, actually or constructively receives the dividend, and will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. For foreign tax credit limitation purposes, dividends will be income from sources outside the United States. The amount of any dividend paid in pounds will be the US dollar value of the pound sterling payments made, determined at the spot pound sterling/US dollar rate on the date the dividend distribution is includible in income, regardless of whether the payment is in fact converted into US dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includible in income to the date the payment is converted into US dollars will be treated as ordinary income or loss and, for foreign tax credit limitation purposes, from sources within the United States. Distributions in excess of the Company’s current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a return of capital to the extent of the US holder’s basis in the shares or ADSs and thereafter as capital gain. Because the Company has not historically maintained, and does not currently maintain, books in accordance with US tax principles, the Company does not expect to be in a position to determine whether any distribution will be in excess of the Company’s current and accumulated earnings and profits as computed for US federal income tax purposes. As a result, the Company expects that amounts distributed will be reported to the Internal Revenue Service as dividends.

Taxation of Capital Gains United Kingdom Taxation A US holder who is not resident or ordinarily resident for UK tax purposes in the United Kingdom will not generally be liable for UK taxation on capital gains realized or accrued on the sale or other disposal of ADSs or ordinary shares unless, at the time of the sale or other disposal, the US holder carries on a trade, profession or vocation in the United Kingdom through a branch, agency or permanent establishment and such ADSs or ordinary shares are or have been used, held or acquired for the purposes of such trade, profession or vocation. A US holder of ADSs or ordinary shares who is an individual and who, broadly, has temporarily ceased to be resident or ordinarily resident in the UK or has become temporarily treated as non-resident for UK tax purposes for a period of less than five years of assessment and who disposes of ordinary shares or ADSs during that period may, for the year of assessment when that individual becomes resident again in the UK, also be liable to UK tax on capital gains (subject to any available exemption or relief), notwithstanding the fact that such US holder was not resident or ordinarily resident in the United Kingdom at the time of the sale or other disposal.

United States Federal Income Taxation Subject to the PFIC rules discussed below, a US holder that sells or otherwise disposes of shares or ADSs will recognize a capital gain or loss for US federal income tax purposes equal to the difference between the US dollar

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value of the amount realized and its tax basis, determined in US dollars, in the shares or ADSs. Subject to the discussion above relating to the special dividend (see Taxation of Dividends — United States Federal Income Taxation), such capital gain or loss will be long-term capital gain or loss where the holder has a holding period greater than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. The deductibility of losses is subject to limitations.

PFIC Rules The Company believes that it was not a PFIC for US federal income tax purposes for its 2007 taxable year. However, this conclusion is an annual factual determination and thus may be subject to change. If the Company were to be treated as a PFIC, gain realized on the sale or other disposition of Company shares or ADSs would in general not be treated as capital gain. Instead, gain would be treated as if the US holder had realized such gain ratably over the holding period for the Company shares or ADSs and, to the extent allocated to the taxable year of the sale or other exchange and to any year before the Company became a PFIC, would be taxed as ordinary income. The amount allocated to each other taxable year would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. In addition, similar rules would apply to any “excess distribution” received on the Company shares or ADSs (generally, the excess of any distribution received on the Company shares or ADSs during the taxable year over 125% of the average amount of distributions received during a specified prior period), and the preferential rate for “qualified dividend income” received by certain non-corporate US holders would not apply. Certain elections may be available (including a market-to-market election) to US holders that may mitigate the adverse tax consequences resulting from PFIC status.

Additional Tax Considerations United States Backup Withholding and Information Reporting Payments of dividends and other proceeds with respect to ADSs may be reported to the IRS and to the US holder in accordance with applicable regulations. Backup withholding may apply to these payments if the US holder fails to provide an accurate taxpayer identification number or certification of exempt status or fails to report all interest and dividends required to be shown on its US federal income tax returns. Certain US holders (including, among others, corporations) are not subject to backup withholding. US holders should consult their tax advisers as to their qualification for exemption from backup withholding and the procedure for obtaining an exemption.

United Kingdom Inheritance Tax An individual who is domiciled in the United States (for the purposes of the Estate and Gift Tax Convention) and is not a UK national as defined in the Convention will not be subject to UK inheritance tax in respect of ADSs on the individual’s death or on a transfer of the ADSs during their lifetime, provided that any applicable US federal gift or estate tax is paid, unless the ADSs are part of the business property of a UK permanent establishment or pertain to a UK fixed base of an individual used for the performance of independent personal services. Where the ADSs have been placed in trust by a settlor, they may be subject to UK inheritance tax unless, when the trust was created, the settlor was domiciled in the United States and was not a UK national. Where ADSs are subject to both UK inheritance tax and to US federal gift or estate tax, the Estate and Gift Tax Convention generally provides for either a credit against US federal tax liabilities for UK inheritance tax paid or for a credit against UK inheritance tax liabilities for US federal tax paid, as the case may be.

United Kingdom Stamp Duty and Stamp Duty Reserve Tax (“SDRT”) The transfer of ordinary shares will generally be liable to stamp duty at the rate of 0.5% of the amount or value of the consideration given (rounded up to the nearest £5). An unconditional agreement to transfer ordinary shares will generally be subject to SDRT at 0.5% of the agreed consideration. However, if within the period of six years of the date of such agreement becoming unconditional an instrument of transfer is executed pursuant to the agreement and duly stamped, any liability to SDRT will usually be repaid, if already paid, or canceled. The liability to pay stamp duty or SDRT is generally satisfied by the purchaser or transferee.

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No stamp duty or SDRT will generally arise on a transfer of ordinary shares into CREST, unless such transfer is made for a consideration in money or money’s worth, in which case a liability to SDRT will arise, usually at the rate of 0.5% of the value of the consideration. A transfer of ordinary shares effected on a paperless basis within CREST will generally be subject to SDRT at the rate of 0.5% of the value of the consideration. Stamp duty, or SDRT, is generally payable upon the transfer or issue of ordinary shares to, or to a nominee or, in some cases, agent of, a person whose business is or includes issuing depositary receipts or the provision of clearance services. For these purposes, the current rate of stamp duty and SDRT is usually 1.5% (rounded up, in the case of stamp duty, to the nearest £5). The rate is applied, in each case, to the amount or value of the consideration or, in some circumstances, to the value or the issue price of the ordinary shares. In accordance with the terms of the deposit agreement, any tax or duty payable on deposits of ordinary shares by the depositary or by the custodian of the depositary will be charged to the party to whom ADSs are delivered against such deposits. Provided that the instrument of transfer is not executed in the United Kingdom and remains at all subsequent times outside the United Kingdom, no stamp duty should be payable on the transfer of ADSs. An agreement to transfer ADSs in the form of depositary receipts will not give rise to a liability to SDRT.

DOCUMENTS ON DISPLAY It is possible to read and copy documents referred to in this annual report on Form 20-F that have been filed with the SEC at the SEC’s public reference room located at 100 F Street, NE Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. The Company’s SEC filings since May 22, 2002 are also publicly available through the SEC’s website located at www.sec.gov.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Exchange and Interest Rate Risk, and Financial Instruments The Company’s treasury policy is to manage the financial risks that arise in relation to the underlying business needs. The activities of the treasury function are carried out in accordance with board approved policies and are subject to regular internal audit. The treasury function does not operate as a profit center.

Treasury Risk Management The treasury function seeks to reduce the financial risk of the Company and manages liquidity to meet all foreseeable cash needs. Treasury activities include money market investments, spot and forward foreign exchange instruments, currency options, currency swaps, interest rate swaps, options and forward rate agreements. One of the primary objectives of the Company’s treasury risk management policy is to mitigate the adverse impact of movements in interest rates and foreign exchange rates. Derivatives are not used for trading or speculative purposes.

Credit Risk Credit Risk on treasury transactions is minimized by operating a policy on the investment of surplus funds that generally restricts counterparties to those with an A credit rating or better, or those providing adequate security. Limits are also set for individual counterparties. Most of the Company’s surplus funds are held in the United Kingdom or United States and there are no material funds where repatriation is restricted as a result of foreign exchange regulations.

Interest Rate Risk The Company has an exposure to interest rate fluctuations on its borrowings and it seeks to manage these by the use of interest rate swaps and options, and forward rate agreements. The Company takes out interest rate swaps to fix the interest flows on between 25% and 75% of its borrowings in major currencies.

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At December 31, 2007, the Company held interest rate swaps with notional principals of US$100 million, £150 million, and €75 million (2006 US$100 million and €80 million). Based on the year end net debt position and given the underlying maturity profile of investments, borrowings and hedging instruments at that date, a one percentage point rise in US dollar interest rates would increase the annual net interest charge by approximately £2.9 million. A similar rise in euro and sterling interest rates would increase the annual net interest charge by approximately £0.6 million and £1.6 million respectively.

Currency Risk The US dollar is the predominant currency of the Company’s revenue and cash flows, and movements in foreign exchange rates, particularly the US dollar and euro, can affect the company’s reported profits, net assets and interest cover. To hedge this translation exposure the Company denominates the currency of its debt (either directly or via derivatives) to match the currency of its net assets, whilst trying to maximise the amount of US dollars borrowed. At December 31, 2007, the Company held outstanding forward foreign exchange contracts of £6 million which were used as effective hedges against the currency of the Company’s net assets. The Company is exposed to foreign currency risk on income streams denominated in foreign currencies. Foreign exchange transaction exposure is managed by forward purchase or sale of foreign currencies or the use of currency options. Most significant exposures of the Company are in currencies that are freely convertible. At the year end there were no outstanding contracts hedging currency risk on income streams. A general weakening of the US dollar (specifically a five cent rise in the sterling: US dollar rate) would reduce the Company’s profit before tax by an estimated £4.2 million and increase net assets by an estimated £4.4 million. Similarly, a general weakening of the euro (specifically a five cent rise in the sterling : euro rate) would reduce the Company’s profit before tax by an estimated £0.8 million and decrease net assets by an estimated £3.0 million.

Quantitative Information about Market Risk Interest Rate Sensitivity The tables below provide information about the Company’s derivative and other financial instruments that are sensitive to changes in interest rates, including interest rate swaps and debt obligations. For long-term debt obligations (excluding debt due entirely within one year), the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For interest rate swaps and forward rate agreements, the table presents notional amounts and weighted average interest rates by expected maturity dates. Weighted average variable rates are based on rates set at the balance sheet date. The actual currencies of the instruments are indicated in parentheses.

At December 31, 2007

Expected to mature before December 31, 2008 2009 2010 2011 Thereafter Total Fair value(i) (£ million, except percentages) Long-Term Debt: Fixed Rate lease debt (US dollar) — — — — 100 100 126 Average dollar interest rate 9.7 % 9.7 % Variable Rate (various currencies) — 773 4 — — 777 777 Average interest rate 5.9 % 8.2% 5.9 %

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Expected to mature before December 31, 2008 2009 2010 2011 Thereafter Total Fair value(i) (local currency million, except percentages) Interest Rate Swaps: Principal (US dollar) 100 — — — — 100 — Fixed rate payable 4.7 % 4.7 % Variable rate receivable 5.1 % 5.1 % Principal (euro) 75 75 — — — 150 — Fixed rate payable 3.9 % 4.2% 4.0 % Variable rate receivable 4.5 % 4.5% 4.5 % Principal (sterling) 75 75 — — — 150 (1 ) Fixed rate payable 6.3 % 6.3% 6.3 % Variable rate receivable 6.2 % 6.3% 6.3 %

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

Exchange Risk Sensitivity The following information provides details of the Company’s derivative and other financial instruments by currency presented in sterling equivalents. Forward exchange contracts provide a currency hedge against currency net assets. All forward exchange agreements mature within one year.

Pay Receive 2007 2007 (local currency (£ million) million) Sale of US dollars against sterling 12.5 6

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES None.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF ITEM 14. PROCEEDS None.

ITEM 15. CONTROLS AND PROCEDURES Disclosure Controls and Procedures As at the end of the period covered by this report, the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Chief Executive and Finance Director, of the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Rules 13a-15(c) and 15d-15(e)). These are defined as those controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the specified periods. Based on that evaluation, the Chief Executive and Finance Director concluded that the Company’s disclosure controls and procedures were effective.

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Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934. Management has issued a report on the effectiveness of the Company’s Internal Control over Financial reporting as at December 31, 2007. This report appears on page F-1 of the Company’s Consolidated Financial Statements contained in this Annual Report. Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on the Company’s internal control over financial reporting. This report appears on page F-2 of the Company’s consolidated financial statements contained in this Annual Report.

Changes in Internal Control Over Financial Reporting There have been no changes in the Company’s internal controls over financial reporting that occurred during the period covered by this Form 20-F that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 16. [RESERVED] ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT The Senior Independent Director David Kappler, who has significant recent and relevant financial experience is the “Audit Committee Financial Expert” as defined under the regulations of the US Securities and Exchange Commission. David Kappler is independent as that term is defined under the listing standards of the NYSE.

ITEM 16B. CODE OF ETHICS The board has adopted a global Code of Ethics and Business Conduct that applies to all directors, officers and employees of IHG, including the Chief Executive and Finance Director. This Code of Ethics has been signed by the Chief Executive and the Finance Director of the Company and by the Group Financial Controller and regional financial heads. The Company has published its Code of Ethics and Business Conduct on its website www.ihg.com.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES Fees for professional services provided by Ernst & Young LLP, the Group’s independent auditors in each of the last two fiscal periods in each of the following categories are:

Year ended December 31, 2007 2006 (£ million) Audit Fees 2.2 2.4 Audit Related Fees 2.0 2.1 Tax Fees 0.4 0.7 Total 4.6 5.2

Further detail is provided in Note 4 “Auditor’s remuneration paid to Ernst & Young LLP” of Item 18 — Financial Statements. Audit fees in respect of the pension scheme were not material. The Audit Committee has a process to ensure that any non-audit services do not compromise the independence and objectivity of the external auditor and that relevant UK and US professional and regulatory requirements are met. A number of criteria are applied when deciding whether pre-approval for such services should be given. These include the nature of the service, the level of fees, and the practicality of appointing an alternative provider, having regard to the skills and experience required to supply the service effectively. Cumulative fees for audit and non-audit

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services are presented to the Audit Committee on a quarterly basis for review. The Audit Committee is responsible for monitoring adherence to the pre-approval policy.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Not applicable.

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. 38,063,720 Month 2 02.21.07 — 02.28.07 1,770,739 12.27 1,770,739 36,292,981 Month 3 03.01.07 — 03.01.07 280,000 11.95 280,000 36,012,981 Month 4 (no purchases in this month) 0 0.00 0 36,012,981 Month 5 05.16.07 — 05.25.07 186,525 12.80 186,525 35,826,456 Month 6 06.26.07 — 06.28.07 260,351 12.73 260,351 44,371,983 Month 7 (no purchases in this month) 0 0.00 0 44,371,983 Month 8 (no purchases in this month) 0 0.00 0 44,371,983 Month 9 09.05.07 — 09.28.07 2,373,182 9.53 2,373,182 41,998,801 Month 10 10.03.07 — 10.05.07 273,788 10.18 273,788 41,725,013 Month 11 11.06.07 — 11.21.07 2,255,716 9.61 2,255,716 39,469,297 Month 12 12.17.07 — 12.18.07 324,543 8.98 324,543 39,144,754 The first share repurchase program was announced on March 11, 2004 with the intention to repurchase £250 million worth of shares (US$456,525,000). A second £250 million share repurchase program followed, announced September 9, 2004. These programs were completed on December 20, 2004 and April 11, 2006, respectively. On September 8, 2005, the Company announced a further £250 million share repurchase program. In June 2007 the Company completed this repurchase program at an average price per share of 943 pence. During fiscal 2007, 5,866,817 ordinary shares were purchased by the Company’s Employee Share Ownership Trust at prices ranging from 931 pence to 1349 pence per share, for the purpose of satisfying future share awards to employees. On February 20, 2007, the Company announced a fourth, £150 million share repurchase program. By March 14, 2008, 6,312,024 shares had been repurchased at an average price of 926 pence per share (approximately £58 million).

PART III

ITEM 17. FINANCIAL STATEMENTS Not applicable.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ITEM 18. FINANCIAL STATEMENTS The following consolidated financial statements and related schedule, together with the report thereon of Ernst & Young LLP, are filed as part of this Annual Report:

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, 2007, 2006 and 2005. F-5 Consolidated Statement of Recognized Income and Expense for the years ended December 31, 2007, 2006 and 2005. F-6 Consolidated Balance Sheet for the years ended December 31, 2007 and 2006. F-7 Consolidated Statement of Changes in Shareholders’ Funds for the years ended December 31, 2007, 2006 and 2005 F-8 Consolidated Cash Flow Statement for the years ended December 31, 2007, 2006 and 2005. F-10 Notes to the Financial Statements F-11 Schedule for the years ended December 31, 2007, 2006 and 2005. Schedule II — Valuation and Qualifying Accounts S-1 Exhibit 1 Exhibit 8 Exhibit 12.A Exhibit 12.B Exhibit 13.A

ITEM 19. EXHIBITS The following exhibits are filed as part of this Annual Report:

Exhibit 1 Memorandum and Articles of Association of IHG 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) 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)

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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 (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 30, 2007) 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 (incorporated by reference to Exhibit 4(b)(ix) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated March 30, 2007) Exhibit 4(c)(i) 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)(ii) 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)(iii) Richard Solomons’ service contract dated February 12, 2003 (incorporated by reference to Exhibit 4(c)(iv) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated April 8, 2004) Exhibit 4(c)(iv) 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)(v) 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)(vi) 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)

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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)

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of InterContinental Hotels Group PLC (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Company’s transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In connection with the preparation of the Company’s annual consolidated financial statements, management has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (the “COSO”). Based on this assessment, management has concluded that as of December 31, 2007, the Company’s internal control over financial reporting is effective based on those criteria. Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements, has issued an attestation report on the Company’s internal control over financial reporting, a copy of which appears on the next page of this Annual Report.

F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Shareholders of InterContinental Hotels Group PLC: We have audited InterContinental Hotels Group PLC’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). InterContinental Hotels Group PLC’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Form 20-F. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, InterContinental Hotels Group PLC maintained, in all material aspects, effective internal control over financial reporting as of December 31, 2007, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying Consolidated Balance Sheets of InterContinental Hotels Group PLC as of December 31, 2007 and 2006, and the related Consolidated Income Statements, Consolidated Statements of Recognized Income and Expense, Consolidated Statements of Changes in Shareholders’ Funds and Consolidated Cash Flow Statements for each of the three years in the period ended December 31, 2007, and the financial statement schedule listed in the Index at Item 18. Financial Statements, and our report dated March 28, 2008 expressed an unqualified opinion thereon.

ERNST & YOUNG LLP London, England March 28, 2008

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INTERCONTINENTAL HOTELS GROUP PLC

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of InterContinental Hotels Group PLC We have audited the accompanying Consolidated Balance Sheets of InterContinental Hotels Group PLC as of December 31, 2007 and 2006, and the related Consolidated Income Statements, Consolidated Statements of Recognized Income and Expense, Consolidated Statements of Changes in Shareholders’ Funds and Consolidated Cash Flow Statements for each of the three years in the period ended December 31, 2007. Our audits also included the financial statements schedule listed in the Index at Item 18. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of InterContinental Hotels Group PLC at December 31, 2007 and 2006, and the consolidated results of its operations and its consolidated cash flows for each of the three years in the period ended December 31, 2007, in accordance with International Financial Reporting Standards as adopted by the European Union and International Financial Reporting Standards as issued by the International Accounting Standards Board. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of InterContinental Hotels Group PLC’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 28, 2008 expressed an unqualified opinion thereon.

ERNST & YOUNG LLP London, England March 28, 2008.

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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the Registration Statements (Form F-3 No. 333-108084 and Form S-8 Nos. 333-01572, 333-08336, 333-99785, 333-104691 and 333-126139) of InterContinental Hotels Group PLC of the reference to our name in “Item 3. Key Information” and our reports dated March 28, 2008, with respect to the Consolidated Financial Statements and Schedule of InterContinental Hotels Group PLC, and the effectiveness of internal control over financial reporting of InterContinental Hotels Group PLC, included in this Annual Report (Form 20-F) for the year ended December 31, 2007.

ERNST & YOUNG LLP London, England March 28, 2008

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INTERCONTINENTAL HOTELS GROUP PLC CONSOLIDATED INCOME STATEMENT

Year ended December 31, Year ended December 31, Year ended December 31, 2007 2006 2005 Before Exceptional Before Exceptional Before Exceptional exceptional items exceptional items exceptional items For the year ended 31 Decemberitems 2007(Note 5) Total items (Note 5) Total items (Note 5) Total (£ million) Revenue (Note 2) 883 — 883 786 — 786 697 — 697 Cost of sales (411 ) — (411 ) (355 ) — (355 ) (323 ) — (323 ) Administrative expenses (188 ) (7 ) (195 ) (180 ) — (180 ) (150 ) — (150 ) Other operating income and expenses 8 38 46 4 27 31 3 (15 ) (12 ) 292 31 323 255 27 282 227 (15 ) 212 Depreciation and amortization(Note 2) (55 ) (1 ) (56 ) (55 ) — (55 ) (52 ) — (52 ) Operating profit (Note 2) 237 30 267 200 27 227 175 (15 ) 160 Financial income (Note 6) 9 — 9 26 — 26 30 — 30 Financial expenses (Note 6) (54 ) — (54 ) (37 ) — (37 ) (54 ) — (54 ) Profit before tax 192 30 222 189 27 216 151 (15 ) 136 Tax (Note 7) (42 ) 30 (12 ) (41 ) 94 53 (30 ) 8 (22 ) Profit for the year from continuing operations 150 60 210 148 121 269 121 (7 ) 114 Profit for the year from discontinued operations (Note 11) 5 16 21 19 117 136 97 304 401 Profit for the year 155 76 231 167 238 405 218 297 515 Attributable to: Equity holders of the parent 155 76 231 167 238 405 199 297 496 Minority equity interest — — — — — — 19 — 19 155 76 231 167 238 405 218 297 515 Earnings per ordinary share (Note 9) Continuing operations: Basic 65.6p 69.1p 21.9p Diluted 63.8p 67.4p 21.4p Total operations: Basic 72.2p 104.1p 95.2p Diluted 70.2p 101.5p 93.1p The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

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INTERCONTINENTAL HOTELS GROUP PLC CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSE

Year ended Year ended Year ended December 31, December 31, December 31, 2007 2006 2005 (£ million) Income and expense recognized directly in equity Gains on valuation of available-for-sale assets 4 16 31 (Losses)/gains on cash flow hedges (1 ) 1 1 Exchange differences on retranslation of foreign operations 10 (30 ) 29 Actuarial gains/(losses) on defined benefit pension plans 12 (2 ) (23 ) 25 (15 ) 38 Transfers to the income statement On cash flow hedges: interest payable (1 ) (1 ) (6 ) On disposal of foreign operations: gain on disposal of assets — 4 2 On disposal of available-for-sale assets: other operating income and expenses (10 ) (14 ) — (11 ) (11 ) (4 ) Tax Tax on items above taken directly to or transferred from equity (3 ) 4 (1 ) Tax related to share schemes recognized directly in equity (2 ) 26 8 (5 ) 30 7 Net income recognized directly in equity 9 4 41 Profit for the year 231 405 515 Total recognized income and expense for the year 240 409 556 Attributable to: Equity holders of the parent 240 409 541 Minority equity interest — — 15 240 409 556 Effects of changes in accounting policy Losses on valuation of available-for-sale assets — — (10 ) Gains on cash flow hedges — — 6 — — (4 ) The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

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INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED BALANCE SHEET

December 31, December 31, 2007 2006 (£ million) ASSETS Property, plant and equipment — (Note 10) 962 997 Goodwill — (Note 12) 110 109 Intangible assets — (Note 13) 167 154 Investment in associates — (Note 14) 33 32 Retirement benefit assets — (Note 3) 32 — Other financial assets — (Note 15) 93 96 Total non-current assets 1,397 1,388 Inventories — (Note 16) 3 3 Trade and other receivables — (Note 17) 235 237 Current tax receivable 54 23 Cash and cash equivalents — (Note 18) 52 179 Other financial assets — (Note 15) 9 13 Total current assets 353 455 Non-current assets classified as held for sale — (Note 11) 57 50 Total assets (Note 2) 1,807 1,893

LIABILITIES Loans and other borrowings — (Note 20) (8 ) (10 ) Trade and other payables — (Note 19) (390 ) (402 ) Current tax payable (212 ) (231 ) Total current liabilities (610 ) (643 ) Loans and other borrowings — (Note 20) (869 ) (303 ) Retirement benefit obligations — (Note 3) (55 ) (71 ) Trade and other payables — (Note 19) (139 ) (109 ) Deferred tax payable — (Note 25) (82 ) (79 ) Total non-current liabilities (1,145 ) (562 ) Liabilities classified as held for sale — (Note 11) (3 ) (2 ) Total liabilities (Note 2) (1,758 ) (1,207 ) Net assets 49 686

EQUITY Equity share capital 81 66 Capital redemption reserve 5 4 Shares held by employee share trusts (41 ) (17 ) Other reserves (1,528 ) (1,528 ) Unrealized gains and losses reserve 19 27 Currency translation reserve 6 (3 ) Retained earnings 1,504 2,129 IHG shareholders’ equity 46 678 Minority equity interest — (Note 26) 3 8 Total equity 49 686 The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

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INTERCONTINENTAL HOTELS GROUP PLC CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ FUNDS

Retained earnings and other reserves Shares Share Capital held by Unrealized Number of Capital employee gains and Currency Total IHG ordinary Ordinary Share redemption Other share losses translation Retained shareholders’ shares(i) shares(i) premium(ii) reserve(ii) reserves(iii) trusts(iv) reserve(v) reserve(vi) earnings equity (£ million, except per ordinary share amounts) 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 Total recognized income and expense for the year — — — — — — (8 ) 9 239 240 Issue of ordinary shares 4 — 16 — — — — — — 16 Repurchase of shares (8 ) (1 ) — — — — — — (80 ) (81 ) Share capital consolidation (57 ) — — — — — — — — — Transfer to capital redemption reserve — — — 1 — — — — (1 ) — Purchase of own shares by employee share trusts — — — — — (69 ) — — — (69 ) Release of own shares by employee share trusts — — — — — 45 — — (40 ) 5 Equity-settled share-based cost — — — — — — — — 30 30 Equity dividends paid — — — — — — — — (773 ) (773 ) At December 31, 2007 295 40 41 5 (1,528 ) (41 ) 19 6 1,504 46

At December 31, 2004 the authorized share capital was £10,000,049,999 comprising 8,928,571,428 ordinary shares of 112 pence each and one redeemable preference share of £50,000. The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

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(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 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 was completed in the first half of 2007. In June 2007, a further £150 million share repurchase program commenced. During the year, 7,724,844 (2006 28,409,753, 2005 30,600,010) ordinary shares were repurchased and canceled under the authorities granted by shareholders at general meetings held during 2003, 2004, 2005, 2006 and 2007. Of these, 2,237,264 were 113/7 pence shares and 5,487,580 were 13 29/47 pence shares. 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 11 3/7 pence each. The share capital consolidation became effective on June 12, 2006. On June 1, 2007, shareholders approved a share capital consolidation on the basis of 47 new ordinary shares for every 56 existing ordinary shares. This provided for all the authorized ordinary shares of 113/7 pence each (whether issued or unissued) to be consolidated into new ordinary shares of 1329/47 pence each. The share capital consolidation became effective on June 4, 2007. 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 Extraordinary General Meeting on June 1, 2007 to purchase its own shares was still valid at December 31, 2007. A resolution to renew the authority will be put to shareholders at the Annual General Meeting on May 30, 2008.

At December 31, 2007, the authorized share capital was £160,050,000, comprising 1,175,000,000 ordinary shares of 1329/47 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 the merger reserve. (iv) The shares held by employee share trusts comprises £41.1 million (2006 £16.8 million, 2005 £21.7 million) in respect of 3.4 million (2006 1.7 million, 2005 2.9 million) InterContinental Hotels Group PLC ordinary shares held by employee share trusts, with a market value at December 31, 2007 of £30 million (2006 £21 million, 2005 £25 million). (v) The 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, 2007 was a £2 million liability (2006 £1 million asset, 2005 £1 million asset).

(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

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document deemed to be £nil as permitted by IFRS 1. During the year ended December 31, 2007, the impact of hedging net investments in foreign operations was to reduce the amount recorded in the currency translation reserve by £7 million (2006 £32 million, 2005 £9 million). The fair value of derivative instruments designated as hedges of net investments in foreign operations outstanding at December 31, 2007 was £nil (2006 £3 million net asset, 2005 £5 million net liability). The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

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INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED CASH FLOW STATEMENT

Year ended Year ended Year ended December 31, December 31, December 31, 2007 2006 2005 (£ million) Profit for the year 231 405 515 Adjustments for: Net financial expense 45 11 33 Income tax charge/(credit) 15 (41 ) 80 Exceptional operating items before depreciation (31 ) (27 ) 22 Gain on disposal of assets, net of tax (16 ) (117 ) (311 ) Depreciation and amortization 58 64 130 Equity-settled share-based cost, net of payments 24 14 12 Other non-cash items (2 ) — — Operating cash flow before movements in working capital 324 309 481 Increase in trade and other receivables (15 ) (31 ) — Increase/(decrease) in trade and other payables 26 10 (32 ) Retirement benefit contributions, net of charge (33 ) — (26 ) Cash flow from operations 302 288 423 Interest paid (42 ) (33 ) (59 ) Interest received 9 24 29 Tax paid on operating activities (37 ) (43 ) (80 ) Net cash from operating activities 232 236 313 Cash flow from investing activities Purchases of property, plant and equipment — Hotels (57 ) (87 ) (107 ) Purchases of intangible assets — Hotels (20 ) (23 ) (19 ) Purchases of associates and other financial assets — Hotels (16 ) (8 ) (10 ) Acquisition of subsidiary, net of cash acquired — (6 ) — Disposal of assets, net of costs and cash disposed of — Hotels 49 620 1,816 Proceeds from associates and other financial assets — Hotels 57 124 10 Purchases of property, plant and equipment — Soft Drinks — — (47 ) Disposal of business, net of cash disposed of — Soft Drinks — — 220 Tax paid on disposals (32 ) (6 ) (11 ) Net cash from investing activities (19 ) 614 1,852 Cash flow from financing activities Proceeds from the issue of share capital 16 20 10 Purchase of own shares (81 ) (260 ) (207 ) Payment to shareholders as a result of the capital reorganisation on June 27, 2005 — — (996 ) Purchase of own shares by employee share trusts (69 ) (47 ) (29 ) Proceeds on release of own shares by employee share trusts 10 19 16 Dividends paid to shareholders (773 ) (561 ) (81 ) Dividends paid to minority interests — (1 ) (177 ) Increase/(decrease) in borrowings 553 (172 ) (442 ) Net cash from financing activities (344 ) (1,002 ) (1,906 ) Net movement in cash and cash equivalents in the year (131 ) (152 ) 259 Cash and cash equivalents at beginning of the year 179 324 72 Exchange rate effects 4 7 (7 ) Cash and cash equivalents at end of the year 52 179 324

The Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

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Note 1 — Corporate Information and Accounting Policies Corporate information The consolidated financial statements of InterContinental Hotels Group PLC (the “Company” or “IHG”) for the year ended December 31, 2007 were authorized for issue in accordance with a resolution of the Directors on February 18, 2008. InterContinental Hotels Group PLC is incorporated in Great Britain and registered in England and Wales.

Summary of significant accounting policies Basis of preparation The consolidated financial statements are presented in sterling and all values are rounded to the nearest million except where otherwise indicated.

Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with IFRS as adopted by the European Union (“EU”), and in accordance with the provisions of the Companies Act 1985. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences have no impact on the Company’s consolidated financial statements for the years presented. The Company has early adopted International Financial Reporting Interpretations Committee 14 “IAS 19 -The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction” (“IFRIC 14”). IFRIC 14 provides guidance on assessing the limit in International Accounting Standard 19 “Employee Benefits” (“IAS 19”) on the amount of the surplus that can be recognized as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. Under IFRIC 14, the Company has recognized retirement benefit assets of £32 million on the balance sheet at December 31, 2007. The Company has also adopted International Financial Reporting Standard 7 ‘‘Financial Instruments: Disclosures” (“IFRS 7”) for the first time in these financial statements. This is a disclosure standard only which has had no impact on the Company’s results or net assets. The new disclosures are included throughout the financial statements. Other new accounting standards and interpretations issued by the IASB and the International Financial Reporting Interpretations Committee (“IFRIC”), becoming effective during the year, have not had a material impact on the Company’s financial statements. The principal accounting policies of the Company are set out below.

Basis of consolidation The consolidated financial statements comprise the financial statements of the parent company and entities controlled by the Company. All inter-company balances and transactions have been eliminated. The results of those businesses acquired or disposed of are consolidated for the period during which they were under the Company’s control.

Foreign currencies Transactions in foreign currencies are translated to the functional currency at the exchange rates ruling on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency at the relevant rates of exchange ruling at the balance sheet date. All foreign exchange differences arising on translation are recognized in the income statement except on foreign currency borrowings that provide a hedge against a net investment in a foreign operation. These are taken directly to the currency

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translation reserve until the disposal of the net investment, at which time they are recycled against the gain or loss on disposal. The assets and liabilities of foreign operations, including goodwill, are translated into sterling at the relevant rates of exchange ruling at the balance sheet date. The revenues and expenses of foreign operations are translated into sterling at weighted average rates of exchange for the period. The exchange differences arising on the retranslation are taken directly to the currency translation reserve. On disposal of a foreign operation, the cumulative amount recognized in the currency translation reserve relating to that particular foreign operation is recycled against the gain or loss on disposal.

Derivative financial instruments and hedging Derivatives designated as hedging instruments are accounted for in line with the nature of the hedging arrangement. The Company’s detailed accounting policies with respect to hedging instruments are set out in Note 21. Documentation outlining the measurement and effectiveness of the hedging arrangement is maintained throughout the life of the hedge relationship. Any ineffective element of a hedge arrangement is recognized in financial income or expense. Interest arising from currency swap agreements is taken to financial income or expense on a gross basis over the term of the relevant agreements. Interest arising from other currency derivatives and interest rate swaps is taken to financial income or expense on a net basis over the term of the agreement. Foreign exchange gains and losses on currency instruments are recognized in financial income and expense unless they form part of effective hedge relationships. The fair value of derivatives is calculated by discounting the expected future cash flows at prevailing interest rates.

Property, plant and equipment Property, plant and equipment are stated at cost less depreciation and any impairment. Borrowing costs are not capitalized. Repairs and maintenance costs are expensed as incurred. Land is not depreciated. All other property, plant and equipment are depreciated to a residual value over their estimated useful lives, namely:

Buildings lesser of 50 years and unexpired term of lease; and Fixtures, fittings and equipment 3 to 25 years. All depreciation is charged on a straight-line basis. Residual value is reassessed annualy. Property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Assets that do not generate independent cash flows are combined into cash-generating units. If carrying values exceed estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. Recoverable amount is the greater of fair value less cost to sell and value in use. Value in use is assessed based on estimated future cash flows discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. On adoption of IFRS the Company retained previous revaluations of property, plant and equipment at deemed cost as permitted by IFRS 1 “First-time Adoption of International Financial Reporting Standards.”

Goodwill Goodwill arises on consolidation and is recorded at cost, being the excess of the cost of acquisition over the fair value at the date of acquisition of the Company’s share of identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

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Goodwill is tested for impairment at least annualy by comparing carrying values of cash-generating units with their recoverable amounts.

Intangible assets Software Acquired software licenses and software developed in-house are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. Costs are amortized over estimated useful lives of three to five years on a straight-line basis.

Management contracts When assets are sold and a purchaser enters into a management or franchise contract with the Company, the Company capitalizes as part of the gain or loss on disposal an estimate of the fair value of the contract entered into. The value of management contracts is amortized over the life of the contract which ranges from six to 50 years on a straight-line basis.

Other intangible assets Amounts paid to hotel owners to secure management contracts and franchise agreements are capitalized and amortized over the shorter of the contracted period and 10 years on a straight-line basis. Internally generated development costs are expensed unless forecast revenues exceed attributable forecast development costs, at which time they are capitalized and amortized over the life of the asset. Intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Associates An associate is an entity over which the Company has the ability to exercise significant influence, but not control, through participation in the financial and operating policy decisions of the entity. Associates are accounted for using the equity method unless the associate is classified as held for sale. Under the equity method, the Company’s investment is recorded at cost adjusted by the Company’s share of post acquisition profits and losses. When the Company’s share of losses exceeds its interest in an associate, the Company’s carrying amount is reduced to £nil and recognition of further losses is discontinued except to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of an associate.

Financial assets The Company classifies its financial assets into one of the two following categories: loans and receivables or available-for-sale financial assets. Management determines the classification on initial recognition and they are subsequently held at amortized cost (loans and receivables) or fair value (available-for-sale financial assets). Interest on loans and receivables is calculated using the effective interest rate method and is recognized in the income statement as interest income. Changes in fair values of available-for-sale financial assets are recorded directly in equity within the unrealized gains and losses reserve. On disposal, the accumulated fair value adjustments recognized in equity are recycled to the income statement. Dividends from available-for-sale financial assets are recognized in the income statement as operating income and expenses. Financial assets are tested for impairment at each balance sheet date. If an available-for-sale financial asset is impaired, the difference between original cost and fair value is transferred from equity to the income statement to the extent of any cumulative loss recorded in equity with any excess charged directly to the income statement.

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Financial liabilities Financial liabilities are measured at amortized cost using the effective interest rate method. A financial liability is derecognized when the obligation under the liability expires, is discharged or canceled.

Inventories Inventories are stated at the lower of cost and net realizable value.

Trade receivables Trade receivables are recorded at their original amount less provision for impairment. It is the Company’s policy to provide for 100% of the previous month’s aged receivables balances which are more than 180 days past due. Adjustments to the policy may be made due to specific or exceptional circumstances when collection is no longer considered probable. The carrying amount of the receivable is reduced through the use of a provision account and movements in the provision are recognized in the income statement within cost of sales. When a previously provided trade receivable is uncollectable, it is written off against the provision.

Cash and cash equivalents Cash comprises cash in hand and demand deposits. Cash equivalents are short-term highly liquid investments with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value. In the cash flow statement cash and cash equivalents are shown net of short-term overdrafts which are repayable on demand and form an integral part of the Company’s cash management.

Assets held for sale Non-current assets and associated liabilities are classified as held for sale when their carrying amount will be recovered principally through a sale transaction rather than continuing use and a sale is highly probable. Assets designated as held for sale are held at the lower of carrying amount at designation and sales value less cost to sell. Depreciation is not charged against property, plant and equipment classified as held for sale.

Trade payables Trade payables are non interest bearing and are stated at their nominal value.

Loyalty program The hotel loyalty program, Priority Club Rewards, enables members to earn points, funded through hotel assessments, during each stay at an IHG hotel and redeem the points at a later date for free accommodation or other benefits. The future redemption liability is included in trade and other payables and is estimated using eventual redemption rates determined by actuarial methods and points values. The Company pays interest to the loyalty program on the accumulated cash received in advance of redemption of the points awarded.

Self insurance The Company is self insured for various insurable risks including general liability, workers’ compensation and employee medical and dental coverage. Insurance reserves include projected settlements for known and incurred but not reported claims. Projected settlements are estimated based on historical trends and actuarial data.

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Provisions Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that a payment will be made and a reliable estimate of the amount payable can be made. If the effect of the time value of money is material, the provision is discounted.

Bank and other borrowings Bank and other borrowings are initially recognized at the fair value of the consideration received less directly attributable transaction costs. They are subsequently measured at amortized cost. Finance charges, including issue costs, are charged to the income statement using an effective interest rate method. Borrowings are classified as non-current when the repayment date is more than 12 months from the balance sheet date or where they are drawn on a facility with more than 12 months to expiry.

Retirement benefits Defined contribution plans Payments to defined contribution schemes are charged to the income statement as they fall due.

Defined benefit plans Plan assets are measured at fair value and plan liabilities are measured on an actuarial basis, using the projected unit credit method and discounting at an interest rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the plan liabilities. The difference between the value of plan assets and liabilities at the balance sheet date is the amount of surplus or deficit recorded on the balance sheet as an asset or liability. An asset is recognized in full when the employer has an unconditional right to use the surplus at some point during the life of the plan or on its wind up. The service cost of providing pension benefits to employees for the year is charged to the income statement. The cost of making improvements to pensions is recognized in the income statement on a straight-line basis over the period during which any increase in benefits vests. To the extent that improvements in benefits vest immediately, the cost is recognized immediately as an expense. Actuarial gains and losses may result from: differences between the expected return and the actual return on plan assets; differences between the actuarial assumptions underlying the plan liabilities and actual experience during the year; or changes in the actuarial assumptions used in the valuation of the plan liabilities. Actuarial gains and losses, and taxation thereon, are recognized in the consolidated statement of recognized income and expense. Actuarial valuations are normally carried out every three years and are updated for material transactions and other material changes in circumstances (including changes in market prices and interest rates) up to the balance sheet date.

Taxes Current tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities including interest. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred tax Deferred tax assets and liabilities are recognized in respect of temporary differences between the tax base and carrying value of assets and liabilities, including accelerated capital allowances, unrelieved tax losses, unremitted profits from overseas where the Company does not control remittance, gains rolled over into replacement assets, gains on previously revalued properties and other short-term temporary differences.

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Deferred tax assets are recognized to the extent that it is regarded as probable that the deductible temporary differences can be realized. The recoverability of all deferred tax assets is reassessed at each balance sheet date. Deferred tax is calculated at the tax rates that are expected to apply in the periods in which the asset or liability will be settled, based on rates enacted or substantively enacted at the balance sheet date.

Revenue recognition Revenue is derived from the following sources: owned and leased properties; management fees; franchise fees and other revenues which are ancillary to the Company’s operations. Generally, revenue represents sales (excluding VAT and similar taxes) of goods and services, net of discounts, provided in the normal course of business and recognized when services have been rendered. The following is a description of the composition of revenues of the Company. Owned and leased — primarily derived from hotel operations, including the rental of rooms and food and beverage sales from owned and leased hotels operated under the Company’s brand names. Revenue is recognized when rooms are occupied and food and beverages are sold. Management fees — earned from hotels managed by the Company, usually under long-term contracts with the hotel owner. Management fees include a base fee, which is generally a percentage of hotel revenue, and an incentive fee, which is generally based on the hotel’s profitability or cash flows. Revenue is recognized when earned and realized or realizable under the terms of the contract. Franchise fees — received in connection with the license of the Company’s brand names, usually under long-term contracts with the hotel owner. The Company charges franchise royalty fees as a percentage of room revenue. Revenue is recognized when earned and realized or realizable under the terms of the agreement.

Share-based payments The cost of equity-settled transactions with employees is measured by reference to fair value at the date at which the shares are granted. Fair value is determined by an external valuer using option pricing models. The cost of equity-settled transactions is recognized, together with a corresponding increase in equity, over the period in which any performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date). The income statement charge for a period represents the movement in cumulative expense recognized at the beginning and end of that period. No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied. The Company has taken advantage of the transitional provisions of IFRS 2 “Share-based Payments” in respect of equity-settled awards and has applied IFRS 2 only to equity-settled awards granted after November 7, 2002 that had not vested before January 1, 2005.

Leases Operating lease rentals are charged to the income statement on a straight-line basis over the term of the lease. Assets held under finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease, with a corresponding liability being recognized for the fair value of the leased asset or, if lower, the present value of the minimum lease payments. Lease payments are apportioned between the reduction of the lease liability and finance charges in the income statement so as to achieve a constant rate of interest on the remaining balance of the liability. Assets held under finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term.

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Disposal of non-current assets The Company recognizes the sales proceeds and related gain or loss on disposal on completion of the sales process. In determining whether the gain or loss should be recorded, the Company considers whether it: • has a continuing managerial involvement to the degree associated with asset ownership; • has transferred the significant risks and rewards associated with asset ownership; and • can reliably measure and will actually receive the proceeds.

Discontinued operations Discontinued operations are those relating to hotels sold or those classified as held for sale when the results relate to a separate line of business, geographical area of operations, or where there is a co-ordinated plan to dispose of a separate line of business or geographical area of operations.

Exceptional items The Company discloses certain financial information both including and excluding exceptional items. The presentation of information excluding exceptional items allows a better understanding of the underlying trading performance of the Company and provides consistency with the Company’s internal management reporting. Exceptional items are identified by virtue of either their size or nature so as to facilitate comparison with prior periods and to assess underlying trends in financial performance. Exceptional items can include, but are not restricted to, gains and losses on the disposal of assets, impairment charges and reversals, restructuring costs and the release of tax provisions. Amounts that have previously been disclosed as special items have now been called exceptional items in accordance with market practice. There have been no change to the Company’s accounting policy for identifying these items.

Use of accounting estimates and judgments The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions and conditions. The estimates and assumptions that have the most significant effect on the amounts recognized in the financial statements are: 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. Retirement 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.

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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 — a provision for impairment 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 The IASB and IFRIC issued the following standards and interpretations with an effective date after the date of these financial statements. They have not been adopted early by the Company and the Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Company’s reported income or net assets in the period of adoption.

IFRS 3R Business Combinations Effective from July 1, 2009 IFRS 8 Operating Segments Effective from January 1, 2009 IAS 23 Borrowing Costs (Amendment) Effective from January 1, 2009 IAS 27R Consolidated and Separate Financial Statements Effective from July 1, 2009. IFRIC 11 Group and Treasury Share Transactions Effective from March 1, 2007 IFRIC 13 Customer Loyalty Programmes Effective from July 1, 2008. Note: the effective dates are in respect of accounting periods beginning on or after the date.

Note 2 — Segmental Information Exchange Rates The results of foreign operations have been translated into sterling at the weighted average rates of exchange for the period. In the case of the US dollar, the translation rate is £1 = $2.01 (2006 £1 = $1.84, 2005 £1 = $1.83). In the case of the euro, the translation rate is £1 = €1.46 (2006 £1 = €1.47, 2005 £1 = €1.46). Foreign currency denominated assets and liabilities have been translated into sterling at the rates of exchange on the balance sheet date. In the case of the US dollar, the translation rate is £1 = $2.01 (2006 £1 = $1.96, 2005 £1 = $1.73). In the case of the euro, the translation rate is £1 = €1.36 (2006 £1 = €1.49, 2005 £1 = €1.46).

Hotels The primary segmental reporting format is determined to be three main geographical regions: Americas; Europe, the Middle East and Africa (“EMEA”); and Asia Pacific. These, together with Central functions, form the principal format by which management is organized and makes operational decisions.

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The Company further breaks each geographical region into three distinct business models which offer different growth, return, risk and reward opportunities:

Franchised Where the Company neither owns nor manages the hotel, but licenses the use of a Company brand and provides access to reservation systems, loyalty schemes, and know-how. The Company derives revenues from a brand royalty or licensing fee, based on a percentage of room revenue.

Managed Where, in addition to licensing the use of a Company brand, the Company manages the hotel for third party owners. The Company derives revenues from base and incentive management fees and provides the system infrastructure necessary for the hotel to operate. Management contract fees are generally a percentage of hotel revenue and may have an additional incentive fee linked to profitability or cash flow. The terms of these agreements vary, but are often long term (for example, 10 years or more). The Company’s responsibilities under the management agreement typically include hiring, training and supervising the managers and employees that operate the hotels under the relevant brand standards. In order to gain access to central reservation systems, global and regional brand marketing and brand standards and procedures, owners are typically required to make a further contribution.

Owned and leased Where the Company both owns (or leases) and operates the hotel and, in the case of ownership, takes all the benefits and risks associated with ownership. Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Soft Drinks This business, which manufactures a variety of soft drink brands with distribution concentrated mainly in the UK, was sold in December 2005.

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Segmental Information Year ended December 31, 2007 Revenue

Asia Americas EMEA Pacific Central Total (£ million) Hotels Owned and leased 128 121 73 — 322 Managed 78 84 49 — 211 Franchised 244 40 8 — 292 Central — — — 58 58 Continuing operations 450 245 130 58 883 Discontinued operations — owned and leased 31 9 — — 40 481 254 130 58 923

Segmental result

Asia Americas EMEA Pacific Central Total (£ million) Hotels Owned and leased 20 17 18 — 55 Managed 21 43 23 — 87 Franchised 212 29 3 — 244 Regional and central (33 ) (22 ) (13 ) (81 ) (149) Continuing operations 220 67 31 (81 ) 237 Discontinued operations — owned and leased 8 — — — 8 228 67 31 (81 ) 245 Exceptional operating items 9 10 8 3 30 Operating profit 237 77 39 (78 ) 275

Continuing Discontinued Total (£ million) Operating profit 267 8 275 Net finance costs (45 ) — (45 ) Profit before tax 222 8 230 Tax (12 ) (3 ) (15 ) Profit after tax 210 5 215 Gain on disposal of assets, net of tax — 16 16 Profit for the year 210 21 231

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Year ended December 31, 2007 Assets and liabilities

Asia Americas EMEA Pacific Central Total (£ million) Segment assets 614 613 334 83 1,644 Non-current assets classified as held for sale 57 — — — 57 671 613 334 83 1,701 Unallocated assets: Current tax receivable 54 Cash and cash equivalents 52 Total assets 1,807 Segment liabilities (280 ) (237) (67 ) — (584 ) Liabilities classified as held for sale (3 ) — — — (3 ) (283 ) (237) (67 ) — (587 ) Unallocated liabilities: Current tax payable (212 ) Deferred tax payable (82 ) Loans and other borrowings (877 ) Total liabilities (1,758)

Other segmental information

Asia Americas EMEA Pacific Central Total (£ million) Continuing operations: Capital expenditure(i) 29 20 20 23 92 Additions to: Property, plant and equipment 16 14 14 10 54 Intangible assets 4 5 3 13 25 Depreciation and amortization(ii) 16 18 11 11 56 Reversal of previously recorded impairment — — 3 — 3 Discontinued operations: Capital expenditure(i) 1 — — — 1 Depreciation and amortization(ii) 1 1 — — 2

(i) Comprises purchases of property, plant and equipment, intangible assets and other financial assets and acquisitions of subsidiaries as included in the consolidated cash flow statement. (ii) Included in the £58 million of depreciation and amortization is £20 million relating to administrative expenses and £38 million relating to cost of sales.

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Year ended December 31, 2006 Revenue

Asia Americas EMEA Pacific Central Total (£ million) Hotels Owned and leased 104 92 71 — 267 Managed 77 71 36 — 184 Franchised 241 35 4 — 280 Central — — — 55 55 Continuing operations 422 198 111 55 786 Discontinued operations — owned and leased 41 133 — — 174 463 331 111 55 960

Segmental result

Americas EMEA Asia Pacific Central Total (£ million) Hotels Owned and leased 12 (4 ) 17 — 25 Managed 27 37 21 — 85 Franchised 208 24 3 — 235 Regional and central (32 ) (20 ) (12 ) (81 ) (145) Continuing operations 215 37 29 (81 ) 200 Discontinued operations — owned and leased 6 25 — — 31 221 62 29 (81 ) 231 Exceptional operating items 25 2 — — 27 Operating profit 246 64 29 (81 ) 258

Continuing Discontinued Total (£ million) Operating profit 227 31 258 Net finance costs (11 ) — (11 ) Profit before tax 216 31 247 Tax 53 (12 ) 41 Profit after tax 269 19 288 Gain on disposal of assets, net of tax — 117 117 Profit for the year 269 136 405

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Year ended December 31, 2006 Assets and liabilities

Asia Americas EMEA Pacific Central Total (£ 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)

Other segmental information

Asia Americas EMEA Pacific Central Total (£ million) Continuing operations: Capital expenditure(i) 34 49 17 15 115 Additions to: Property, plant and equipment 116 53 9 4 182 Intangible assets 10 31 1 11 53 Depreciation and amortization(ii) 15 17 10 13 55 Reversal of previously recorded impairment — 2 — — 2 Discontinued operations: Capital expenditure(i) 1 8 — — 9 Additions to property, plant and equipment — 4 — — 4 Depreciation and amortization(ii) 4 5 — — 9 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 consolidated 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.

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Year ended December 31, 2005* Revenue

Asia Total Americas EMEA Pacific Central Hotels (£ million) Hotels Owned and leased 98 102 59 — 259 Managed 65 55 25 — 145 Franchised 213 35 3 — 251 Central — — — 42 42 Continuing operations 376 192 87 42 697 Discontinued operations — owned and leased 69 419 54 — 542 445 611 141 42 1,239

Continuing Discontinued Group (£ million) Group Hotels 697 542 1,239 Soft Drinks — 671 671 Total revenue 697 1,213 1,910 Segmental result Total Americas EMEA Asia Pacific Central Hotels (£ million) Hotels Owned and leased 14 (3 ) 11 — 22 Managed 20 31 16 — 67 Franchised 186 26 2 — 214 Regional and central (34 ) (21 ) (8 ) (65 ) (128) Continuing operations 186 33 21 (65 ) 175 Discontinued operations — owned and leased 12 71 11 — 94 198 104 32 (65 ) 269

Continuing Discontinued Total (£ million) Group Hotels 175 94 269 Soft Drinks — 70 70 175 164 339 Exceptional operating items (15 ) (7 ) (22 ) Operating profit 160 157 317 Net finance costs (24 ) (9 ) (33 ) Profit before tax 136 148 284 Tax (22 ) (58 ) (80 ) Profit after tax 114 90 204 Gain on disposal of assets, net of tax — 311 311 Profit for the year 114 401 515

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

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Year ended December 31, 2005* Assets and liabilities

Asia Total Soft Americas EMEA Pacific Central Hotels Drinks Total (£ 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)

Other segmental information

Asia Total Soft Americas EMEA Pacific Central Hotels Drinks Total (£ million) Continuing operations: Capital expenditure(i) 17 19 28 13 77 — 77 Additions to: Property, plant and equipment 7 15 30 6 58 — 58 Intangible assets 27 51 9 7 94 — 94 Depreciation and amortization(ii) 16 13 8 15 52 — 52 Impairment of property, plant and equipment — 7 — — 7 — 7 Discontinued operations: Capital expenditure(i) 11 44 4 — 59 47 106 Additions to: Property, plant and equipment 9 33 4 — 46 36 82 Intangible assets — — — — — 7 7 Depreciation and amortization(ii) 4 26 3 — 33 45 78

* 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.

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Note 3 — Staff costs and Directors’ emoluments Staff

Year ended December 31, 2007 2006 2005 (£ million) Costs: Wages and salaries 292 301 465 Social security costs 31 38 61 Pension and other post-retirement benefits: Defined benefit plans 4 6 19 Defined contribution plans 12 11 15 339 356 560

Employee numbers Average number of employees, including part-time employees:

Year ended December 31, 2007 2006 2005 (Number) Americas 3,761 3,771 5,832 EMEA 2,739 4,437 10,477 Asia Pacific 2,716 2,225 1,737 Central 1,150 1,023 949 Hotels 10,366 11,456 18,995 Soft Drinks — — 2,991 10,366 11,456 21,986

Retirement benefits Retirement and death in service benefits are provided for eligible employees in the United Kingdom principally by the InterContinental Hotels UK Pension Plan. The plan, which is funded and HM Revenue & Customs registered covers approximately 440 (2006 410, 2005 400) employees, of which 200 (2006 220, 2005 240) are in the defined benefit section which provides pensions based on final salaries and 240 (2006 190, 2005 160) are in the defined contribution section. The deferred benefit section of the plan closed to new entrants during 2002 with new members provided with defined contribution arrangements The assets of the plan are held in self-administered trust funds separate from the Company’s assets. In addition, there are unfunded UK pension arrangements for certain members affected by the lifetime allowance. The Company also maintains the following US-based deferred benefit plans; the funded InterContinental Hotels Pension Plan, unfunded InterContinental Hotels non-qualified pension plans and post-employment benefits schemes. These plans are now closed to new members. The Company also operates a number of minor pension schemes outside the United Kingdom, the most significant of which is a defined contribution scheme in the United States; there is no material difference between the pension costs of, and contributions to, those schemes. On December 14, 2005, the Soft Drinks business, including the Britvic Pension Plan, was sold. The comparative information provided below includes movements for the Britvic Pension Plan up to the date of disposal.

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The amounts recognized in the consolidated income statement in respect of the defined benefit plans are:

Post- Pension plans employment UK US and other benefits Total Recognized in administrative2007 expenses2006 2005 2007 2006 2005 2007 2006 2005 2007 2006 2005 (£ million) Current service costs 5 5 19 — — — — — — 5 5 19 Interest cost on benefit obligation 15 13 30 5 5 6 1 1 1 21 19 37 Expected return on plan assets (17) (14) (32) (5) (4) (5) — — — (22) (18) (37) 3 4 17 — 1 1 1 1 1 4 6 19

Recognized in other operating income and expense Plan curtailment — — (7 ) — — — — — — — — (7 )

The curtailment gain arose as a result of the sale of 73 United Kingdom hotel properties. The amounts recognized in the consolidated statement of recognized income and expense are:

Pension plans Post-employment UK US and other benefits Total Actuarial gains and losses2007 2006 2005 2007 2006 2005 2007 2006 2005 2007 2006 2005 (£ million) Actual return on plan assets 14 21 79 5 6 4 — — — 19 27 83 Less: expected return on plan assets (17) (14) (32) (5) (4) (5) — — — (22) (18) (37) (3 ) 7 47 — 2 (1) — — — (3 ) 9 46 Other actuarial gains and losses 15 (12) (67) — — (3) — 1 1 15 (11) (69) 12 (5 ) (20) — 2 (4) — 1 1 12 (2 ) (23)

The assets and liabilities of the schemes and the amounts recognised in the consolidated balance sheet are:

Pension plans Post-employment UK US and other benefits Total 2007 2006 2007 2006 2007 2006 2007 2006 (£ million) Schemes in surplus Fair value of plan assets 304 — 7 — — — 311 — Present value of benefit obligations (274) — (5 ) — — — (279) — Retirement benefit assets 30 — 2 — — — 32 — Schemes in deficit Fair value of plan assets — 269 65 56 — — 65 325 Present value of benefit obligations (23 ) (298) (87) (89) (10) (9) (120) (396) Retirement benefit obligations (23 ) (29 ) (22) (33) (10) (9) (55 ) (71 ) Total fair value of plan assets 304 269 72 56 — — 376 325 Total present value of benefit obligations (297) (298) (92) (89) (10) (9) (399) (396)

The “US and other” surplus of £2 million relates to a defined benefit pension scheme in Hong Kong.

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Assumptions The principal financial assumptions used by the actuaries to determine the benefit obligation are:

Pension plans UK US Post-employment benefits 2007 2006 2005 2007 2006 2005 2007 2006 2005 (%) Wages and salaries increases 4.9 4.6 4.3 — — — 4.0 4.0 4.0 Pensions increases 3.4 3.1 2.8 — — — — — — Discount rate 5.5 5.0 4.7 5.8 5.8 5.5 5.8 5.8 5.5 Inflation rate 3.4 3.1 2.8 — — — — — — Healthcare cost trend rate assumed for next year 10.0 10.0 9.0 Ultimate rate that the cost trend rate trends to 5.0 5.0 4.5 Mortality is the most significant demographic assumption. In respect of the UK plans, the specific mortality rates used are in line with the PA92 medium cohort tables, with age rated down by one year, implying the following life expectancies at retirement. In the US, life expectancy is determined by reference to the RP-2000 healthy tables.

Pension plans UK US 2007 2006 2005 2007 2006 2005 (years) Current pensioners at 65 — male(i) 23 23 21 18 18 17 Current pensioners at 65 — female(i) 26 26 24 20 20 22 Future pensioners at 65 — male(ii) 24 24 22 18 18 17 Future pensioners at 65 — female(ii) 27 27 25 20 20 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 2027. The assumptions allow for expected increases in longevity.

Sensitivities The value of scheme assets is sensitive to market conditions, particularly equity value. Changes in assumptions used for determining retirement benefit costs and obligations may have a material impact on the income statement and the balance sheet. The main assumptions are the discount rate, the rate of inflation and the assumed mortality rate. The following table provides an estimate of the potential impacts of each of these variables on the pension plans.

UK US Higher/ Increase/ Higher/ Increase/ (lower) (decrease) (lower) (decrease) pension cost in liabilities pension cost in liabilities (£ million) Discount rate — 0.25% decrease 0.4 15.6 — 2.4 Discount rate — 0.25% increase (0.4 ) (14.7 ) — (2.3 ) Inflation rate — 0.25% increase 0.9 14.6 — — Inflation rate — 0.25% decrease (0.9 ) (13.8 ) — — Mortality rate — one year increase 0.6 6.8 — 2.7

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In 2018 the healthcare cost trend rate reaches the assumed ultimate rate. A one percentage point increase/(decrease) in assumed healthcare costs trend rate would increase/(decrease) the accumulated post- employment benefit obligations as on December 31, 2007, 2006 and 2005, by approximately £1 million and would increase/(decrease) the total of the service and interest cost components of net post-employment healthcare cost for the period then ended by approximately £nil.

Post- Pension plans employment UK US and other benefits Total Movement in benefit obligation2007 2006 2007 2006 2007 2006 2007 2006 (£ million) Benefit obligation at beginning of year 298 274 89 103 9 11 396 388 Current service cost 5 5 — — — — 5 5 Members’ contributions 1 1 — — — — 1 1 Interest expense 15 13 5 5 1 1 21 19 Benefits paid (7 ) (7 ) (5 ) (6 ) (1 ) (1 ) (13 ) (14 ) Reclassification(i) — — 5 — — — 5 — Actuarial (gain)/ loss arising in the year (15 ) 12 — — — (1 ) (15 ) 11 Exchange adjustments — — (2 ) (13 ) 1 (1 ) (1 ) (14 ) Benefit obligation at end of year 297 298 92 89 10 9 399 396 Comprising: Funded plans 274 275 70 65 — — 344 340 Unfunded plans 23 23 22 24 10 9 55 56 297 298 92 89 10 9 399 396

Post- Pension plans employment UK US and other benefits Total Movement in plan assets 2007 2006 2007 2006 2007 2006 2007 2006 (£ million) Fair value of plan assets at beginning of year 269 250 56 62 — — 325 312 Company contributions 27 4 10 1 1 1 38 6 Members’ contributions 1 1 — — — — 1 1 Benefits paid (7 ) (7 ) (5 ) (6 ) (1) (1) (13 ) (14 ) Reclassification(i) — — 7 — — — 7 — Expected return on assets 17 14 5 4 — — 22 18 Actuarial (loss)/gain arising in the year (3 ) 7 — 2 — — (3 ) 9 Exchange adjustments — — (1 ) (7 ) — — (1 ) (7 ) Fair value of plan assets at end of year 304 269 72 56 — — 376 325

(i) Relates to the recognition of the gross assets and obligations of the Hong Kong pension scheme. Normal company contributions are expected to be £8 million in 2008. In addition, the Company has agreed to pay special contributions of £20 million to the UK pension plan; £10 million in 2008 and £10 million in 2009.

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The combined assets of the principal plans and expected rate of return are:

2007 2006 2005 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 pension plans Equities 7.9 109 7.9 128 7.5 125 Bonds 4.8 179 4.6 123 4.2 110 Other 7.9 16 7.9 18 7.5 15 Total market value of assets 304 269 250 US pension plans Equities 9.5 39 9.5 34 9.6 38 Fixed income 5.5 26 5.5 22 5.5 24 Total market value of assets 65 56 62

The expected rate of return on assets has been determined following advice from the plans’ independent actuaries and is based on the expected return on each asset class together with consideration of the long-term asset strategy. History of experience gains and losses:

UK pension plans 2007 2006 2005 2004 2003 (£ million) Fair value of plan assets 304 269 250 470 353 Present value of benefit obligations (297) (298) (274) (600) (477) Surplus/(deficit) in the plans 7 (29 ) (24 ) (130) (124) Experience adjustments arising on plan liabilities 15 (12 ) (67 ) (60 ) Experience adjustments arising on plan assets (3 ) 7 47 14

US pension plans 2007 2006 2005 2004 2003 (£ million) Fair value of plan assets 65 56 62 56 48 Present value of benefit obligations (87) (89) (103) (88) (91) Deficit in the plans (22) (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 2007 2006 2005 2004 2003 (£ million) Present value of benefit obligations (10) (9) (11) (11) (11) Experience adjustments arising on plan liabilities — 1 1 (1 ) The cumulative amount of actuarial gains and losses recognized since January 1, 2004 in the consolidated statement of recognized income and expense is £64 million (2006 £76 million, 2005 £74 million). The Company is unable to determine how much of the pension scheme deficit recognized on transition to IFRS of £178 million and taken directly to total equity is attributable to actuarial gains and losses since inception of the schemes. Therefore, the Company is unable to determine the amount of actuarial gains and losses that would have been recognized in the consolidated statement of recognized income and expense before January 1, 2004.

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Policy on remuneration of Executive Directors and senior executives The following policy has applied throughout the year and, except where stated, will apply in future years, subject to regular review.

Total level of remuneration The Remuneration Committee aims to ensure that overall remuneration is offered which: attracts high-quality executives in an environment where compensation levels are based on global • market practice; • provides appropriate retention strength against loss of key executives; drives aligned focus and attention to key business initiatives and appropriately rewards their • achievement; • supports equitable treatment between members of the same executive team; and • facilitates global assignments and relocation. The Remuneration Committee is aware that, as the Company’s primary listing is on the London Stock Exchange, IHG’s incentive arrangements may be expected to recognize UK investor guidelines. However, given the global nature of the Hotels business, an appropriate balance needs to be drawn in the design of relevant remuneration between domestic and international expectations.

Key developments During 2007, the Remuneration Committee undertook a major review of the executive remuneration structure. The purpose of the review was to ensure that executive remuneration arrangements are simple, relevant to participants and easily understood. The review resulted in two main amendments to the executive incentives: restructuring of the Short Term Incentive Plan and the Short Term Deferred Incentive Plan into a • single plan, renamed the Annual Bonus Plan; and a change to the Total Shareholder Return (“TSR”) performance measure linked to the Performance • Restricted Share Plan, which has been renamed the Long Term Incentive Plan. Further details of the changes are included in the relevant sections below. The Remuneration Committee believes that the changes will enhance the effectiveness of the arrangements in support of the aims of attracting, retaining, and motivating high-quality executives in the highly competitive global environment in which the Company operates. The greater simplification introduced will make overall reward more transparent and motivational to executives. The changes to the performance measures are intended to generate a more robust alignment between reward and performance.

The main components The components of overall reward place a strong emphasis on performance-related reward. The individual elements are designed to provide the appropriate balance between fixed remuneration and variable “risk” reward, which is linked to the performance of both the Company and the individual. Company performance-related measures are chosen carefully to ensure a strong link between reward and true underlying financial performance, and emphasis is placed on particular areas requiring executive focus. The normal policy for all Executive Directors is that, using “target” or “expected value” calculations, their performance-related incentives will equate to approximately 70% of total annual remuneration (excluding pensions & benefits).

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The main components of remuneration are as follows: Base salary and benefits The salary for each Executive Director is reviewed annualy and based on both individual performance and on the most recent relevant market information provided from independent professional sources on comparable salary levels. Internal relativities and salary levels in the wider employment market are also taken into account. Base salary is the only element of remuneration which is pensionable. In addition, benefits are provided to Executive Directors in accordance with the policy applying to other executives in their geographic location. In assessing levels of pay and benefits, IHG analyzes those offered by different groups of comparator companies. These groups are chosen having regard to participants’: • 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 Bonus During 2007, and in previous years, the annual performance bonus consisted of two elements, the Short Term Incentive Plan (“STI”) and the Short Term Deferred Incentive Plan (“STDIP”). Both elements require the achievement of challenging performance goals before target bonus is payable. Any bonus for 2007 earned under the STI arrangement is payable in cash in 2008, based on individual performance relative to personal objectives and leadership competencies. 100% of any bonus earned under the STDIP for 2007 is payable in 2008 in shares and deferred on a mandatory basis. Participants could also receive matching shares up to half of the total deferred amount. This matching award was taken into account when the Remuneration Committee decided the basic level of payment under the STDIP. Therefore, there is no separate performance test governing the vesting of matching awards. Such awards are, however, conditional on the Directors’ continued employment with the Company until the release date. The shares will normally be released at the end of the three years following deferral. For awards to be made in respect of financial year 2008 onwards, the STI and STDIP will be combined, so that all Executive Directors will participate in the Annual Bonus Plan. Cash bonuses will no longer be payable under the STI. Existing powers within the STDIP, renamed the Annual Bonus Plan, will be used to pay both cash and share bonuses. The maximum bonus amount a participant can receive in any one year is 200% of salary. The target award level will be 115% of salary. Half of any bonus earned will be deferred in the form of shares for three years. Matching shares will no longer be awarded. The first cash and share awards will be made under the new arrangements in 2009, in respect of the 2008 financial year. Awards under the Annual Bonus Plan will be linked to individual performance (30% of total award), Earnings Before Interest and Tax (“EBIT”) (50% of total award) and net annual rooms additions (20% of total award). Individual performance is measured by the achievement of specific Key Performance Objectives that are linked directly to the Company’s strategic priorities, and an assessment of performance against leadership competencies and behaviours. Under the financial measure (EBIT), threshold payout is 90% of target performance, with maximum payout at 110% of target. If performance under the financial measure in any year is below threshold, payouts on all other measures are reduced by half. Long Term Incentive Plan The Long Term Incentive Plan (“LTIP”) was formerly called the Performance Restricted Share Plan. It allows Executive Directors and eligible employees to receive share awards, subject to the satisfaction of a performance condition, set by the Remuneration Committee, which is normally measured over a three-year period. Awards are normally made annualy and, other than in exceptional circumstances, will not exceed three times annual salary for Executive Directors.

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For the 2007/09 LTIP cycle, performance will be measured by reference to: the increase in IHG’s Total Shareholder Return (“TSR”) over the performance period relative to • eight* identified comparator companies: Accor, Choice, Marriott Hotels, Millennium & Copthorne, NH Hotels, Sol Melia, Starwood Hotels and Wyndham Worldwide; and • growth in adjusted Earnings Per Share (“EPS”) over the period.

* Following the delisting of Hilton Hotels Corp. shares in October 2007. In respect of TSR performance, 10% of the award will be released for the achievement of median performance and 50% of the award will be released for the achievement of first place only (previously first or second place). In respect of EPS performance, 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. Vesting between all stated points will continue to be on a straight-line basis. Awards under the LTIP lapse if the performance conditions are not met – there is no retesting. For the 2008/10 cycle, the performance measures for the LTIP will be as follows: 50% of the award will be based on IHG’s TSR relative to the Dow Jones World Hotels Index. 10% of the award will be released for the achievement of growth equal to the index and 50% of the award • will be released for the out-performance of the index by 8% per annum. Vesting between all stated points will continue to be on a straight-line basis; and the other 50% of the award will depend on growth in adjusted EPS over the period. 10% of the award will be released for threshold performance and 50% of the award will be released for superior performance. The Remuneration Committee reviews the EPS targets each year and, at the time of this • report, the target had not yet been determined. It will be disclosed when awards are made in due course. In setting the target, the Remuneration Committee will take into account a range of factors, including IHG’s strategic plans, City analysts’ expectations for IHG’s performance and for the industry as a whole, the historical performance of the industry and FTSE 100 market practice. Executive Share Options Since 2006, executive share options have not formed part of the Company’s remuneration strategy. Details of prior share option grants are given in the table on page F-39. For options granted in 2005, a performance condition has to be met before options can be exercised. The Company’s adjusted EPS over a three-year period must increase by at least nine percentage points over the increase in the UK Retail Price Index (“RPI”) for the same period for one-third of the options granted to vest; 12 percentage points over the increase in RPI for the same period for two-thirds of the options granted to vest; and 15 percentage points over the increase in RPI for the same period for the full award to vest. Share capital During 2007, no awards or grants over shares were made that would be dilutive of the Company’s ordinary share capital. Current policy is to settle all awards or grants under any of the Company’s share plans with shares purchased in the market, with the exception of a number of options granted before 2005, which are yet to be exercised and settled with the issue of new shares. Share Ownership The Remuneration Committee believes that share ownership by Executive Directors and senior executives strengthens the link between the individual’s personal interest and that of the shareholders. The Executive Directors are expected to hold all shares earned (net of any share sales required to meet personal tax liabilities) from the Company’s remuneration plans while the value of their holding is less than twice their base salary or three times in the case of the Chief Executive.

Policy on external appointments The Company recognizes that its Directors may be invited to become Non-Executive Directors of other companies and that such duties can broaden experience and knowledge, and benefit the business. Executive Directors are, therefore, allowed to accept one Non-Executive appointment (not including positions where the

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Director is appointed as the Group’s representative), subject to Board approval, as long as this is not likely to lead to a conflict of interest, and to retain the fees received. Andrew Cosslett is Non-Executive Chairman of Duchy Originals Limited, for which he receives no remuneration.

Contracts of service a) Policy The Remuneration Committee’s policy is for Executive Directors to have rolling contracts with a notice period of 12 months. Andrew Cosslett, Stevan Porter and Richard Solomons have service agreements with a notice period of 12 months. All new appointments are intended to have 12-month notice periods. However, on occasion, to complete an external recruitment successfully, a longer initial period reducing to 12 months may be used, following guidance in the Combined Code. No provisions for compensation for termination following change of control, or for liquidated damages of any kind, are included in the current Directors’ contracts. In the event of any early termination of an Executive Director’s contract, the policy is to seek to minimise any liability. Non-Executive Directors have letters of appointment. David Webster’s appointment as Non-Executive Chairman, effective from January 1, 2004, is subject to six months’ notice. The dates of appointment of the other Non-Executive Directors are set out on page 58. All Directors’ appointments and subsequent reappointments are subject to election and re-election by shareholders.

b) Directors’ contracts

Contract(1) Unexpired term/ Director effective date notice period Andrew Cosslett 02.03.05 12 months Richard Hartman(2) 04.15.03 N/A 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 reorganization of the Company on the same terms as their original service agreements. (2) Richard Hartman retired in September 2007, at which point his rolling contract with 12 months’ notice expired.

Policy regarding pensions Andrew Cosslett, Richard Solomons and other senior UK-based employees participate on the same basis in the executive section of the registered InterContinental Hotels UK Pension Plan and, if appropriate, the InterContinental Executive Top-Up Scheme. The latter is an unfunded arrangement, but with appropriate security provided via a fixed charge on a hotel asset. As an alternative to these arrangements, a cash allowance may be taken. Stevan Porter and senior US-based executives participate in US retirement benefits plans. With effect from January 30, 2006, Richard Hartman ceased to be an active member of the InterContinental Hotels UK Pension Plan and InterContinental Executive Top-Up Scheme, and from that date up to his retirement on September 25, 2007, he participated in the InterContinental Hotels Group International Savings and Retirement Plan. Executives in other countries participate in these plans or local plans.

Policy on remuneration of Non-Executive Directors Non-Executive Directors are paid a fee which is approved by the Board on the recommendation of the Executive Directors, having taken account of the fees paid in other companies of a similar complexity, and the skills and experience of the individual. Higher fees are payable to the Chairman of the Remuneration Committee and to

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the Senior Independent Director, who chairs the Audit Committee, reflecting the additional responsibilities of these roles. Non-Executive Directors’ fee levels were last established by the Board on January 1, 2007. Having taken into account the global nature, scale and complexity of the Company’s business, and current competitive fee levels, the following annual fee rates apply:

Role Fee Chairman £390,000 Senior Independent Director & Chairman of Audit Committee £95,000 Chairman of Remuneration Committee £80,000 Other Non-Executive Directors £60,000

Directors’ emoluments

Total emoluments excluding pensions Base salaries Performance Jan 1, 2007 to Jan 1, 2006 to and fees payments(1) Benefits(2) Dec 31, 2007 Dec 31, 2006 (£ thousands) Executive Directors Andrew Cosslett 732 519 25 1,276 1,268 Richard Hartman(3) 398 201 247 846 1,005 Stevan Porter(4) 416 253 8 677 726 Richard Solomons 468 285 18 771 806 Non-Executive Directors David Webster 390 — 2 392 354 David Kappler 95 — — 95 80 Ralph Kugler(5) 60 — — 60 50 Jennifer Laing 60 — — 60 50 Robert C Larson 60 — — 60 50 Jonathan Linen 60 — — 60 50 Sir David Prosser 80 — — 80 65 Sir Howard Stringer(6) — — — — 43 Ying Yeh(7) 5 — — 5 — Former Directors(8) — — 1 1 1 Total 2,824 1,258 301 4,383 4,548

(1) Performance payments include bonus awards in cash in respect of participation in the Short Term Incentive Plan (“STI”) 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) Richard Hartman retired as a Director on September 25, 2007. (4) Emoluments for Stevan Porter include £79,051 that was chargeable to UK income tax. (5) All fees due to Ralph Kugler were paid to Unilever. (6) Sir Howard Stringer resigned as a Director on November 10, 2006. (7) Ying Yeh was appointed as a Director on December 1, 2007. (8) Sir retired as a Director on December 31, 2003. However, he had an ongoing healthcare benefit of £1,150 during the year.

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Long-term reward Short Term Deferred Incentive Plan (“STDIP”) — now called the Annual Bonus Plan Messrs Cosslett, Hartman, Porter and Solomons participated in the STDIP during the year ended December 31, 2007, and received an award on February 25, 2008. Directors’ pre-tax interests during the year were:

Value based on STDIP shares STDIP shares share awarded Market vested Market STDIP price of during price during price shares 884.0 pence STDIP shares the year per share the year per share Value held at Planned at Dec 31, held at Jan 1, 2007 Award at award Jan 1, 2007 to Vesting at vesting at vesting Dec 31, vesting 2007 Directors Jan 1, 2007 to Dec 31, 2007 date (pence) Dec 31, 2007 date (pence) (£) 2007 date (£) Andrew Cosslett 39,916(1 ) 4.1.05 617.5 39,916 4.1.07 1260.0 502,942 — 32,168(3 ) 3.8.06 853.67 32,168 3.8.07 1239.6 398,755 — 32,167(3 ),(8) 3.8.06 853.67 28,877 3.8.08 255,273 32,168(3 ),(8) 3.8.06 853.67 28,878 3.8.09 255,282 62,575(4 ),(8),(9) 2.26.07 1235 55,870 2.26.10 493,891 Total 113,625 1,004,446 Richard Hartman 29,447(2 ) 3.16.05 653.67 29,447 3.16.07 1210.5 356,456 — 29,447(2 ) 3.16.05 653.67 29,447 3.16.08 260,312 19,714(3 ) 3.8.06 853.67 19,714 3.8.07 1239.6 244,375 — 19,714(3 ),(8) 3.8.06 853.67 17,698 3.8.08 156,451 19,713(3 ),(8) 3.8.06 853.67 17,696 3.8.09 156,433 51,281(5 ),(9) 2.26.07 1235 51,281 2.26.10 453,325 Total 116,122 1,026,521 Stevan Porter 26,978(2 ) 3.16.05 653.67 26,978 3.16.07 1210.5 326,569(10) — 26,978(2 ) 3.16.05 653.67 26,978 3.16.08 238,486 20,643(3 ) 3.8.06 853.67 20,643 3.8.07 1239.6 255,891(10) — 20,642(3 ),(8) 3.8.06 853.67 18,531 3.8.08 163,815 20,642(3 ),(8) 3.8.06 853.67 18,530 3.8.09 163,806 33,352(6 ),(8),(9) 2.26.07 1235 29,778 2.26.10 263,238 Total 93,817 829,345 Richard Solomons 29,020(2 ) 3.16.05 653.67 29,020 3.16.07 1210.5 351,287 — 29,021(2 ) 3.16.05 653.67 29,021 3.16.08 256,546 20,563(3 ) 3.8.06 853.67 20,563 3.8.07 1239.6 254,899 — 20,562(3 ),(8) 3.8.06 853.67 18,459 3.8.08 163,178 20,563(3 ),(8) 3.8.06 853.67 18,459 3.8.09 163,178 40,048(7 ),(8),(9) 2.26.07 1235 35,757 2.26.10 316,092 Total 101,696 898,994

(1) This special award was made to Andrew Cosslett as part of his overall recruitment terms. The shares were to vest in equal portions on the first and second anniversary of the award date, subject to his continued employment until that time. The second half of the award vested on April 1, 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 where the performance measures were related to EPS, EBIT and personal performance. Total shares held include matching shares. (4) This award was based on financial year 2006 performance and the bonus target was 50% of base salary. Andrew Cosslett was awarded 50% for EPS performance and 42% for Group EBIT performance. Andrew Cosslett’s total bonus was therefore 92% of his base salary. One matching share was awarded for every two bonus shares earned. (5) This award was based on financial year 2006 performance and the bonus target was 50% of base salary. Richard Hartman was awarded 50% for EPS performance and 34.3% for EMEA EBIT performance. Richard Hartman’s total bonus was therefore 84.3% of his base salary. One matching share was awarded for every two bonus shares earned.

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(6) This award was based on financial year 2006 performance and the bonus target was 50% of base salary. Stevan Porter was awarded 50% for EPS performance and 33.8% for Americas EBIT performance. Stevan Porter’s total bonus was therefore 83.8% of his base salary. One matching share was awarded for every two bonus shares earned. (7) This award was based on financial year 2006 performance and the bonus target was 50% of base salary. Richard Solomons was awarded 50% for EPS performance and 42% for Group EBIT performance. Richard Solomons’ total bonus was therefore 92% of his base salary. One matching share was awarded for every two bonus shares earned.

(8) A proportion of these share interests were in InterContinental Hotels Group PLC 113/7 pence ordinary shares which were subject to the share consolidation effective from June 4, 2007. For every 56 existing InterContinental Hotels Group PLC shares held on June 1, 2007, shareholders received 47 new ordinary shares of 13 29/47 pence each and a special dividend of 200 pence per existing ordinary share. As a consequence, shares held at December 31, 2007 have been reduced accordingly. (9) Under the financial year 2006 STDIP, paid in 2007, 80% of the bonus award was paid in shares and deferred for a full three- year period. Participants could also defer the remaining 20% of bonus on the same terms.

(10) The value of Stevan Porter’s shares at vesting includes £67,953 that was chargeable to UK income tax.

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Long Term Incentive Plan (“LTIP”) — previously called the Performance Restricted Share Plan In 2007, there were three cycles in operation and one cycle which vested. The awards made in respect of cycles ending on December 31, 2006, 2007, 2008 and 2009 and the maximum pre-tax number of ordinary shares due if performance targets are achieved in full are set out in the table below. In respect of the cycle ending on December 31, 2007, the Company finished in fourth place in the TSR group and achieved a relative cumulative annual rooms growth (“CAGR”) of 3.1%. Accordingly, 55.3% of the award vested on February 20, 2008.

Maximum Expected Maximum LTIP shares value value LTIP shares vested based on based on awarded during share share during Market the year Market Maximum price of price of Maximum the year price Jan 1, 2007 price Actual/ LTIP shares 884.0 pence 884.0 pence LTIP shares Jan 1, 2007 per share to per share Value planned held at at Dec 31, at Dec 31, held at to Dec 31, Award at award Dec 31, at vesting at vesting vesting Dec 31, 2007 2007 Directors Jan 1, 2007 2007 date (pence) 2007 (pence) (£) date 2007 (£) (£) Andrew Cosslett 136,432(1) 4.1.05 617.5 85,133 1249 1,063,311 2.21.07 — 276,200(2) 6.29.05 706 — 2.20.08 276,200 2,441,608 1,350,010(8) 200,740(3) 4.3.06 941.5 — 2.18.09 200,740 1,774,542 159,506(4) 4.2.07 1256 — 2.17.10 159,506 1,410,034 Total 636,446 5,626,184 Richard Hartman 165,130(1) 6.24.04 549.5 103,041 1249 1,286,982 2.21.07 — 214,870(2) 6.29.05 706 — 2.20.08 196,964(5) 1,741,162 962,863(8 ) 146,110(3) 4.3.06 941.5 — 2.18.09 85,230(5 ) 753,434 113,731(4) 4.2.07 1256 — 2.17.10 28,432(5 ) 251,339 Total 310,626 2,745,935 Stevan Porter 142,290(1) 6.24.04 549.5 88,788 1249 1,108,962(6) 2.21.07 — 174,900(2) 6.29.05 706 — 2.20.08 174,900 1,546,116 855,003(8 ) 132,240(3) 4.3.06 941.5 — 2.18.09 132,240 1,169,002 92,667(4 ) 4.2.07 1256 — 2.17.10 92,667 819,177 Total 399,807 3,534,295 Richard Solomons 144,990(1) 6.24.04 549.5 90,473 1249 1,130,008 2.21.07 — 176,550(2) 6.29.05 706 — 2.20.08 176,550 1,560,702 863,069(8 ) 128,470(3) 4.3.06 941.5 — 2.18.09 128,470 1,135,675 102,109(4) 4.2.07 1256 — 2.17.10 102,109 902,644 Total 407,129 3,599,021 Former Directors Richard North 144,993(1),(7) 6.24.04 549.5 90,475 1249 1,130,033 2.21.07 — Total —

(1) This award was based on performance to December 31, 2006 where the performance measure related to both the Company’s TSR against a group of eight 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 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. 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. (2) 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 seven other comparator companies and the cumulative annual growth rate (“CAGR”) of rooms in the IHG system relative to a group of five other comparator companies. The number of shares released is 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 median position; and b) relative CAGR with 50% of the award being released for 3.4% (upper quartile) CAGR and 10% of the award being released for 2.4% (median) CAGR.

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(3) 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 eight other comparator companies and the relative CAGR of rooms in the IHG system. (4) This award is based on performance to December 31, 2009 where the performance measure relates to both the Company’s TSR against a group of eight other comparator companies and the compound annual growth rate in earnings per share (“EPS”) over the performance period. (5) Richard Hartman’s awards were pro-rated to reflect his contractual service during the applicable performance periods. (6) The value of Stevan Porter’s shares at vesting includes £129,378 that was chargeable to UK income tax. (7) Richard North’s award was pro-rated to reflect his contractual service during the applicable performance period. (8) The Company finished in fourth place in the TSR group and achieved CAGR of 3.1%. Accordingly, 55.3% of the award vested on February 20, 2008.

Share options Between 2003 and 2005, grants of options were made under the IHG Executive Share Option Plan. No executive share options have been granted since 2005. In 2003, a grant of options was made under the IHG all-employee Sharesave Plan.

Weighted Ordinary shares under option average Granted Lapsed Exercised Options option Option Options held during during during held at price price Directors at Jan 1, 2007 the year the year the year Dec 31, 2007 (pence) (pence) Andrew Cosslett 157,300 B 157,300 619.83 Total 157,300 — — — 157,300 619.83 Richard Hartman 337,760 218,950 494.17 B 118,810 619.83 Total 337,760 — — 218,950 118,810 619.83 Stevan Porter 321,630 A 225,260 494.17 B 96,370 619.83 Total 321,630 — — — 321,630 531.82 Richard Solomons 334,639 A 230,320 494.17 B 100,550 619.83 C 3,769 420.50 Total 334,639 — — — 334,639 531.10

A Where options are exercisable at December 31, 2007. Executive share options granted in 2004 are exercisable up to April 2014. B Where options are not yet exercisable at December 31, 2007. Executive share options granted in 2005 are exercisable up to April 2015. The performance condition relating to the 2005 grant of executive share options is set out on page F-33. C Sharesave options granted in 2003. These are exercisable between March and September 2009. Option prices range from 420.50 pence to 619.83 pence per IHG share. The closing market value share price on December 31, 2007 was 884.00 pence and the range during the year was 873.50 pence to 1413.00 pence per share. No serving Director exercised options during the year; therefore there is no disclosable gain by Directors in aggregate for the year ended December 31, 2007 (2006 £6,662,750). Richard Hartman was a Director until his retirement on September 25, 2007. He subsequently exercised options at an option price of 494.17 pence per share. The market value share price on exercise was 911.78 pence per share.

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Directors’ shareholdings December 31, 2007 January 1, 2007 InterContinental Hotels Group PLC InterContinental Hotels Group PLC ordinary shares of 1329/47 pence(2) ordinary shares of 113/7 pence(1) Executive Directors Andrew Cosslett 133,101 42,063 Stevan Porter 168,162 114,446 Richard Solomons 156,810 104,247 Non-Executive Directors David Kappler 1,400 1,669 Ralph Kugler 1,169 572 Jennifer Laing 1,404 875 Robert C Larson 10,269(3 ) 6,874(3 ) Jonathan Linen 7,343(3 ) 8,750(3 ) Sir David Prosser 2,402 2,863 David Webster 31,938 31,975 Ying Yeh — —

(1) These share interests were in InterContinental Hotels Group PLC 11 3/7 pence ordinary shares prior to the share consolidation effective from June 4, 2007. For every 56 existing InterContinental Hotels Group PLC shares held on June 1, 2007, shareholders received 47 new ordinary shares of 13 29/47 pence each and 200 pence per existing ordinary share. (2) 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. (3) Held in the form of American Depositary Receipts.

Directors’ pensions The following information relates to the pension arrangements provided for Messrs Cosslett, Hartman and Solomons under the executive section of the InterContinental Hotels UK Pension Plan (“the IC Plan”) and the unfunded InterContinental Executive Top-Up Scheme (“ICETUS”). The executive section of the IC Plan is a funded, registered, final salary, occupational pension scheme. The main features applicable to the Executive Directors are: a normal pension age of 60; pension accrual of 1/30th of final pensionable salary for each year of pensionable service; life assurance cover of four times pensionable salary; pensions payable in the event of ill health; and spouses’, partners’ and dependants’ pensions on death. When benefits would otherwise exceed a member’s lifetime allowance under the post- April 2006 pensions regime, these benefits are limited in the IC Plan, but the balance is provided instead by ICETUS. Richard Hartman, who reached the IC Plan normal pension age of 60 on January 30, 2006, ceased to be an active member of the IC Plan and ICETUS with effect from that date, and, up to his retirement on September 25, 2007, instead participated in the InterContinental Hotels Group International Savings and Retirement Plan (“IS&RP”), which is a Jersey-based defined contribution plan to which the Company contributes. Stevan Porter has retirement benefits provided via the 401(k) Retirement Plan for employees of Six Continents Hotels Inc. (“401(k)”) and the Six Continents Hotels Inc. Deferred Compensation Plan (“DCP”). The 401(k) is a tax qualified plan providing benefits on a defined contribution basis, with the member and the relevant company both contributing. The DCP is a non-tax qualified plan, providing benefits on a defined contribution basis, with the member and the relevant company both contributing.

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Directors’ pension benefits

Increase/ (decrease) in transfer value Increase/ Increase/ Directors’ Transfer value of over the year, (decrease) in (decrease) Accrued contributions accrued benefits less Directors’ accrued in accrued pension at Age at in the year(1) Jan 1, 2007 Dec 31, 2007 contributions pension(2) pension(3) Dec 31, 2007(4) Directors Dec 31, 2007 (£) (£) (£) (£) (£ pa) (£ pa) (£ pa) Andrew Cosslett 52 34,400 595,300 1,184,200 554,500 27,100 25,300 70,900 Richard Hartman 61 — 1,935,400 1,812,600 (122,800 ) (19,300 ) (23,300) 75,400(5 ) Richard Solomons 46 22,000 1,470,500 2,371,600 879,100 24,900 18,700 168,700

(1) Contributions paid in the year by the Directors under the terms of the plans. Contributions have been 5% of full pensionable salary.

(2) The absolute increase or decrease in accrued pension during the year.

(3) The increase or decrease in accrued pension during the year, excluding any increase for inflation, on the basis that increases or decreases to accrued pensions are applied at October 1.

(4) Accrued pension is that which would be paid annualy on retirement at 60, based on service to December 31, 2007.

(5) When Richard Hartman retired on September 25, 2007, his pension was £97,600 per annum pre-commutation. He took a tax- free cash sum of £385,400, leaving a residual pension of £75,400 per annum. The figures shown in the above table relate to the final salary plans only. For defined contribution plans, the contributions made by and in respect of Stevan Porter during the year are:

Director’s contribution to Company contribution to DCP 401(k) DCP 401(k) (£) (£) (£) (£) Stevan Porter 105,000 5,600 74,700 4,500 The Company contributions made in respect of Richard Hartman to the IS&RP during the year were £159,300. He made no contributions.

Note 4 — Auditor’s Remuneration paid to Ernst & Young LLP

Year ended December 31, 2007 2006 2005 (£ million) Audit fees 0.8 0.9 1.0 Audit fees in respect of subsidiaries 1.3 1.4 2.1 Tax fees 0.4 0.7 0.6 Fees in respect of reporting under Sarbanes Oxley Act 0.6 1.0 — Interim review fees 0.2 0.2 0.2 Other services pursuant to legislation 0.1 0.1 0.8 Corporate finance fees — 0.1 1.8 Other 1.2 0.8 0.7 4.6 5.2 7.2

Audit fees in respect of the pension scheme were not material. The Audit Committee has a process to ensure that any non-audit services do not compromise the independence and objectivity of the external auditor and that relevant United Kingdom and United States professional and regulatory requirements are met. A number of criteria are applied when deciding whether pre-approval for such services should be given. These include the nature of the service, the level of fees, and the practicality of appointing an alternative provider, having regard to the skills and experience required to supply the service effectively. Cumulative fees for audit and non-audit services are presented to the Audit Committee on a quarterly basis for review. The Audit Committee is responsible for monitoring adherence to the pre-approval policy.

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Note 5 — Exceptional Items

Year ended December 31, 2007 2006 2005 (£ million) Continuing operations Exceptional operating items Gain on sale of associate investments* 11 — — Gain on sale of investments in FelCor Lodging Trust, Inc.* — 25 — Gain on sale of other financial assets* 18 — — Reversal of previously recorded impairment* 3 2 — Office reorganizations(i) (2 ) — — Restructuring costs*(ii) — — (13 ) Property damage*(iii) — — (9 ) Employee benefits curtailment gain*(iv) — — 7 30 27 (15 ) Tax Tax charge on exceptional operating items — (6 ) — Exceptional tax credit(v) 30 100 8 30 94 8 60 121 (7 )

Discontinued operations Exceptional operating items Impairment of property, plant and equipment(vi) — — (7 ) Gain on disposal of assets Gain on disposal of assets 20 123 349 Tax charge (4 ) (6 ) (38 ) 16 117 311 16 117 304

* Included within other operating income and expenses.

The above items are treated as exceptional by reason of their size or nature.

Profit on sale and leaseback of new head office less costs incurred to date on the office move and closure of the Company’s Aylesbury facility. Costs will continue to be incurred during the first half of 2008. Costs of £7 million are included in (i) administrative expenses and £1 million in depreciation and amortization. Income of £6 million is included in other operating income and expenses. (ii) Restructuring costs relate to the delivery of the further restructuring of the Hotels business. (iii) Damage to properties resulting from fire and natural disasters. (iv) A curtailment gain arising as a result of the sale of UK hotel properties. The exceptional tax credit relates to the release of provisions which are exceptional by reason of their size or nature relating to (v) tax matters which have been settled or in respect of which the relevant statutory limitation period has expired, together with, in 2006, a credit in respect of previously unrecognized losses. (vi) Property, plant and equipment were written down by £7 million in 2005 following an impairment review of the hotel estate.

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Note 6 — Finance costs

Year ended December 31, 2007 2006 2005 (£ million) Financial income Interest income 8 21 28 Fair value gains 1 5 2 9 26 30 Financial expenses Interest expense — Hotels 45 33 51 Interest expense — Soft Drinks — — 9 Finance charge payable under finance leases 9 4 — 54 37 60 Fair value charge — — 3 54 37 63

Interest income and expense relate to financial assets and liabilities held at amortized cost, calculated using the effective interest rate method. Included within the Hotels interest expense is £10 million (2006 £10 million, 2005 £5 million) payable to the Company’s loyalty program relating to interest on the accumulated balance of cash received in advance of the redemption of points awarded.

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Note 7 — Tax Income tax

Year ended December 31, 2007 2006 2005 (£ million) UK corporation tax at 30% (2006 30%, 2005 30%): Current period 23 16 11 Benefit of tax reliefs on which no deferred tax previously recognized (1 ) (10 ) — Adjustments in respect of prior periods (16 ) (4 ) (6 ) 6 2 5 Foreign tax: Current period 100 72 149 Benefit of tax reliefs on which no deferred tax previously recognized (8 ) (1 ) (2 ) Adjustments in respect of prior periods (50 ) (94 ) (19 ) 42 (23 ) 128 Total current tax 48 (21 ) 133 Deferred tax: Origination and reversal of temporary differences (34 ) 27 (3 ) Changes in tax rates (2 ) (4 ) (2 ) Adjustments to estimated recoverable deferred tax assets 3 (13 ) 1 Adjustments in respect of prior periods 4 (24 ) (11 ) Total deferred tax (29 ) (14 ) (15 ) Total income tax charge/(credit) on profit for the year 19 (35 ) 118 Further analyzed as tax relating to: Profit before exceptional items 45 53 88 Exceptional items (Note 5): Exceptional operating items — 6 — Exceptional tax credit(i) (30 ) (100) (8 ) Gain on disposal of assets 4 6 38 19 (35 ) 118 The total tax charge/(credit) can be further analyzed as relating to: Profit on continuing operations 12 (53 ) 22 Profit on discontinued operations 3 12 58 Gain on disposal of assets 4 6 38 19 (35 ) 118

(i) Represents the release of provisions which are exceptional by reason of their size or nature relating to tax matters which have been settled or in respect of which the relevant statutory limitation period has expired, together with, in 2006, a credit in respect of previously unrecognized losses.

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

Year ended December 31, 2007 2006 2005 (%) UK corporation tax at standard rate 30.0 30.0 30.0 Permanent differences 5.6 3.7 1.3 Net effect of different rates of tax in overseas businesses 1.8 3.5 2.9 Effect of changes in tax rates (1.0 ) (1.0 ) (0.3 ) Benefit of tax reliefs on which no deferred tax previously recognized (3.3 ) (3.0 ) (0.1 ) Effect of adjustments to estimated recoverable deferred tax assets 1.3 (0.2 ) 0.1 Adjustment to tax charge in respect of prior periods (11.0) (6.9 ) (4.5 ) Other 0.4 0.4 (0.1 ) Exceptional items and gain on disposal of assets (16.3) (36.1) (10.7) 7.5 (9.6 ) 18.6

Tax paid Total tax paid during the year of £69 million (2006 £49 million, 2005 £91 million) comprises £37 million (2006 £43 million, 2005 £80 million) in respect of operating activities and £32 million (2006 £6 million, 2005 £11 million) in respect of investing activities.

Note 8 — Dividends paid and proposed

Year ended December 31, 2007 2006 2005 2007 2006 2005 (pence per share) (£ million) Paid during the year: Final (declared in previous year) 13.3 10.7 10.0 47 46 61 Interim 5.7 5.1 4.6 17 18 20 Special interim 200.0 118.0 — 709 497 — 219.0 133.8 14.6 773 561 81

Proposed for approval at the Annual General Meeting (not recognized as a liability at December 31): Final 14.9 13.3 10.7 44 47 46

The proposed final dividend is payable on the shares in issue at March 28, 2008.

Note 9 — Earnings per ordinary share Basic earnings per ordinary share is calculated by dividing the profit for the year available for IHG equity holders by the weighted average number of ordinary shares, excluding investment in own shares, in issue during the year. Diluted earnings per ordinary share is calculated by adjusting basic earnings per ordinary share to reflect the notional exercise of the weighted average number of dilutive ordinary share options outstanding during the year. On June 1, 2007, shareholders approved a share capital consolidation on the basis of 47 new ordinary shares for every 56 existing ordinary shares, together with a special dividend of 200 pence per existing ordinary share. The overall effect of the transaction was that of a share repurchase at fair value, therefore no adjustment has been made to comparative data. Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by exceptional items, to give a more meaningful comparison of the Company’s performance.

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Year ended December 31, 2007 2006 2005 Continuing Continuing Continuing operations Total operations Total operations Total Basic earnings per share Profit available for equity holders (£ million) 210 231 269 405 114 496 Basic weighted average number of ordinary shares (millions) 320 320 389 389 521 521 Basic earnings per share (pence) 65.6 72.2 69.1 104.1 21.9 95.2 Diluted earnings per share Profit available for equity holders (£ million) 210 231 269 405 114 496 Diluted weighted average number of ordinary shares (millions) 329 329 399 399 533 533 Diluted earnings per share (pence) 63.8 70.2 67.4 101.5 21.4 93.1

2007 2006 2005 (millions) Diluted weighted average of ordinary shares is calculated as: Basic weighted average number of ordinary shares 320 389 521 Dilutive potential ordinary shares — employee share options 9 10 12 329 399 533

Year ended December 31, 2007 2006 2005 Continuing Continuing Continuing operations Total operations Total operations Total Adjusted earnings per share Profit available for equity holders (£ million) 210 231 269 405 114 496 Less adjusting items (Note 5): Exceptional operating items (£ million) (30 ) (30 ) (27 ) (27 ) 15 15 Tax on exceptional operating items (£ million) — — 6 6 — — Exceptional tax credit (£ million) (30 ) (30 ) (100 ) (100) (8 ) (8 ) Impairment of property, plant and equipment (£ million) — — — — — 7 Gain on disposal of assets, net of tax (£ million) — (16 ) — (117) — (311) Adjusted earnings (£ million) 150 155 148 167 121 199 Basic weighted average number of ordinary shares (millions) 320 320 389 389 521 521 Adjusted earnings per share (pence) 46.9 48.4 38.0 42.9 23.2 38.2

Adjusted earnings (£ million) 150 155 148 167 121 199 Diluted weighted average number of ordinary shares (millions) 329 329 399 399 533 533 Adjusted diluted earnings per share (pence) 45.6 47.1 37.1 41.8 22.7 37.3

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Note 10 — Property, Plant and Equipment

Land Fixtures, and fittings and buildings equipment Total (£ million) Year ended December 31, 2006 Cost: At January 1, 2006 1,155 615 1,770 Additions 104 82 186 Transfers to non-current assets classified as held for sale (363 ) (118 ) (481 ) Disposals (2 ) (31 ) (33 ) Exchange and other adjustments (73 ) (42 ) (115 ) At December 31, 2006 821 506 1,327 Depreciation: At January 1, 2006 (101 ) (313 ) (414 ) Provided (7 ) (41 ) (48 ) Transfers to non-current assets classified as held for sale 17 55 72 On disposals 2 28 30 Exchange and other adjustments 7 23 30 At December 31, 2006 (82 ) (248 ) (330 ) Net book value at December 31, 2006 739 258 997 Year ended December 31, 2007 Cost: At January 1, 2007 821 506 1,327 Additions 5 49 54 Reclassifications 15 (20 ) (5 ) Net transfers to non-current assets classified as held for sale (38 ) (44 ) (82 ) Disposals (7 ) (19 ) (26 ) Exchange and other adjustments 3 3 6 At December 31, 2007 799 475 1,274 Depreciation: At January 1, 2007 (82 ) (248 ) (330 ) Provided (6 ) (33 ) (39 ) Net transfers to non-current assets classified as held for sale 17 15 32 Reversal of impairment — 3 3 On disposals 7 18 25 Exchange and other adjustments — (3 ) (3 ) At December 31, 2007 (64 ) (248 ) (312 ) Net book value at December 31, 2007 735 227 962

At December 31, 2007 a previously recorded impairment charge of £3 million was reversed following an impairment review of hotel assets based on current market conditions. No impairment charge, or subsequent reversal, was required at December 31, 2006. The carrying value of land and buildings held under finance leases at December 31, 2007 was £104 million (2006 £93 million).

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Note 11 — Held for Sale and Discontinued Operations Hotels During the year ended December 31, 2007, the Company sold three hotels (2006 32 hotels, 2005 112 hotels) and two associates (2006 nil, 2005 nil), continuing the asset disposal program commenced in 2003. An additional three hotels were classified as held for sale during the year, whilst one hotel previously classified as held for sale was reclassified as property, plant and equipment. At December 31, 2007, three hotels (2006 four hotels and two associates, 2005 26 hotels) were classified as held for sale. At December 31, 2006, an impairment loss of £3 million was recognized on the remeasurement of a property that was classified as held for sale. The loss, which reduced the carrying amount of the asset to fair value less costs to sell, was recognized in the income statement in gain on disposal of assets. Fair value was determined by an independent property valuation. No impairment losses have been recognized at December 31, 2007.

Year ended December 31, 2007 2006 2005 (£ million) Net assets of hotels sold Property, plant and equipment 35 648 1,961 Goodwill — — 20 Net working capital 1 (22 ) 1 Cash and cash equivalents — 31 16 Loans and other borrowings — (10 ) — Deferred tax — (117) (121 ) Minority equity interest (6 ) (13 ) — Company’s share of net assets disposed of 30 517 1,877 Consideration Current year disposals: Cash consideration, net of costs paid 47 628 1,832 Deferred consideration — 10 40 Management contract value 3 30 82 Other — (14 ) (12 ) 50 654 1,942 Net assets disposed of (30) (517) (1,877) Provision against deferred consideration — (10 ) — Other, including impairment of held for sale asset — (4 ) — Tax (4 ) (6 ) (38 ) Gain on disposal of assets, net of tax(i) 16 117 27 Net cash inflow Current year disposals: Cash consideration, net of costs paid 47 628 1,832 Cash disposed of — (31 ) (16 ) Prior year disposals 2 23 — 49 620 1,816 Assets and liabilities held for sale Non-current assets classified as held for sale: Property, plant and equipment 57 40 279 Associates — 10 — 57 50 279 Liabilities classified as held for sale: Deferred tax (3 ) (2 ) (34 ) (i) Reported within discontinued operations.

Soft Drinks During December 2005, the Company disposed of all of its interests in the Soft Drinks business with the initial public offering of Britvic plc.

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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, 2007 2006 2005 (£ million) Cash flows attributable to discontinued operations Hotels Operating profit before interest, depreciation and amortization 10 40 127 Investing activities (1 ) (9 ) (59 ) Financing activities — (25) (16 ) Soft Drinks Operating profit before interest, depreciation and amortization — — 115 Investing activities — — (47 ) Financing activities — — 162

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Year ended December 31, 2007 2006 2005 (£ million) Results of discontinued operations Revenue 40 174 1,213 Cost of sales (30) (134) (897 ) Administrative expenses — — (74 ) 10 40 242 Depreciation and amortization (2 ) (9 ) (78 ) Operating profit before exceptional operating items 8 31 164 Exceptional operating items — — (7 ) Operating profit 8 31 157 Financial expenses — — (9 ) Profit before tax 8 31 148 Tax (3 ) (12 ) (58 ) Profit after tax 5 19 90 Gain on disposal of assets, net of tax (Note 5) 16 117 311 Profit for the year from discontinued operations 21 136 401 Attributable to: Equity holders of the parent 21 136 382 Minority equity interest — — 19 21 136 401

2007 2006 2005 Pence Pence Pence per share per share per share Earnings per share from discontinued operations Basic 6.6 35.0 73.3 Diluted 6.4 34.1 71.7 The effect of discontinued operations on segmental results is shown in Note 2.

Note 12 — Goodwill

At December 31, 2007 2006 (£ million) At January 1 109 118 Acquisition of subsidiary (Note 31) — 2 Exchange and other adjustments 1 (11 ) At December 31 110 109

Goodwill arising on business combinations that occurred before January 1, 2005 was not restated on adoption of IFRS as permitted by IFRS 1.

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Goodwill has been allocated to cash-generating units (“CGUs”) for impairment testing as follows:

At December 31, 2007 2006 (£ million) Americas managed operations 70 72 Asia Pacific managed and franchised operations 40 37 110 109

The Company tests goodwill for impairment annualy, or more frequently if there are any indications that an impairment may have arisen. The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding discount rates and growth rates. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. Growth rates are based on management expectations and industry growth forecasts. The growth rates used to determine cash flows beyond five years do not exceed the average long-term growth rate for the relevant markets.

Americas managed operations The Company prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next year and extrapolates cash flows for the following four years based on an estimated growth rate of 4.0% (2006 4.0%, 2005 4.0%). After this period, the terminal value of future cash flows is calculated based on a perpetual growth rate of approximately 2.7% (2006 3.0%, 2005 3.0%). The rate used to discount the forecast cash flows is 10.0% (2006 10.5%, 2005 10.5%).

Asia Pacific managed and franchised operations The Company prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next year and extrapolates cash flows for the following four years based on an estimated growth rate of 15.0% (2006 15.0%, 2005 15.0%). After this period, the terminal value of future cash flows is calculated based on a perpetual growth rate of approximately 4.0% (2006 4.0%, 2005 4.0%). The rate used to discount the forecast cash flows is 11.0% (2006 11.0%, 2005 11.0%). With regard to the assessment of value in use, management believe that the carrying values of the CGUs would only exceed their recoverable amounts in the event of highly unlikely changes in the key assumptions.

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Note 13 — Intangible assets

Management Other Software contracts intangibles Total (£ million) Year ended December 31, 2006 Cost: At January 1, 2006 38 84 28 150 Additions 10 30 13 53 Acquisition of subsidiary (note 31) 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 Year ended December 31, 2007 Cost: At January 1, 2007 43 117 36 196 Additions 13 5 7 25 Reclassifications 5 — — 5 Disposals — — (1 ) (1 ) Exchange and other adjustments (1 ) 2 — 1 At December 31, 2007 60 124 42 226 Amortization: At January 1, 2007 (23 ) (7 ) (12 ) (42 ) Provided (9 ) (6 ) (4 ) (19 ) Disposals — — 1 1 Exchange and other adjustments 1 — — 1 At December 31, 2007 (31 ) (13 ) (15 ) (59 ) Net book value at December 31, 2007 29 111 27 167

The weighted average remaining amortization period for management contracts is 24 years (2006 24 years).

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Note 14 — Investments in associates The Company holds seven investments (2006 six) accounted for as associates. The following table summarizes the financial information of the associates.

At At December 31, December 31, 2007 2006 (£ million) Share of associates’ balance sheet Current assets 3 2 Non-current assets 52 50 Current liabilities (8 ) (5 ) Non-current liabilities (14 ) (15 ) Net assets 33 32 Share of associates’ revenue and profit Revenue 16 22 Net profit 1 2 Related party transactions Revenue from related parties 3 4 Amounts owed by related parties 1 1

Note 15 — Other Financial Assets

At At December 31, December 31, 2007 2006 (£ million) Non-current Equity securities available-for-sale 46 48 Other 47 48 93 96 Current Equity securities available-for-sale — 9 Derivatives — 4 Other 9 — 9 13

Available-for-sale financial assets, which are held on the balance sheet at fair value, consist of equity investments in listed and unlisted shares. Of the total amount of equity investments at December 31, 2007, £2 million (2006 £nil) were listed securities and £44 million (2006 £57 million) unlisted; £28 million (2006 £27 million) were denominated in US dollars, £8 million (2006 £11 million) in Hong Kong dollars and £10 million (2006 £19 million) in other currencies. Unlisted equity shares are mainly investments in entities that own hotels which the Company manages. The fair value of unlisted equity shares has been estimated using valuation guidelines issued by the British Venture Capital Association and is based on assumptions regarding expected future earnings. Listed equity share valuation is based on observable market prices. Dividend income from available-for-sale equity securities of £8 million (2006 £4 million) is reported as other operating income and expenses in the consolidated income statement. Other financial assets consist of trade deposits, restricted cash and deferred consideration on asset disposals. These amounts have been designated as “loans and receivables” and are held at amortized cost. Restricted cash of £27 million (2006 £25 million) relates to cash held in bank accounts which is pledged as collateral to insurance companies for risks retained by the Company.

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Derivatives, including those within trade and other payables, are held on the balance sheet at fair value. Fair value is estimated using discounted future cash flows taking into consideration interest and exchange rates prevailing at the balance sheet date. The movement in the provision for impairment of other financial assets during the year is as follows:

At At December 31, December 31, 2007 2006 (£ million) At January 1, (21 ) (16 ) Provided and charged to gain on disposal of assets — (10 ) Recoveries 2 3 Disposals 3 — Amounts written off against the financial asset 12 1 Exchange and other adjustments — 1 At December 31, (4 ) (21 )

The provision is used to record impairment losses unless the Company is satisfied that no recovery of the amount is possible; at that point the amount considered irrecoverable is written off against the financial asset directly with no impact on the income statement.

Note 16 — Inventories

At At December 31, December 31, 2007 2006 (£ million) Finished goods 1 1 Consumable stores 2 2 3 3

Note 17 — Trade and other receivables

At At December 31, December 31, 2007 2006 (£ million) Trade receivables 180 163 Other receivables 29 51 Prepayments 26 23 235 237

Trade and other receivables are designated as ‘‘loans and receivables’’ and are held at amortized cost. Trade receivables are non-interest bearing and are generally on payment terms of up to 30 days. The fair value of trade and other receivables approximates their carrying value.

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The maximum exposure to credit risk for trade and other receivables, excluding prepayments, at the balance sheet date by geographic region is:

At At December 31, December 31, 2007 2006 (£ million) Americas 115 105 Europe, the Middle East and Africa 70 78 Asia Pacific 24 31 209 214

The aging of trade and other receivables, excluding prepayments, at the balance sheet date is:

At December 31, 2007 At December 31, 2006 Gross Provision Net Gross Provision Net (£ million) Not past due 141 (1 ) 140 118 — 118 Past due 1 to 30 days 37 (1 ) 36 62 (1 ) 61 Past due 31 to 180 days 39 (8 ) 31 49 (16 ) 33 More than 181 days 40 (38 ) 2 28 (26 ) 2 257 (48 ) 209 257 (43 ) 214

The movement in the provision for impairment of trade and other receivables during the year is as follows:

At At December 31, December 31, 2007 2006 (£ million) At January 1, (43 ) (47 ) Provided (12 ) (16 ) Amounts written off 6 15 Exchange and other adjustments 1 5 At December 31, (48 ) (43 )

Note 18 — Cash and cash equivalents

At At December 31, December 31, 2007 2006 (£ million) Cash at bank and in hand 26 30 Short-term deposits 26 149 52 179

Short-term deposits are highly liquid investments with an original maturity of three months or less, in various currencies.

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Note 19 — Trade and other payables

At At December 31, December 31, 2007 2006 (£ million) Current Trade payables 49 47 Other tax and social security payable 19 26 Other payables 172 190 Accruals 148 139 Derivatives 2 — 390 402 Non-current Other payables 139 109

Trade payable are non-interest bearing and are normally settled within 45 days. Other payables includes £212 million (2006 £180 million) relating to the future redemption liability of the Company’s loyalty program, of which £84 million (2006 £83 million) is classified as current and £128 million (2006 £97 million) as non-current.

Note 20 — Loans and other borrowings

At December 31, 2007 At December 31, 2006 Current Non-current Total Current Non-current Total (£ million) Secured bank loans — 3 3 4 3 7 Finance leases 8 92 100 3 94 97 Unsecured bank loans — 774 774 3 206 209 Total borrowings 8 869 877 10 303 313 Denominated in the following currencies: Pounds sterling — 275 275 — 102 102 US dollars 8 425 433 10 145 155 Euro — 121 121 — 54 54 Other — 48 48 — 2 2 8 869 877 10 303 313

Secured bank loans These mortgages are secured on the hotel properties to which they relate. The rates of interest and currencies of these loans vary.

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Finance leases Finance lease obligations, which relate to the 99 year lease on the InterContinental Boston, are payable as follows:

At December 31, 2007 At December 31, 2006 Minimum Present Minimum Present lease value of lease value of payments payments payments payments (£ million) Less than one year 8 8 3 3 Between one and five years 32 24 33 24 More than five years 1,689 68 1,745 70 1,729 100 1,781 97 Less amount representing finance charges (1,629 ) — (1,684 ) — 100 100 97 97

The Company has the option to extend the term of the lease for two additional 20 year terms. Payments under the lease step up at regular intervals over the lease term.

Unsecured bank loans Unsecured bank loans are borrowings under the Company’s 2009 £1.1 billion Syndicated Facility and its short-term bilateral loan facilities. Amounts are classified as non-current when the facilities have more than 12 months to expiry. These facilities contain financial covenants and as at the balance sheet date the Company was not in breach of the covenants, nor had any breaches or defaults occurred during the year.

Facilities provided by banks

At December 31, 2007 At December 31, 2006 Utilized Unutilized Total Utilized Unutilized Total (£ million) Committed 777 377 1,154 213 944 1,157 Uncommitted — 25 25 3 36 39 777 402 1,179 216 980 1,196

At December 31, 2007 2006 (£ million) Unutilized facilities expire: within one year 75 86 after one but before two years 327 — after two years — 894 402 980

Note 21 — Financial risk management policies Overview The Company’s treasury policy is to manage financial risks that arise in relation to underlying business needs. The activities of the treasury function are carried out in accordance with Board approved policies and are subject to regular audit. The treasury function does not operate as a profit center.

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The treasury function seeks to reduce the financial risk of the Company and manages liquidity to meet all foreseeable cash needs. Treasury activities include money market investments, spot and forward foreign exchange instruments, currency options, currency swaps, interest rate swaps and options and forward rate agreements. One of the primary objectives of the Company’s treasury risk management policy is to mitigate the adverse impact of movements in interest rates and foreign exchange rates.

Market risk exposure The US dollar is the predominant currency of the Company’s revenue and cash flows. Movements in foreign exchange rates, particularly the US dollar and euro can affect the Company’s reported profit, net assets and interest cover. To hedge this translation exposure the Company matches the currency of its debt (either directly or via derivatives) to the currency of its net assets, whilst maximising the amount of US dollars borrowed. Foreign exchange transaction exposure is managed by the forward purchase or sale of foreign currencies or the use of currency options. Most significant exposures of the Company are in currencies that are freely convertible. Interest rate exposure is managed within parameters that stipulate that fixed rate borrowings should normally account for no less than 25% and no more than 75% of net borrowings for each major currency. This is achieved through the use of interest rate swaps and options and forward rate agreements. Based on the year end net debt position and given the underlying maturity profile of investments, borrowings and hedging instruments at that date, a one percentage point rise in US dollar interest rates would increase the annual net interest charge by approximately £2.9 million (2006 £1.4 million, 2005 £1.3 million). A similar rise in euro and sterling interest rates would increase the annual net interest charge by approximately £0.6 million (2006 £0.4 million, 2005 £4.0 million) and £1.6 million (2006 £1.0 million, 2005 £nil) respectively. A general weakening of the US dollar (specifically a five cent rise in the sterling : US dollar rate) would reduce the Company’s profit before tax by an estimated £4.2 million (2006 £4.9 million, 2005 £6.0 million) and increase net assets by an estimated £4.4 million (2006 £2.6 million, 2005 £nil). Similarly, a general weakening of the euro (specifically a five cent rise in the sterling: euro rate) would reduce the Company’s profit before tax by an estimated £0.8 million (2006 £0.9 million, 2005 increase of £0.1 million) and decrease net assets by an estimated £3.0 million (2006 £4.0 million, 2005 £5.5 million).

Liquidity risk exposure The treasury function ensures that the Company has access to sufficient funds to allow the implementation of the strategy set by the Board. At the year end, the Company had access to £377 million of undrawn committed facilities. Medium and long-term borrowing requirements are met through the £1.1 billion Syndicated Facility and short-term borrowing requirements are met from drawings under bilateral bank facilities. The Company is in compliance with all of the financial covenants in its loan documents, none of which is expected to present a material restriction on funding or investment policy in the near future. At the year end, the Company had surplus cash of £52 million which is held in short-term deposits and cash funds which allow daily withdrawals of cash. Most of the Company’s surplus funds are held in the United Kingdom or United States and there are no material funds where repatriation is restricted as a result of foreign exchange regulations.

Credit risk exposure Credit risk on treasury transactions is minimized by operating a policy on the investment of surplus cash that generally restricts counterparties to those with an A credit rating or better or those providing adequate security. The Company trades only with recognized, creditworthy third parties. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In respect of credit risk arising from financial assets, the Company’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

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Capital risk management The Company manages its capital to ensure that it will be able to continue as a going concern. The capital structure consists of net debt, issued share capital and reserves. The structure is managed to minimize the Company’s cost of capital, to provide ongoing returns to shareholders and to service debt obligations, whilst maintaining maximum operational flexibility. Surplus cash is either reinvested in the business, used to repay debt or returned to shareholders. The Group maintains a conservative level of debt. The level of debt is monitored on the basis of a cashflow leverage ratio, which is net debt divided by EBITDA. Net debt is calculated as total borrowings less cash and cash equivalents. EBITDA is earnings before interest, tax, depreciation and amortization.

Hedging Interest rate risk The Company hedges its interest rate risk by taking out interest rate swaps to fix the interest flows on between 25% and 75% of its net borrowings in major currencies. At December 31, 2007, the Company held interest rate swaps with notional principals of US $100 million and £150 million and €75 million (2006 US $100 million, €80 million). The interest rate swaps are designated as cash flow hedges of borrowings under the syndicated loan facility and they are held on the balance sheet at fair value in other financial assets and other payables. Changes in the fair value of cash flow hedges are recognized in the unrealized gains and losses reserve to the extent that the hedges are effective. When the hedged item is recognized, the cumulative gains and losses on the hedging instrument are recycled to the income statement. No ineffectiveness was recognized during the current or prior year.

Foreign currency risk The Company is exposed to foreign currency risk on income streams denominated in foreign currencies. When appropriate, the Company hedges a portion of forecast foreign currency income by taking out forward exchange contracts. The designated risk is the spot foreign exchange risk. Forward contracts are held at fair value on the balance sheet as other financial assets and other payables. During the year, a £nil (2006 £3 million, 2005 £nil) foreign exchange gain was recognized in financial income, relating to gains on forward contracts that were not classified as hedging instruments under IAS 39.

Hedge of net investment in foreign operations The Company designates its foreign currency bank borrowings and currency derivatives as net investment hedges of foreign operations. The designated risk is the spot foreign exchange risk; the interest on these financial instruments is taken through financial income or expense and the derivatives are held on the balance sheet at fair value in other financial assets and other payables. Hedge effectiveness is measured at calendar quarter ends. Variations in fair value due to changes in the underlying exchange rates are taken to the currency translation reserve until an operation is sold, at which point the cumulative currency gains and losses are recycled against the gain or loss on sale. No ineffectiveness was recognized on net investment hedges during the current or prior year. At December 31, 2007, the Company held foreign exchange derivatives with a principal of £6 million (2006 £220 million) and a fair value of £nil (2006 £3.5 million). The maximum amount of foreign exchange derivatives held during the year as net investment hedges and measured at calendar quarter ends had a principal of £272 million (2006 £220 million) and a fair value of £1.6 million (2006 £3.5 million).

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Note 22 — Financial Instruments Liquidity risk The following are the undiscounted contractual cash flows of financial liabilities, including interest payments.

Less than Between 1 and Between 2 and More than December 31, 2007 1 year 2 years 5 years 5 years Total (£ million) Secured bank loans 1 1 4 — 6 Finance lease obligations 8 8 24 1,689 1,729 Unsecured bank loans 781 — — — 781 Trade and other payables 388 64 50 55 557 Derivatives 6 — — — 6

Less than Between 1 and Between 2 and More than December 31, 2006 1 year 2 years 5 years 5 years Total (£ million) Secured bank loans 4 1 5 — 10 Finance lease obligations 3 8 25 1,745 1,781 Unsecured bank loans 214 — — — 214 Trade and other payables 402 47 36 53 538 Derivatives 57 — — — 57

Cash flows relating to unsecured bank loans are classified according to the maturity date of the loan drawdown rather than the facility maturity date.

Credit risk The carrying amount of financial assets represents the maximum exposure to credit risk.

At At December 31, December 31, 2007 2006 (£ million) Equity securities available-for-sale 46 57 Loans and receivables: Cash and cash equivalents 52 179 Other financial assets 56 48 Trade and other receivables excluding prepayments 209 214 Derivatives — 4 363 502

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Interest rate risk For each class of interest bearing financial asset and financial liability, the following table indicates the range of interest rates effective at the balance sheet date, the carrying amount on the balance sheet and the periods in which they reprice, if earlier than the maturity date.

Repricing analysis Total Between Between Effective carrying Less than 6 months 1 and 2 More than As at December 31, 2007interest rate amount 6 months and 1 year years 5 years (%) (£ million) Cash and cash equivalents 0.0-5.9 (52 ) (52 ) — — — Secured bank loans 8.2 3 3 — — — Finance lease obligations* 9.7 100 — — — 100 Unsecured bank loans: Euro floating rate 5.3 121 121 — — — — effect of euro interest rate swaps* (0.6 ) — (55 ) — 55 — US dollar floating rate 5.5 333 333 — — — — effect of US dollar interest rate swaps* (0.4 ) — (50 ) 50 — — Sterling floating rate 6.9 275 275 — — — — effect of sterling interest rate swaps 0.0 — (75 ) — 75 — HK dollar floating rate 4.5 45 45 — — — Net debt 825 545 50 130 100

* These items bear interest at a fixed rate.

Repricing analysis Total Between Between Effective carrying Less than 6 months 1 and 2 More than As at December 31, 2006interest rate amount 6 months and 1 year years 5 years (%) (£ million) Cash and cash equivalents 0.0-5.2 (179 ) (179 ) — — — Secured bank loans 8.5 7 7 — — — Finance lease obligations* 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. Interest rate swaps are included in the above tables to the extent that they effect the Company’s interest rate repricing risk. The swaps hedge the floating rate debt by fixing the interest rate. The effect shown above is their

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impact on the debt’s floating rate, for an amount equal to their notional principal (principal and maturity of swap is shown in repricing analysis). The fair values of derivatives are recorded in other financial assets and other payables. Trade and other receivables and trade and other payables are not included above as they are not interest bearing.

Fair values The table below compares carrying amounts and fair values of the Company’s financial assets and liabilities.

At December 31, 2007 At December 31, 2006 Carrying Carrying value Fair value value Fair value (£ million) Financial assets Equity securities available-for-sale (Note 15) 46 46 57 57 Loans and receivables: Cash and cash equivalents (Note 18) 52 52 179 179 Other financial assets (Note 15) 56 56 48 48 Trade and other receivables, excluding prepayments (Note 17) 209 209 214 214 Derivatives (Note 15) — — 4 4 Financial liabilities Borrowings, excluding finance lease obligations (Note 20) (777 ) (777 ) (216 ) (216 ) Finance lease obligations (Note 20) (100 ) (126 ) (97 ) (97 ) Trade and other payables (Note 19) (527 ) (527 ) (511 ) (511 ) Derivatives (Note 19) (2 ) (2 ) — —

The fair value of cash and cash equivalents approximates book value due to the short maturity of the investments and deposits. Equity securities available-for-sale and derivatives are held on the balance sheet at fair value as set out in Note 15. The fair value of other financial assets approximates book value based on prevailing market rates. The fair value of borrowings, excluding finance lease obligations, approximates book value as interest rates reset to market rates on a frequent basis. The fair value of the finance lease obligation is calculated by discounting future cash flows at prevailing interest rates. The fair value of trade and other receivables and trade and other payables approximates to their carrying value, including the future redemption liability of the Company’s loyalty program.

Note 23 — Net debt

At December 31, At December 31, 2007 2006 (£ million) Cash and cash equivalents 52 179 Loans and other borrowings — current (8 ) (10 ) Loans and other borrowings — non-current (869 ) (303 ) Net debt (825 ) (134 )

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Year ended Year ended December 31, December 31, 2007 2006 (£ million) Movement in net debt Net decrease in cash and cash equivalents (131 ) (152 ) Add back cash flows in respect of other components of net debt: (Increase)/decrease in borrowings (553 ) 172 (Increase)/decrease in net debt arising from cash flows (684 ) 20 Non-cash movements: Finance lease liability (9 ) (103 ) Exchange and other adjustments 2 37 Increase in net debt (691 ) (46 ) Net debt at beginning of the year (134 ) (88 ) Net debt at end of the year (825 ) (134 )

Note 24 — Share-based payments Short Term Deferred Incentive Plan The IHG Short Term Deferred Incentive Plan (“STDIP”), now called the Annual Bonus Plan, enables eligible employees, including Executive Directors, to receive all or part of their bonus in the form of shares together with, in certain cases, a matching award of free shares up to half the deferred amount. The bonus and matching shares in the 2004 and 2005 plans are deferred and released in three equal tranches on the first, second and third anniversaries of the award date. The bonus and matching shares in the 2006 and 2007 plans are released on the third anniversary of the award date. Under the 2006 and 2007 plans a percentage of the award (Board members — 100% (2006 80%); other eligible employees — 50%) must be taken in shares and deferred. Participants may defer the remaining amount on the same terms or take it in cash. The awards in all of the plans are conditional on the participants remaining in the employment of a participating company. Participation in the STDIP is at the discretion of the Remuneration Committee. The number of shares is calculated by dividing a specific percentage of the participant’s annual performance related bonus by the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A number of executives participated in the plan during the year and conditional rights over 675,515 (2006 606,573) shares were awarded to participants.

Long Term Incentive Plan The Long Term Incentive Plan (“LTIP”), previously called the Performance Restricted Share Plan (“PRSP”), allows Executive Directors and eligible employees to receive share awards, subject to the satisfaction of a performance condition, set by the Remuneration Committee, which is normally measured over a three year period. Awards are normally made annualy and, except in exceptional circumstances, will not exceed three times salary for Executive Directors and four times salary in the case of other eligible employees. During the year, conditional rights over 3,538,535 (2006 4,277,550) shares were awarded to employees under the plan. The plan provides for the grant of “nil cost options’’ to participants as an alternative to conditional share awards.

Executive Share Option Plan For options granted, the option price is not less than the market value of an ordinary share, or the nominal value if higher. The market value is the quoted price on the business day preceding the date of grant, or the average of the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A performance condition has to be met before options can be exercised. The performance condition is set by the Remuneration Committee. The plan was not operated during 2007 and no options were granted in the year under the plan. The latest date that any options may be exercised is April 2015.

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Sharesave Plan The Sharesave Plan is a savings plan whereby employees contract to save a fixed amount each month with a savings institution for three or five years. At the end of the savings term, employees are given the option to purchase shares at a price set before savings began. The Sharesave Plan is available to all United Kingdom employees (including Executive Directors) employed by participating companies provided that they have been employed for at least one year. The plan provides for the grant of options to subscribe for ordinary shares at the higher of nominal value and not less than 80% of the middle market quotations of the ordinary shares on the three dealing days immediately preceding the invitation date. The plan was not operated during 2007 and no options were granted in the year under the plan. The latest date that any options may be exercised under the three-year plan is February 29, 2008 and under the five-year plan is February 28, 2010.

US Employee Stock Purchase Plan The US Employee Stock Purchase Plan will allow eligible employees resident in the United States an opportunity to acquire Company American Depositary Shares (“ADS”s) on advantageous terms. The plan, when operational, will comply with Section 423 of the US Internal Revenue Code of 1986. The option to purchase ADSs may be offered only to employees of designated subsidiary companies. The option price may not be less than the lesser of either 85% of the fair market value of an ADS on the date of grant or 85% of the fair market value of an ADS on the date of exercise. Options granted under the plan must generally be exercised within 27 months from the date of grant. The plan was not operated during 2007 and at December 31, 2007 no options had been granted under the plan.

Former Six Continents Share Schemes Under the terms of the separation of Six Continents PLC in 2003, holders of options under the Six Continents Executive Share Option Schemes were given the opportunity to exchange their Six Continents PLC options for equivalent value new options over IHG shares. As a result of this exchange, 23,195,482 shares were put under option at prices ranging from 308.48 pence to 593.29 pence. The exchanged options were immediately exercisable and are not subject to performance conditions. During 2007, 1,358,791 (2006 3,678,239,) such options were exercised, leaving a total of 2,696,883 (2006 4,055,674) such options outstanding at prices ranging from 308.48 pence to 593.29 pence. The latest date that any options may be exercised is October 2012. The Company recognized a cost of £30 million (2006 £18 million, 2005 £17 million) in operating profit related to equity-settled share-based payment transactions during the year. The aggregate consideration in respect of ordinary shares issued under option schemes during the year was £16 million (2006 £20 million, 2005 £10 million). The following table sets forth awards and options granted during 2007. No awards were granted under the Executive Share Option Plan, Sharesave Plan or US Employee Stock Purchase Plan during the year.

Short Term Deferred Long Term Incentive Plan Incentive Plan Number of shares awarded in 2007 675,515 3,538,535

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In 2007, 2006 and 2005, the Company used separate option pricing models and assumptions for each plan. The following tables set forth information about how the fair value of each option is calculated:

Short Term Deferred Long Term 2007 Incentive Plan Incentive Plan Valuation model Binomial Monte Carlo Simulation and Binomial Weighted average share price (pence) 1252.0 1262.0 Expected dividend yield 2.13 % 2.13 % Risk-free interest rate 5.40 % Volatility(i) 19 % Term (years) 3.0 3.0

Short Term Deferred Long Term 2006 Incentive Plan Incentive Plan Valuation model Binomial Monte Carlo Simulation and Binomial Weighted average share price (pence) 831.0 946.0 Expected dividend yield 2.32 % Risk-free interest rate 4.90 % Volatility(i) 20 % Term (years) 2.0 3.0

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

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Movements in the awards and options outstanding under the schemes are as follows:

Short Term Deferred Long Term Incentive Plan Incentive Plan Number of shares Number of shares (thousands) Outstanding at January 1, 2005 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 607 4,277 Vested (328 ) (1,395 ) Share capital consolidation (50 ) — Lapsed or canceled (57 ) (2,191 ) Outstanding at December 31, 2006 1,001 11,325 Granted 675 3,539 Vested (418 ) (1,694 ) Share capital consolidation (68 ) — Lapsed or canceled (86 ) (1,707 ) Outstanding at December 31, 2007 1,104 11,463 Fair value of awards granted during the year (pence) At December 31, 2007 1190.6 453.8 At December 31, 2006 894.5 287.0 At December 31, 2005 649.1 117.0 Weighted average remaining contract life (years) At December 31, 2007 1.5 1.1 At December 31, 2006 1.0 1.3 At December 31, 2005 1.1 1.2 The above awards do not vest until the performance conditions have been met.

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Sharesave Plan Executive Share Option Plan Weighted Weighted Number of Range of average Number of Range of average shares option prices option price shares option prices option price (thousands) (pence) (pence) (thousands) (pence) (pence) Options outstanding at January 1, 2005 1,262 420.5 420.5 26,741 308.5-593.3 447.6 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 22,619 308.5-619.8 465.4 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 14,079 308.5-619.8 482.2 Exercised (101 ) 420.5 420.5 (5,568 ) 308.5-619.8 471.9 Lapsed or canceled (7 ) 420.5 420.5 (317 ) 438.0-619.8 526.8 Options outstanding at December 31, 2007 57 420.5 420.5 8,194 308.5-619.8 487.4 Options exercisable At December 31, 2007 — — — 6,583 308.5-619.8 455.0 At December 31, 2006 — — — 6,002 308.5-619.8 430.2 At December 31, 2005 — — — 8,710 308.5-619.8 434.3 Included within the options outstanding of the Executive Share Option Plan are options over 2,696,883 (2006 4,055,674, 2005 7,909,002) shares that have not been recognized in accordance with IFRS 2 as the options were granted on or before November 7, 2002. These options, relating to former Six Continents shares schemes, have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2. The weighted average share price at the date of exercise for share options vested during the year was 1259.0 pence. The closing share price on December 31, 2007 was 884.0 pence and the range during the year was 873.5 pence to 1413.0 pence per share. Summarized information about options outstanding at December 31, 2007 under the share option schemes is as follows:

Options outstanding Weighted Options exercisable 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 57 1.0 420.5 — — Executive Share Option Plan 308.5 to 349.1 565 2.3 347.7 565 347.7 349.2 to 498.0 5,905 5.3 462.6 5,905 462.6 498.1 to 619.8 1,724 6.8 618.1 113 593.7 8,194 5.4 487.4 6,583 455.0

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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, 2005 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 Income statement 1 (4 ) (2 ) 3 3 (30 ) (29 ) Statement of recognized income and expense — — — 3 — 27 30 Exchange and other adjustments 3 (1 ) (3 ) — 1 3 3 At December 31, 2007 123 87 (94 ) (8 ) 21 (44 ) 85

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

At December 31, 2007 2006 2005 (£ million) Analyzed as: Deferred tax payable 82 79 210 Liabilities classified as held for sale 3 2 34 At December 31 85 81 244

The deferred tax asset of £94 million (2006 £89 million, 2005 £123 million) recognized in respect of losses includes £60 million (2006 £64 million, 2005 £89 million) of capital losses available to be utilized against the realization of capital gains which are recognized as a deferred tax liability and £34 million (2006 £25 million, 2005 £34 million) in respect of revenue tax losses. Revenue losses include £3 million (2006 £1m, 2005 £nil) in respect of losses which arose during a period of hotel refurbishment and which are expected to be utilized against future operating profit. Tax losses with a value of £191 million (2006 £192 million, 2005 £282 million), including capital losses with a value of £109 million (2006 £87 million, 2005 £93 million), have not been recognized as their use is uncertain or not currently anticipated. These losses may be carried forward indefinitely with the exception of £1 million (2006 £nil, 2005 £nil) which expires after five years, £nil (2006 £1 million, 2005 £nil) which expires after seven years and £nil (2006 £1 million, 2005 £nil) which expires after 15 years.

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Deferred tax assets of £4 million (2006 £6 million, 2005 £19 million) in respect of share-based payments, £7 million (2006 £7 million, 2005 £7 million) in respect of employee benefits and £13 million (2006 £17 million, 2005 £11 million) in respect of other items have not been recognized as the timing of their realization and consequent use is uncertain or not currently anticipated and, in part, is dependent upon the outcome of European Union (“EU”) case law. Other items include £nil (2006 £7 million, 2005 £nil) which expire after nine years. At December 31, 2007 the Company has not provided deferred tax in relation to temporary differences associated with undistributed earnings of subsidiaries. Quantifying the temporary differences is not practical. However, based on current enacted law and on the basis that the Company is in a position to control the timing and manner of realization of these temporary differences, no material tax consequences are expected to arise.

Note 26 — Minority equity interest

Year ended December 31, 2007 2006 2005 (£ million) At January, 1 8 20 117 Total recognized income and expense in the year — — 15 Dividends paid to minority interests — (1 ) (177) Disposal of hotels (Note 11) (6) (13) — Disposal of Soft Drinks business (Note 11) — — 66 Acquisition of subsidiary (Note 31) — 3 — Exchange and other adjustments 1 (1 ) (1 ) At December, 31 3 8 20

Note 27 — Operating leases During the year ended December 31, 2007, £32 million (2006 £39 million, 2005 £62 million) was recognized as an expense in the income statement in respect of operating leases. Total commitments under non-cancelable operating leases are as follows:

At December 31, 2007 2006 (£ million) Due within one year 28 27 One to two years 19 21 Two to three years 16 19 Three to four years 14 14 Four to five years 11 9 More than five years 108 100 196 190

The average remaining term of these leases, which generally contain renewal options, is approximately 17 years. No material restrictions or guarantees exist in the Company’s lease obligations.

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Note 28 — Capital and other commitments

At December 31, 2007 2006 (£ million) Contracts placed for expenditure on property, plant and equipment not provided for in the financial statements 10 24

On October 24, 2007, the Company announced a worldwide relaunch of its Holiday Inn brand family. In support of this relaunch, IHG will make a non-recurring revenue investment of up to £30 million which it is anticipated will be charged to the income statement as on exceptional item during 2008.

Note 29 — Contingencies

At December 31, 2007 2006 (£ million) Contingent liabilities not provided for in the financial statements relating to guarantees 5 11

In limited cases, the Company may provide performance guarantees to third-party owners to secure management contracts. The maximum exposure under such guarantees is £121 million (2006 £142 million). It is the view of the Directors that, other than to the extent that liabilities have been provided for in these financial statements, such guarantees are not expected to result in financial loss to the Company. As of December 31, 2007, the Company had outstanding letters of credit of £31 million (2006 £31 million) mainly relating to self-insurance programs. The Company may guarantee loans made to facilitate third-party ownership of hotels in which the Company has an equity interest and also a management contract. As of December 31, 2007, the Company was a guarantor of loans which could amount to a maximum of £14 million (2006 £13 million). The Company has given warranties in respect of the disposal of certain of its former subsidiaries and hotels. It is the view of the Directors that, other than to the extent that liabilities have been provided for in these financial statements, such warranties are not expected to result in financial loss to the Company.

Note 30 — Related party disclosures Key management personnel comprises the Board and Executive Committee.

Year ended December 31, 2007 2006 2005 (£ million) Total compensation of key management personnel Short-term employment benefits 9.4 9.5 6.5 Post-employment benefits 0.5 0.5 0.2 Termination benefits — — 0.8 Equity compensation benefits 9.1 7.9 6.9 19.0 17.9 14.4

There were no transactions with key management personnel during the years ended December 31, 2007, 2006 or 2005.

F-70

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Note 31 — Acquisition of subsidiary On December 1, 2006, the Company acquired a 75% interest in ANA Hotels & Resorts Co., Ltd (subsequently renamed IHG ANA Hotels Group Japan LLC), a hotel management company based in Japan.

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

Management contracts acquired were recognized as intangible assets at their fair value. The residual excess over the net assets acquired was recognized as goodwill.

F-71

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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, 2007 Provisions for bad and doubtful debts 43 12 (1 ) (6 ) 48 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

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SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

INTERCONTINENTAL HOTELS GROUP PLC (Registrant)

By: /s/ Richard Solomons Name: Richard Solomons Title: Finance Director

Date: March 28, 2008

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exhibit 1

No. 5134420 The Companies Act 1985 Company Limited by Shares

INTERCONTINENTAL HOTELS GROUP PLC MEMORANDUM AND ARTICLES OF ASSOCIATION Linklaters One Silk Street London EC2Y 8HQ Telephone (44-20) 7456 2000 Facsimile (44-20) 7456 2222 Ref JLF/TXMB Memorandum altered and Articles of Association adopted with effect from 27 June 2005 pursuant to a Special Resolution of the Company passed on 15 June 2005. By a Special Resolution of the Company passed at an Extraordinary General Meeting held on 1 June 2007, the Articles of Association were further amended.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document THE COMPANIES ACT 1985 COMPANY LIMITED BY SHARES

MEMORANDUM OF ASSOCIATION OF INTERCONTINENTAL HOTELS GROUP PLC 1 The Company’s name is “Intercontinental Hotels Group PLC”.1 2 The Company is to be a public company. 3 The Company’s registered office is to be situated in England and Wales. 4 The objects for which the Company is established are:- To acquire, purchase and take over shares in the company formerly known as InterContinental Hotels Group PLC (registered number 4551528) and its subsidiaries and subsidiary undertakings and to carry on business as an (A) investment holding company and to control and co-ordinate the business of any companies in which the Company is for the time being interested. To acquire (whether by original subscription, tender, purchase, exchange, underwriting or otherwise and whether conditionally or otherwise) shares or stocks, debentures, debenture stock, bonds, obligations or any other securities (and any options or rights in respect thereof or interests therein) issued or guaranteed by any other corporation constituted or carrying on business in any part of the world and whether or not engaged or concerned in the same or similar trades or occupations as those carried on by the Company or its subsidiaries and the debentures, debenture (B) stock, bonds, obligations or any other security issued or guaranteed by any government, sovereign ruler, commissioner, public body or authority, whether supreme, local or otherwise in any part of the world and whether such shares, stocks, debentures, debenture stocks, bonds, obligations or securities are or are not fully paid up and to make payments thereon as called up or in advance of calls or otherwise and to hold the same with a view to investment or to sell, exchange or otherwise dispose of the same and to buy and sell foreign exchange. To carry on all or any of the businesses of licensed victuallers, hotel keepers, inn-keepers, beer-house keepers, restaurant keepers, lodging-house keepers, caterers and purveyors of refreshments, refreshment contractors, (C) refreshment room proprietors, sugar merchants, tobacconists, and the business of owning, leasing, managing and franchising hotels and lodging houses of all kinds. To manufacture, buy, sell, improve, treat, preserve, fine, aerate, mineralise, bottle and otherwise deal in minerals and (D) aerated waters and other liquids of every

The Company was incorporated as Hackremco (No. 2154) Limited on 21 May 2004. On 24 March 2005 the name of the Company was changed to New InterContinental Hotels Group Limited. On 27 April 2005, the Company re-registered as a 1 public limited company and its name was changed to New InterContinental Hotels Group PLC with effect from that date. With effect from 27 June 2005, the name of the Company was changed to InterContinental Hotels Group PLC.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document description; and to produce, buy, sell and deal in all materials and things capable of being used in connection with any such business aforesaid; and to manufacture, buy, sell and deal in casks, kegs, bottles and other containers of all kinds and plant, machines, apparatus and appliances capable of being used in connection with any such business as aforesaid. To grow, manufacture, buy, sell, manipulate, and deal both wholesale and retail in commodities, articles and things of (E) all kinds which can conveniently be dealt in by the Company in connection with any of its objects. To carry on any other business or activity of any nature whatsoever which may seem to the Directors to be capable of being conveniently or advantageously carried on in connection or conjunction with any business of the Company (F) hereinbefore or hereinafter authorised or to be expedient with a view directly or indirectly to enhancing the value of or to rendering profitable or more profitable any of the Company’s assets or utilising its skills, know-how or expertise. To carry on any of its business by or through a subsidiary or subsidiaries and to form or establish in any part of the world any company or companies for the purpose of carrying on as principal or as agent for the Company any (G) business herein authorised or which may seem conducive to the Company’s interests and to subscribe for, hold and deal with the shares of any company that may be so formed or established and to guarantee the due performance of its obligations and to transfer to any such company any part or branch of its business. To purchase, acquire, rent, build, construct, alter, remove, replace, equip, execute, carry out, improve, work, develop, administer, maintain, manage or control any freehold, leasehold or other property and, in particular, breweries, hotels, restaurants, licensed premises, cafes, bars or refreshment saloons and the goodwill of any business carried on therein (H) and the stock-in-trade, plant, machinery or effects thereof or thereupon and any other buildings, structures or facilities of all kinds, whether the same be required for the purposes of the Company or for sale or hire to or in return for any consideration from any other company, firm or persons, and to contribute to or assist in or carry out any part of any such operations. To purchase or otherwise acquire for any estate or interest any property (real or personal) or assets or any concessions, licences, grants, patents, trade marks, copyrights or other exclusive or non-exclusive rights of any kind (I) and to hold, develop and turn to account and deal with the same in such manner as may be thought fit, and to make experiments and tests and to carry on all kinds of research work. To borrow and raise money and to secure or discharge any debt or obligation of or binding on the Company in such manner as may be thought fit and in particular by mortgage and charges upon all or any part of the undertaking, (J) property and assets (present and future) and the uncalled capital of the Company, or by the creation and issue on such terms and conditions as may be thought fit of debentures, debenture stock or other securities of any description. To draw, make, accept, endorse, discount, negotiate, execute, and issue, and to buy, sell and deal with bills of (K) exchange, promissory notes, and other negotiable or transferable instruments or securities. To amalgamate or enter into partnership or any joint purpose or profit/loss-sharing arrangement or other association (L) with and to co-operate in any way with or assist or subsidise any company, firm, person or body, and to purchase or otherwise acquire and undertake all or any part of the business, property and liabilities of any company,

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document firm, person or body carrying on any business which the Company is authorised to carry on or possessed of any property suitable for the purposes of the Company. (M) To promote, or join in the promotion of, any company, whether or not having objects similar to those of the Company. To pay all preliminary expenses of the Company and any company promoted by the Company or any company in (N) which this Company is or may contemplate being interested, including in such preliminary expenses all or any part of the costs and expenses of owners of any business or property acquired by the Company. To advance, lend or deposit money or give credit to or with any company, firm or person on such terms as may be (O) thought fit and with or without security. To issue any securities which the Company has power to issue for any other purpose by way of security or indemnity (P) or in satisfaction of any liability undertaken or agreed to be undertaken by the Company. To guarantee or give indemnities or provide security, whether by personal covenant or by mortgage or charge upon all or any part of the undertaking, property and assets (present and future) and the uncalled capital of the Company, or by all or any such methods, for the performance of any contracts or obligations, and the payment of capital or principal (Q) (together with any premium) and dividends or interest on any shares, debentures or other securities, of any person, firm or company including (without limiting the generality of the foregoing) any company which is for the time being a holding company of the Company or another subsidiary of any such holding company or is associated with the Company in business. To sell, lease, grant licenses, easements and other rights over, and in any other manner deal with or dispose of, the (R) undertaking, property, assets, rights and effects of the Company or any part thereof for such consideration as may be thought fit, and in particular for stocks, shares or securities of any other company whether fully or partly paid up. To procure the registration, recognition or incorporation of the Company in or under the laws of any territory outside (S) England. To subscribe, or guarantee money for, any national, charitable, benevolent, public, general or useful object or for any (T) exhibition, or for any purpose which may be considered likely directly or indirectly to further the interests of the Company or of its members. (i) To establish and maintain or contribute to any pension or superannuation funds for the benefit of, and to give or procure the giving of donations, gratuities, pensions, allowances or emoluments to, any individuals who are or were at any time in the employment or service of the Company or of any associated company, or who are or were at any time (U) directors or officers of the Company or of any associated company, and the wives, widows, families and dependants of any such individuals; to establish and subsidise or subscribe to any institutions, associations, clubs or funds which may be considered likely to benefit any such persons or to further the interests of the Company or of any associated company; and to make payments for or towards the insurance of any such persons. (ii) To establish and maintain, and to lend or contribute to, any scheme for encouraging or facilitating the holding of shares or debentures or other securities in the Company or any associated company by or for the benefit of its employees or former employees, or those of any associated company, or by or for the

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document benefit of such other persons as may for the time being be permitted by law, or any scheme for sharing profits with its employees or those of its associated companies, and (so far as for the time being permitted by law) to lend money to employees of the Company or of any associated company with a view to enabling them to acquire shares in the Company or any associated company. (iii) (a) To purchase and maintain insurance for or for the benefit of any persons who are or were at any time directors, officers or employees or auditors of the Company, or of any associated company, or who are or were at any time trustees of any pension fund or employees’ share scheme in which any employees of the Company or of any associated company are interested, including (without prejudice to the generality of the foregoing) insurance against any liability incurred by such persons in respect of any act or omission in the actual or purported execution and/or discharge of their duties and/or in the exercise or purported exercise of their powers and/or otherwise in relation to the Company or associated company or pension fund; (b) to such extent as may be permitted by law otherwise to indemnify any such person against or from any such liability; and (c) (i) to provide a Director or officer with funds to meet expenditure incurred or to be incurred by him in defending any criminal or civil proceedings or in connection with any application under those provisions of the Companies Act 1985 referred to in Section 337A(2) of that Act and (ii) to do anything to enable a Director to avoid incurring such expenditure. (iv) In this paragraph (U): (a) an “associated company” is any company (i) which is the Company’s holding company or (ii) in which the Company or its holding company or any of the predecessors of the Company or of such holding company has any interest whether direct or indirect or (iii) which is in any way allied to or associated with the Company or its holding company or any of the predecessors of the Company or of such holding company, or (iv) which is a subsidiary undertaking of any other associated company; and (b) “holding company” and “subsidiary undertaking” have the same meanings as in the Companies Act 1985 as amended by the Companies Act 1989. To distribute among members of the Company in specie or otherwise, by way of dividend or bonus or by way of (V) reduction of capital, all or any of the property or assets of the Company, or any proceeds of sale or other disposal of any property or assets of the Company, with and subject to any incident authorised and consent required by law. To do all or any of the things and matters aforesaid in any part of the world, and either as principals, agents, (W) contractors, trustees or otherwise, and by or through trustees, agents, subsidiary companies or otherwise, and either alone or in conjunction with others. (X) To do all such other things as may be considered to be incidental or conducive to any of the above objects. And it is hereby declared that the objects of the Company as specified in each of the foregoing paragraphs of this clause (except only if and so far as otherwise expressly provided in any paragraph) shall be separate and distinct objects of the Company and shall

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document not be in any way limited by reference to any other paragraph or the order in which the same occur or the name of the Company. 5 The liability of the members is limited. 6 The share capital of the Company is £100 divided into 100 shares of £1 each.2

Share capital increased from £100 to £50,100 by the creation of a redeemable preference share of £50,000 by way of a resolution of the Company passed at an Extraordinary General Meeting held on 21 April 2005. By resolutions of the Company passed at an Extraordinary General Meeting held on 20 May 2005, the share capital was further increased from £50,100 to £10,000,050,000 by the creation of 9,999,999,900 additional ordinary shares of £1 each and the ordinary share capital was then consolidated into 1,600,000,000 ordinary shares of £6.25 each. By resolutions of the Company passed at an Extraordinary General Meeting held on 30 June 2005, the share capital was reduced to £160,050,000, divided into 2 1,600,000,000 ordinary shares of 10p each and one redeemable preference share of £50,000, by reducing the nominal value of each ordinary share from £6.25 to 10p. By a resolution dated 8 September 2005, the share capital was reduced to £160,000,000 by the redemption of one redeemable preference share of £50,000. By resolutions of the Company passed at an Extraordinary General Meeting held on 1 June 2006, the share capital was consolidated into 1,400,000,000 ordinary shares of 113/7p each. By resolutions of the Company passed at an Extraordinary General Meeting held on 1 June 2007, the share capital was consolidated into 1,175,000,000 ordinary shares of 1329/47p each.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exhibit 1

No. 5134420 The Companies Act 1985 Company Limited by Shares INTERCONTINENTAL HOTELS GROUP PLC ARTICLES OF ASSOCIATION

Linklaters One Silk Street London EC2Y 8HQ Telephone (44-20) 7456 2000 Facsimile (44-20) 7456 2222 Ref JLF/TXMB

Adopted with effect from 27 June 2005 pursuant to a Special Resolution of the Company passed on 15 June 2005. By a Special Resolution of the Company passed at an Extraordinary General Meeting held on 1 June 2007, the Articles of Association were further amended.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Contents

Article No. Page No. Preliminary 1-2 1-6 Share Capital 3-4 6-7 Variation of Rights 5-6 7-8 Alteration of Share Capital 7-11 8-9 Shares 12-16 9-11 Evidence of Title to Securities 17 11-12 Share Certificates 18-22 12-13 Calls on Shares 23-28 13-14 Forfeiture and Lien 29-36 14-15 Transfer of Shares 37-43 16-18 Transmission of Shares 44-46 18 Untraced Shareholders 47-48 19 General Meetings 49-50 19-20 Notice of General Meetings 51-52 20-21 Overflow of General Meetings 53-55 21 Proceedings at General Meetings 56-66 21-23 Votes of Members 67-72 23-26 Proxies 73-78 26-28 Corporations Acting by Representatives 79 28 Directors 80-88 28-30 Appointment and Retirement of Directors 89-97 30-32 Alternate Directors 98-101 32-33 Meetings and Proceedings of Directors 102-111 33-37 Borrowing Powers 112-113 37 General Powers of Directors 114-118 37-38 President 119 38 Departmental, Division or Local Directors 120 38-39 Secretary 121 39 The Seal 122-124 39 Record Date 125 39 Authentication of Documents 126 40 Reserves 127 40

i

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Article No. Page No. Dividends 128-140 40-43 Capitalisation of Profits and Shares 141-142 43-45 Minutes 143 45 Accounts 144-145 45 Auditors . 146-147 46 Communications with Members 148-155 46-48 Winding up 156-157 48-49 Indemnity 158 49-50 Overriding Provisions 159 50-53

ii

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Companies Act 1985 COMPANY LIMITED BY SHARES Articles of Association Adopted by Special Resolution passed on 15 June 2005 Further amended by a Special Resolution passed on 1 June 2007 of INTERCONTINENTAL HOTELS GROUP PLC1 Preliminary The regulations in Table A in The Companies (Tables A to F) Regulations 1985 and in any Table A applicable to the 1 Company under any former enactment relating to companies shall not apply to the Company. In these Articles (if not inconsistent with the subject or context) the words and expressions set out below shall have the 2 following meanings: “Auditors” means the auditors for the time being of the Company. “Company Communications Provisions” shall have the same meaning as in the Companies Acts. “in writing” means written or produced by any substitute for writing (including anything in electronic form) or partly one and partly another. “London Stock Exchange” means London Stock Exchange plc. “month” means calendar month. “Office” means the registered office of the Company for the time being. “Operator” means CRESTCo Limited or such other person as may for the time being be approved by H.M. Treasury as Operator under the Regulations. “Operator-instruction” means a properly authenticated dematerialised instruction attributable to the Operator. “paid” means paid or credited as paid. “participating security” means a security title to units of which is permitted by the Operator to be transferred by means of a relevant system. “Register” means the register of members of the Company.

The Company was incorporated as Hackremco (No. 2154) Limited on 21 May 2004. On 24 March 2005 the name of the Company was changed to New InterContinental Hotels Group Limited. On 27 April 2005, the Company re-registered as a 1 public limited company and its name was changed to New InterContinental Hotels Group PLC with effect from that date. With effect from 27 June 2005, the name of the Company was changed to InterContinental Hotels Group PLC.

1

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document “Regulations” means the Uncertificated Securities Regulations 2001. “relevant system” means a computer-based system, and procedures, which enable title to units of a security to be evidenced and transferred without a written instrument pursuant to the Regulations. “Seal” means the Common Seal of the Company. “Securities Seal” means the official seal kept by the Company for sealing securities issued by the Company, or for sealing documents creating or evidencing securities so issued, as permitted by the Companies Acts. “Statutes” means the Companies Acts, the Regulations and every other enactment (to the extent the same is in force) concerning companies and affecting the Company. “these Articles” means these Articles of Association as from time to time altered. “Transfer Office” means the place where the Register is situated for the time being. “United Kingdom” means the United Kingdom of Great Britain and Northern Ireland. “UK Listing Authority” means the Financial Services Authority in its capacity as competent authority under the Financial Services and Markets Act 2000. “year” means calendar year. The expression “address” includes any number or address (including in the use of any Uncertificated Proxy Instruction permitted under Article 75, an identification number of a participant in the relevant system) used for the purposes of sending or receiving notices, documents or information by electronic means and/or by means of a website. The expression “Companies Acts” shall have the meaning given thereto by Section 2 of the Companies Act 2006 but shall only extend to provisions which are in force at the relevant date. The expressions “hard copy form”, “electronic form” and “electronic means” shall have the same respective meanings as in the Company Communications Provisions. The expressions “debenture” and “debenture holder” shall respectively include “debenture stock” and “debenture stockholder”. The expression “Director” shall include all the directors of the Company. The expression “Group” in relation to moneys borrowed means the Company and its subsidiary undertakings for the time being. The expression “moneys borrowed” shall be deemed to include (to the extent that the same would not otherwise fall to be taken into account): the principal amount of any debentures, as defined in Section 744 of the Companies Act 1985 and any fixed premium (i) payable on final repayment thereof save to the extent that such amounts otherwise fall to be included as moneys borrowed; the principal amount raised by the acceptance of bills by the Company or any subsidiary (not being acceptance of (ii) trade bills for the purchase of goods in the ordinary course of business) or by any bank or accepting house under any acceptance credit opened on behalf of the Company or any subsidiary;

2

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the nominal amount of any share capital and the principal amount of any other debentures or other borrowed moneys (together with any fixed premium payable on final redemption or repayment) the redemption or repayment of which is (iii) guaranteed (or is the subject of an indemnity granted) by the Company or a subsidiary, save to the extent that the amount guaranteed otherwise falls to be included as moneys borrowed; the nominal amount of any paid-up share capital, except ordinary share capital, of a subsidiary which is not for the (iv) time being beneficially owned by the Company or a subsidiary; the aggregate amount owing by any member of the Group under finance leases (as determined in accordance with (v) any then current International Financial Reporting Standard or otherwise in accordance with United Kingdom generally accepted accounting principles but excluding leaseholds of immovable property); the principal amount of any book debts of any member of the Group which have been sold or agreed to be sold, to (vi) the extent that any member of the Group is for the time being liable to indemnify or reimburse the purchaser in respect of any non-payment in respect of such book debts; and any part of the purchase price of any movable or immovable assets acquired by any member of the Group, the payment of which is deferred beyond the date of completion of the conveyance, assignment or transfer of the legal (vii) estate to such assets or, if no such conveyance, assignment or transfer is to take place within six months after the date on which the contract for such purchase is entered into or (if later) becomes unconditional, beyond that date; but shall be deemed not to include: a proportion of the moneys borrowed by any partly-owned subsidiary otherwise than from the Company or a (viii) subsidiary equal to the proportion of its ordinary share capital not directly or indirectly attributable to the Company; amounts borrowed and falling to be taken into account as moneys borrowed pending their application for the purpose (ix) of repaying the whole or any part of the other moneys borrowed provided that they are so applied within six months of being so borrowed; amounts borrowed by the Company or any subsidiary to finance any contract for the sale of goods in respect of which any part of the price receivable is guaranteed by the Export Credit Guarantee Department of the Board of Trade or any institution carrying on similar business to the extent of that part of the contract price guaranteed notwithstanding (x) that such amount is secured by a pledge or charge on the interest in such contract or the underlying goods or bills of exchange or the negotiable instruments drawn or made in connection therewith or the interest in any letters of credit issued or guarantee or indemnity or security held in relation thereto; all sums (whether or not carrying interest) deposited with the Company or with any subsidiary by tenants or managers (xi) of premises owned by any such company by way of earnest or security for the performance by such tenants or managers of their obligations or by loan clubs or by similar associations; and so that:

3

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document no amount shall be taken into account more than once in the same calculation but subject thereto (i) to (xii) above (xii) shall be read cumulatively; moneys borrowed shall be offset by cash and cash equivalence as determined in accordance with any then current (xiii) International Financial Reporting Standards or otherwise in accordance with United Kingdom generally accepted accounting principles; and in determining the amount of any debentures or other moneys borrowed or of any share capital for the purpose of this paragraph there shall be taken into account the nominal or principal amount thereof (or, in the case of partly-paid debentures or shares, the amount for the time being paid up thereon) together with any fixed or minimum premium payable on final redemption or repayment provided that if moneys are borrowed or shares are issued on terms that they may be repayable or redeemable (or that any member of the Group may be required to purchase them) earlier (xiv) than their final maturity date (whether by exercise of an option on the part of the issuer or the creditor (or a trustee for the creditor) or the shareholder, by reason of a default or for any other reason) at a premium or discount to their nominal or principal amount then there shall be taken into account the amount (or the greater or greatest of two or more alternative amounts) which would, if those circumstances occurred, be payable on such repayment, redemption or purchase at the date as at which the calculation is being made. The expression “officer” shall include a Director, manager and the Secretary, but shall not include an auditor. The expressions “recognised clearing house” and “recognised investment exchange” shall mean any clearing house or investment exchange (as the case may be) granted recognition under the Financial Services and Markets Act 2000. The expression “Secretary” shall include any person appointed by the Directors to perform any of the duties of the Secretary including, but not limited to, a joint, assistant or deputy Secretary. The expression “share capital and consolidated reserves” shall mean at any time a sum equal to the aggregate, as shown by the relevant balance sheet, of the amount paid up on the issued or allotted share capital of the Company and the amount standing to the credit of the reserves (including the profit and loss account and any share premium account or capital redemption reserve) of the Company and its subsidiary undertakings included in the consolidation in the relevant balance sheet but after: (i) adding back any debit balance on profit and loss account or on any other reserve; (ii) excluding any amount taken directly to reserves for taxation; making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital and/or any such reserves (other than profit and loss account) subsequent to the date of the relevant balance sheet and so that for this purpose if any issue or proposed issue of shares by the Company for cash has been (iii) underwritten then such shares shall be deemed to have been issued and the amount (including any premium) of the subscription moneys payable in respect thereof (not being moneys payable later than six months after the date of allotment) shall to the extent so underwritten be deemed to have been paid up on the date

4

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document when the issue of such shares was underwritten (or, if such underwriting was conditional, on the date when it became unconditional); making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by the Company or its subsidiary undertakings (to the extent not attributable directly or indirectly to the Company) out of (iv) profits earned up to and including the date of the relevant balance sheet to the extent that such distribution is not provided for in such balance sheet; making such adjustments as may be appropriate in respect of any variation in the interests of the Company in its (v) subsidiary undertakings (including a variation whereby an undertaking becomes or ceases to be a subsidiary undertaking) since the date of the relevant balance sheet; if the calculation is required for the purposes of or in connection with a transaction under or in connection with which (vi) any undertaking is to become or cease to be a subsidiary undertaking of the Company, making all such adjustments as would be appropriate if such transaction had been carried into effect; and (vii) excluding minority interests in subsidiary undertakings to the extent not already excluded. For the purpose of this definition, the “relevant balance sheet” means, at any time, the latest audited consolidated balance sheet dealing with the state of affairs of the Company and (with or without exceptions) its subsidiary undertakings. For the purposes of this definition: capital allotted shall be treated as issued and any capital already called up or payable at any fixed future date shall be (i) treated as already paid up, and (ii) any company which it is proposed shall become a subsidiary shall be treated as if it had already become a subsidiary. The expression “shareholders’ meeting” shall include both a General Meeting and a meeting of the holders of any class of shares of the Company. All such provisions of these Articles as are applicable to paid-up shares shall apply to stock, and the words “share” and “shareholder” shall be construed accordingly. Except where the context otherwise requires, any reference to issued shares of any class (whether of the Company or of any other company) shall not include any shares of that class held as treasury shares. Words denoting the singular shall include the plural and vice versa. Words denoting the masculine shall include the feminine. Words denoting persons shall include bodies corporate and unincorporated associations. References to any statute or statutory provision shall be construed as relating to any statutory modification or re-enactment thereof for the time being in force (whether coming into force before or after the adoption of these Articles). Subject as aforesaid any words or expressions defined in the Companies Acts or the Crest Regulations shall (if not inconsistent with the subject or context) bear the same meanings in these Articles.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document A Special or Extraordinary Resolution shall be effective for any purpose for which an Ordinary Resolution is expressed to be required under any provision of these Articles. References herein to a share (or to a holding of shares) being in uncertificated form or in certificated form are references, respectively, to that share being an uncertificated unit of a security or a certificated unit of a security for the purposes of the Regulations.

Share Capital 3 Amount of Share Capital The share capital of the Company at the date of adoption of these Articles is £10,000,050,000 divided into 1,600,000,000 ordinary shares of £6.25 each (“Ordinary Shares”) and one Redeemable Preference Share of £50,000 (the “Redeemable Preference Share”)2. The Ordinary Shares will have attached thereto the rights and privileges and be subject to the limitations and restrictions specified in this Article 3. The Redeemable Preference Share will have attached thereto the rights and privileges and be subject to the limitations and restrictions specified in Article 4. 3.1 Income Subject to the rights attached to any other share or class of share, the holders of Ordinary Shares shall be entitled to be paid any profits of the Company available for distribution and determined to be paid by the Directors rateably according to the amounts paid up on such shares. 3.2 Capital On a return of capital on winding up or otherwise (except on redemption in accordance with the terms of issue of any share, or purchase by the Company of any share or on a capitalisation issue and subject to the rights of any other class of shares that may be issued) after paying such sums as may be due in priority to holders of any other class of shares in the capital of the Company, any further such amount shall be paid to the holders of the Ordinary Shares rateably according to the amounts paid up or credited as paid up in respect of each Ordinary Share. 3.3 Voting at General Meetings The holders of Ordinary Shares shall be entitled, in respect of their holdings of such shares, to receive notice of General Meetings and to attend, speak and vote at such meetings in accordance with these Articles. 4 Redeemable Preference Share The rights attaching to the Redeemable Preference Share shall be as follows:

By resolutions of the Company passed at an Extraordinary General Meeting held on 30 June 2005, the share capital was reduced to £160,050,000, divided into 1,600,000,000 ordinary shares of 10p each and one redeemable preference share of £50,000, by reducing the nominal value of each ordinary share from £6.25 to 10p. By a resolution dated 8 September 2005, the share capital was reduced to £160,000,000 by the redemption of one redeemable preference share of £50,000. By 2 resolutions of the Company passed at an Extraordinary General Meeting held on 1 June 2006, the share capital was consolidated into 1,400,000,000 ordinary shares of 113/7p each. By resolutions of the Company passed at an Extraordinary General Meeting held on 1 June 2007, the share capital was consolidated into 1,175,000,000 ordinary shares of 1329/47p each.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Redeemable Preference Share shall carry no rights to receive any of the profits of the Company available for 4.1 distribution by way of dividend or otherwise; if there is a return of capital on winding up or otherwise the assets of the Company available for distribution among the 4.2 members shall be applied first in repaying in full the holder of the Redeemable Preference Share the amount paid up on such share; except as provided above the Redeemable Preference Share shall not carry any right to participate in profits or assets of 4.3 the Company; subject to the provisions of the Statutes, the Company may redeem the Redeemable Preference Share at its nominal amount at any time specified by either the Directors or the holder of the Redeemable Preference Share provided always that if the Company shall at any time be unable in compliance with the provisions of the Statutes to redeem the 4.4 Redeemable Preference Share on the date specified by the Directors of the Company or by the holder of the Redeemable Preference Share then the Company shall redeem such share as soon as it is able to comply with such provisions of the Statutes; subject to the provisions of the Statutes, any notice of redemption served shall specify the date fixed for redemption and upon such date the holder of the Redeemable Preference Share shall be bound to present the certificate in respect thereof 4.5 in order that the same may be cancelled. Upon such delivery the Company shall pay to such holder the amount due to him in respect of such redemption; and the holder of the Redeemable Preference Share shall not be entitled to receive notice of or attend and vote at any General 4.6 Meeting of the Company unless a resolution is to be proposed: 4.6.1 to wind up the Company; or 4.6.2 which varies, modifies, alters or abrogates any of the rights attaching to the Redeemable Preference Share.

Variation of Rights 5 Manner of variation of rights Whenever the share capital of the Company is divided into different classes of shares, the special rights attached to any class may, subject to the provisions of the Statutes and Article 4.6.2, be varied or abrogated either with the consent in writing of the holders of three-quarters in nominal value of the issued shares of the class or with the sanction of an 5.1 Extraordinary Resolution passed at a separate General Meeting of the holders of the shares of the class (but not otherwise) and may be so varied or abrogated either whilst the Company is a going concern or during or in contemplation of a winding up. To every such separate General Meeting all the provisions of these Articles relating to General Meetings of the Company and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be two persons at least holding or representing by proxy at least one-third in nominal value of the issued shares of the class (but so that at 5.2 any adjourned meeting any holder of shares of the class present in person or by proxy shall be a quorum) and that any holder of shares of the class present in person or by proxy may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him but not otherwise.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The foregoing provisions of this Article shall apply to the variation or abrogation of the special rights attached to some only 5.3 of the shares of any class as if each group of shares of the class differently treated formed a separate class the special rights whereof are to be varied. 6 Matters not constituting variation of rights The special rights attached to any class of shares having preferential rights shall not unless otherwise expressly provided by the terms of issue thereof be deemed to be varied by (a) the creation or issue of further shares ranking as regards participation in the profits or assets of the Company in some or all respects pari passu therewith but in no respect in priority thereto or (b) the purchase or redemption by the Company of any of its own shares.

Alteration of Share Capital 7 Increase of Share Capital The Company may from time to time by Ordinary Resolution increase its capital by such sum to be divided into shares of such amounts as the resolution shall prescribe. All new shares shall be subject to the provisions of the Statutes and of these Articles with reference to allotment, payment of calls, lien, transfer, transmission, forfeiture and otherwise. 8 Consolidation, cancellation and subdivision The Company may by Ordinary Resolution: 8.1 consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; cancel any shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken, by any 8.2 person and diminish the amount of its capital by the amount of the shares so cancelled; subdivide its shares, or any of them, into shares of smaller amount than is fixed by the Memorandum of Association (subject, nevertheless, to the provisions of the Statutes), and so that the resolution whereby any share is subdivided may 8.3 determine that, as between the holders of the shares resulting from such subdivision, one or more of the shares may, as compared with the others, have any such preferred, deferred or other special rights, or be subject to any such restrictions, as the Company has power to attach to unissued or new shares. 9 Proceeds of consolidation and subdivision Whenever as a result of a consolidation or subdivision of shares any members would become entitled to fractions of a share, the Directors may, on behalf of those members, sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Statutes, the Company) and distribute the net proceeds of sale in due proportion among those members, and the Directors may authorise some person to transfer the shares to, or in accordance with the directions of, the purchaser. The transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale. So far as the Statutes allow, the Directors may treat

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document shares of a member in certificated form and in uncertificated form as separate holdings in giving effect to subdivisions and/ or consolidations and may cause any shares arising on consolidation or subdivision and representing fractional entitlements to be entered in the Register as shares in certificated form where this is desirable to facilitate the sale thereof. 10 Purchase of own shares Subject to the provisions of the Statutes, the Company may purchase, or may enter into a contract under which it will or may purchase, any of its own shares (including any redeemable shares) but so that if there shall be in issue any shares 10.1 which are admitted to the official list maintained by the UK Listing Authority and which are convertible into equity share capital of the Company of the class proposed to be purchased, then the Company shall not purchase, or enter into a contract under which it will or may purchase, such equity shares unless either: the terms of issue of such convertible shares include provisions permitting the Company to purchase its own equity 10.1.1 shares or providing for adjustment to the conversion terms upon such a purchase; or the purchase, or the contract, has first been approved by an Extraordinary Resolution passed at a separate meeting 10.1.2 of the holders of such convertible shares. The Company may not exercise any rights in respect of treasury shares held by it, including any rights to attend or vote at meetings, to participate in any offer by the Company to shareholders or to receive any distribution (including in a winding 10.2 up), but without prejudice to its rights to sell the treasury shares, to transfer the shares for the purposes of or pursuant to an employees’ share scheme, to receive an allotment of shares as fully paid bonus shares in respect of the treasury shares or to receive any amount payable on redemption of any redeemable treasury shares. 11 Reduction of capital Subject to the provisions of the Statutes, the Company may by Special Resolution reduce its share capital or any capital 11.1 redemption reserve, share premium account or other undistributable reserve in any way. Holders of shares of the Company allotted and issued pursuant to the scheme of arrangement (the “Scheme”) under section 425 of the Companies Act 1985 dated 3 May 2005 between the company formerly known as “InterContinental 11.2 Hotels Group PLC” (with registered number 4551528) and the holders of its Scheme Shares (as defined in the Scheme) shall be bound by any Special Resolution to reduce or approve the reduction of the capital of the Company in any way duly passed at any Extraordinary General Meeting prior to the Scheme becoming effective.

Shares 12 Rights attaching to shares on issue Without prejudice to any special rights previously conferred on the holders of any shares or class of shares for the time being issued, any share in the Company may be issued with such preferred, deferred or other special rights, or subject to such restrictions, whether as regards dividend, return of capital, voting or otherwise, as the Company may from time to

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document time by Ordinary Resolution determine (or, in the absence of any such determination, as the Directors may determine) and subject to the provisions of the Statutes the Company may issue any shares which are, or at the option of the Company or the holder are liable, to be redeemed. 13 Directors’ power to allot securities and to sell treasury shares Subject to the provisions of the Statutes relating to authority, pre-emption rights and otherwise and of any resolution of the Company in General Meeting passed pursuant thereto, all unissued shares shall be at the disposal of the Directors and 13.1 they may allot (with or without conferring a right of renunciation), grant options over or otherwise dispose of them to such persons, at such times and on such terms as they think proper. The Directors shall be generally and unconditionally authorised pursuant to, and in accordance with, Section 80 of the 13.2 Companies Act 1985 to exercise for each Allotment Period all the powers of the Company to allot relevant securities up to a maximum aggregate nominal amount equal to the Section 80 Amount. During each Allotment Period the Directors shall be empowered to allot equity securities wholly for cash pursuant to and 13.3 within the terms of any authority in paragraph 13.2 above and to sell treasury shares wholly for cash: 13.3.1 in connection with a rights issue; and otherwise than in connection with a rights issue, up to an aggregate nominal amount equal to the Section 89 13.3.2 Amount, as if Section 89(1) of the Companies Act 1985 did not apply to any such allotment or sale. By such authority and power the Directors may, during the Allotment Period, make offers or agreements which would or 13.4 might require securities to be allotted or sold after the expiry of such period. 13.5 For the purposes of this Article 13: “Allotment Period” means the period ending on the date of the next Annual General Meeting of the Company or on 1 September 2006, whichever is the earlier, or any other period (not exceeding five years on any occasion) for which 13.5.1 the authority conferred by this Article 13 is renewed by Resolution of the Company in General Meeting stating the Section 80 Amount for such period; “rights issue” means an offer of equity securities open for acceptance for a period fixed by the Directors to (i) holders (other than the Company) of Ordinary Shares on the Register on a record date fixed by the Directors in proportion to their respective holdings (for which purpose holdings in certificated and uncertificated form may be 13.5.2 treated as separate holdings) and (ii) other persons so entitled by virtue of the rights attaching to any other equity securities held by them, but subject in both cases to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory; “Section 80 Amount” shall, without prejudice to any other authority given to the Directors, for the first Allotment 13.5.3 Period be £922,013,888 (provided that if the nominal value of the Ordinary Shares (being relevant securities for the purposes of

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section 80 of the Companies Act 1985) has been reduced to ten pence by way of a Court approved reduction of capital, then the Section 80 Amount shall be £14,752,222) or any increased amount fixed by Resolution of the Company in General Meeting; for any other Allotment Period the Section 80 Amount shall be stated in the relevant Resolution renewing the authority conferred by paragraph 13.2 above for such period or any increased amount fixed by Resolution of the Company in General Meeting; “Section 89 Amount” shall for the first Allotment Period be £138,302,083 (provided that if the nominal value of the Ordinary Shares (being equity securities for the purposes of Section 89 of the Companies Act 1985) has been reduced to ten pence by way of a Court approved reduction of capital, then the Section 89 Amount shall be 13.5.4 £2,212,833) or any increased amount fixed by Special Resolution; for any other Allotment Period the Section 89 Amount shall be that stated in the relevant Special Resolution renewing the power conferred by paragraph 13.3 above for such period or any increased amount fixed by Special Resolution; and the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for or to convert any 13.5.5 securities into shares of the Company, the nominal amount of such shares which may be allotted pursuant to such rights. 14 Commission on issue of shares The Company may exercise the powers of paying commissions conferred by the Statutes to the full extent thereby permitted. The Company may also on any issue of shares pay such brokerage as may be lawful. 15 Renunciation of allotment The Directors may at any time after the allotment of any share but before any person has been entered in the Register as the holder: recognise a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of a share a 15.1 right to effect such renunciation; and/or allow the rights represented thereby to be one or more participating securities, in each case upon and subject to such 15.2 terms and conditions as the Directors may think fit to impose. 16 Trust etc. interests not recognised Except as required by law, no person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or compelled in any way to recognise any equitable, contingent, future or partial interest in any share, any interest in any fractional part of a share or (except only as by these Articles or by law otherwise provided) any other right in respect of any share, except an absolute right to the entirety thereof in the registered holder.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Evidence of Title to Securities Nothing in these Articles shall require title to any securities of the Company to be evidenced or transferred by a written instrument, the regulations from time to time made under the Statutes so permitting. The Directors shall have power to 17 implement any arrangements which they may think fit for such evidencing and transfer which accord with those regulations.

Share Certificates 18 Issue of share certificate Every share certificate shall be executed by the Company in such manner as the Directors may decide (which may include use of the Seal or the Securities Seal (or, in the case of shares on a branch register, an official seal for use in the relevant territory) and/or manual or facsimile signatures by one or more Directors) and shall specify the number and class of shares to which it relates and the amount paid up thereon. No certificate shall be issued representing shares of more than one class. No certificate shall normally be issued in respect of shares held by a recognised clearing house or a nominee of a recognised clearing house or of a recognised investment exchange. 19 Joint holder In the case of a share held jointly by several persons in certificated form the Company shall not be bound to issue more than one certificate therefor and delivery of a certificate to one of the joint holders shall be sufficient delivery to all. 20 Timing of issue of share certificate Any person (except a person to whom the Company is not required by law to issue a certificate) whose name is entered in the Register in respect of any shares in certificated form of any one class upon the issue or transfer to him thereof shall be entitled without payment to a certificate therefor (in the case of issue) within one month (or such longer period as the terms of issue shall provide) after allotment or (in the case of a transfer of fully-paid shares) within 14 days after lodgment of a transfer or (in the case of a transfer of partly-paid shares) within two months after lodgment of a transfer. 21 Balance certificate Where some only of the shares comprised in a share certificate are transferred, the old certificate shall be cancelled and, to the extent that the balance is to be held in certificated form, a new certificate for the balance of such shares issued in lieu without charge. 22 Replacement of share certificates Any two or more certificates representing shares of any one class held by any member may at his request be cancelled 22.1 and a single new certificate for such shares issued in lieu without charge. If any member shall surrender for cancellation a share certificate representing shares held by him and request the 22.2 Company to issue in lieu two or more share certificates

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document representing such shares in such proportions as he may specify, the Directors may, if they think fit, comply with such request. If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same shares may be issued to the holder upon request subject to delivery up of the old certificate or (if 22.3 alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of any exceptional out-of-pocket expenses of the Company in connection with the request as the Directors may think fit. 22.4 In the case of shares held jointly by several persons any such request may be made by any one of the joint holders.

Calls on Shares 23 Power to make calls The Directors may from time to time make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or, when permitted, by way of premium) but subject always to the terms of allotment of such shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed and may be made payable by instalments. 24 Liability for calls Each member shall (subject to being given at least 14 days’ notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified, the amount called on his shares. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. A call may be wholly or partly revoked or postponed as the Directors may determine. 25 Interest on overdue amounts If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate (not exceeding 3 per cent per annum above the base rate for the time being of Barclays Bank PLC on the date on which payments are made to the Company) as the Directors determine but the Directors shall be at liberty in any case or cases to waive payment of such interest wholly or in part. 26 Other sums due on shares Any sum (whether on account of the nominal value of the share or by way of premium) which by the terms of allotment of a share becomes payable upon allotment or at any fixed date shall for all the purposes of these Articles be deemed to be a call duly made and payable on the date on which by the terms of allotment the same becomes payable. In case of non- payment all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 27 Power to differentiate between holders The Directors may on the allotment of shares differentiate between the holders as to the amount of calls to be paid and the times of payment. 28 Payment of calls in advance The Directors may if they think fit receive from any member willing to advance the same all or any part of the moneys (whether on account of the nominal value of the shares or by way of premium) uncalled and unpaid upon the shares held by him and such payment in advance of calls shall extinguish pro tanto the liability upon the shares in respect of which it is made and upon the money so received (until and to the extent that the same would but for such advance become payable) the Company may pay interest at such rate (not exceeding 3 per cent per annum above the base rate for the time being of Barclays Bank PLC on the date on which payments are made to the Company) as the member paying such sum and the Directors may agree.

Forfeiture and Lien 29 Notice on failure to pay a call If a member fails to pay in full any call or instalment of a call on or before the due date for payment thereof, the Directors may at any time thereafter serve a notice on him requiring payment of so much of the call or instalment as is unpaid 29.1 together with any interest which may have accrued thereon and any expenses incurred by the Company by reason of such non-payment. The notice shall name a further day (not being less than seven days from the date of service of the notice) on or before 29.2 which and the place where the payment required by the notice is to be made, and shall state that in the event of non- payment in accordance therewith the shares on which the call has been made will be liable to be forfeited. 30 Forfeiture for non-compliance If the requirements of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may at any time thereafter, before payment of all calls and interest and expenses due in respect thereof has been made, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited share and not actually paid before forfeiture. The Directors may accept a surrender of any share liable to be forfeited hereunder. 31 Disposal of forfeited share A share so forfeited or surrendered shall become the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was before such forfeiture or surrender the holder thereof or entitled thereto or to any other person upon such terms and in such manner as the Directors shall think fit and at any time before a sale, re- allotment or disposal the forfeiture or surrender may be cancelled on such terms as the Directors think fit. The Directors may, if necessary, authorise some person to transfer a forfeited or surrendered share to any such other person as aforesaid.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 32 Holder to remain liable despite forfeiture A person whose shares have been forfeited or surrendered shall cease to be a member in respect of the shares and shall, in the case of shares held in certificated form, surrender to the Company for cancellation the certificate for such shares. Such person shall nevertheless remain liable to pay to the Company all moneys which at the date of forfeiture or surrender were presently payable by him to the Company in respect of the shares with interest thereon at 3 per cent per annum above the base rate for the time being of Barclays Bank PLC on the date on which payments are made to the Company (or such lower rate as the Directors may determine) from the date of forfeiture or surrender until payment. The Directors may at their absolute discretion enforce payment without any allowance for the value of the shares at the time of forfeiture or surrender or for any consideration received on their disposal. They may also waive payment in whole or in part. 33 Lien on partly-paid shares The Company shall have a first and paramount lien on every share (not being a fully-paid share) for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such share and the Directors may waive any lien which has arisen and may resolve that any share shall for some limited period be exempt wholly or partially from the provisions of this Article. 34 Sale of shares subject to lien The Company may sell in such manner as the Directors think fit any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of 14 days after a notice in writing demanding payment of the sum presently payable and giving notice of intention to sell the share in default of payment shall have been given to the holder for the time being of the share or the person entitled thereto by reason of his death or bankruptcy or otherwise by operation of law. 35 Proceeds of sale of shares subject to lien The net proceeds of such sale after payment of the costs of such sale shall be applied in or towards payment or satisfaction of the amount in respect whereof the lien exists so far as the same is then payable and any residue shall, upon surrender (in the case of shares held in certificated form) to the Company for cancellation of the certificate for the shares sold and subject to a like lien for sums not presently payable as existed upon the shares prior to the sale, be paid to the person entitled to the shares at the time of the sale. For the purpose of giving effect to any such sale the Directors may authorise some person to transfer the shares sold to, or in accordance with the directions of, the purchaser. 36 Evidence of forfeiture A statutory declaration that the declarant is a Director or the Secretary and that a share has been duly forfeited or surrendered or sold to satisfy a lien of the Company on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. Such declaration shall (subject to the relevant share transfer being made, if the same be required) constitute a good title to the share. The person to whom the share is sold, re-allotted or disposed of shall not be bound

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document to see to the application of the consideration (if any). The title of such person to the share shall not be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, surrender, sale, re-allotment or disposal of the share.

Transfer of Shares 37 Form of transfer Subject to the provisions of Article 17, all transfers of shares which are in certificated form may be effected by transfer in writing in any usual or common form or in any other form acceptable to the Directors and may be under hand only. The 37.1 instrument of transfer shall be signed by or on behalf of the transferor and (except in the case of fully-paid shares) by or on behalf of the transferee. The transferor shall remain the holder of the shares concerned until the name of the transferee is entered in the Register in respect thereof. All transfers of shares which are in uncertificated form may, unless the Regulations otherwise provide, be effected by 37.2 means of a relevant system. 38 Closure of Register The registration of transfers may be suspended at such times and for such periods as the Directors may from time to time determine and either generally or in respect of any class of shares except that, in respect of any shares which are participating securities, the Register shall not be closed without the consent of the Operator. The Register shall not be closed for more than 30 days in any year. 39 Right to refuse registration The Directors may decline to recognise any instrument of transfer relating to shares in certificated form unless the instrument of transfer is in respect of only one class of share and is lodged (duly stamped if required) at the Transfer Office accompanied by the relevant share certificate(s) and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do), provided that, where any such shares are admitted to the official list 39.1 maintained by the UK Listing Authority, such discretion may not be exercised in such a way as to prevent dealings in the shares of that class from taking place on an open and proper basis. In the case of a transfer of shares in certificated form by a recognised clearing house or a nominee of a recognised clearing house or of a recognised investment exchange the lodgment of share certificates will only be necessary if and to the extent that certificates have been issued in respect of the shares in question. The Directors may, in the case of shares in certificated form, in their absolute discretion and without assigning any reason therefor refuse to register any transfer of shares (not being fully-paid shares) provided that, where any such shares are 39.2 admitted to the official list maintained by the UK Listing Authority, such discretion may not be exercised in such a way as to prevent dealings in the shares of that class from taking place on an open and proper basis. The Directors may also refuse to register an allotment or transfer of shares (whether fully-paid or not) in favour of more 39.3 than four persons jointly.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 39.4 If the Directors refuse to register an allotment or transfer of shares they shall within two months after the date on which: the letter of allotment or instrument of transfer was lodged with the Company (in the case of shares held in 39.4.1 certificated form); or 39.4.2 the Operator-instruction was received by the Company (in the case of shares held in uncertificated form), send to the allottee or transferee notice of the refusal. 40 Instruments of transfer All instruments of transfer which are registered may be retained by the Company. 41 No fee on registration No fee will be charged by the Company in respect of the registration of any transfer or any document relating to or affecting the title to any shares or otherwise for making any entry in the Register affecting the title to any shares. 42 Destruction of documents Subject to compliance with the rules (as defined in the Regulations) applicable to shares of the Company in uncertificated form, the Company shall be entitled to destroy or delete all instruments of transfer or other documents (whether in hard copy or electronic form) which have been registered or on the basis of which registration was made at any time after the expiration of six years from the date of registration thereof and all dividend mandates and notifications of change of address at any time after the expiration of two years from the date of recording thereof and all share certificates which have been cancelled at any time after the expiration of one year from the date of the cancellation thereof and it shall conclusively be presumed in favour of the Company that every entry in the Register purporting to have been made on the basis of an instrument of transfer or other document so destroyed or deleted was duly and properly made and every instrument of transfer so destroyed or deleted was a valid and effective instrument duly and properly registered and every share certificate so destroyed was a valid and effective certificate duly and properly cancelled and every other document hereinbefore mentioned so destroyed or deleted was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company. Provided always that: the provisions aforesaid shall apply only to the destruction or deletion of a document in good faith and without notice of any 42.1 claim (regardless of the parties thereto) to which the document might be relevant; nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction or 42.2 deletion of any such document earlier than as aforesaid or in any other circumstances which would not attach to the Company in the absence of this Article; any document referred to above may, subject to the Statutes, be destroyed before the end of the relevant period so long 42.3 as a copy of such document (whether made electronically, by microfilm, by digital imaging or by any other means) has been made and is retained until the end of the relevant period; and

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 42.4 references herein to the destruction or deletion of any document include references to the disposal thereof in any manner. 43 Further provisions on shares in uncertificated form Subject to the Statutes and the rules (as defined in the Regulations), and apart from any class of wholly dematerialised security, the Directors may determine that any class of shares may be held in uncertificated form and that title to such 43.1 shares may be transferred by means of a relevant system or that shares of any class should cease to be held and transferred as aforesaid. The provisions of these Articles shall not apply to shares of any class which are in uncertificated form to the extent that 43.2 such Articles are inconsistent with: 43.2.1 the holding of shares of that class in uncertificated form; 43.2.2 the transfer of title to shares of that class by means of a relevant system; or 43.2.3 any provision of the Regulations.

Transmission of Shares 44 Persons entitled on death In case of the death of a member, the survivors or survivor where the deceased was a joint holder, and the executors or administrators of the deceased where he was a sole or only surviving holder, shall be the only persons recognised by the Company as having any title to his interest in the shares, but nothing in this Article shall release the estate of a deceased member (whether sole or joint) from any liability in respect of any share held by him. 45 Election by persons entitled by transmission Any person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law may (subject as hereinafter provided) upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share either be registered himself as holder of the share upon giving to the Company notice in writing to that effect or transfer such share to some other person. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the notice or transfer were a transfer made by the member registered as the holder of any such share. 46 Rights of persons entitled by transmission Save as otherwise provided by or in accordance with these Articles, a person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law (upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share) shall be entitled to the same dividends and other advantages as those to which he would be entitled if he were the registered holder of the share except that he shall not be entitled in respect thereof (except with the authority of the Directors) to exercise any right conferred by membership in relation to

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document shareholders’ meetings until he shall have been registered as a member in respect of the share.

Untraced Shareholders 47 Untraced shareholders The Company shall be entitled to sell at the best price reasonably obtainable at the time of sale the shares of a member or the shares to which a person is entitled by virtue of transmission on death or bankruptcy or otherwise by operation of law if and provided that: during the period of six years prior to the date of the publication of the advertisements referred to in paragraph 47.2 below (or, if published on different dates, the first thereof) no communication has been received by the Company from the member or the person entitled by transmission and no cheque or warrant sent by the Company through the post in a pre- 47.1 paid letter addressed to the member or to the person entitled by transmission to the shares at his address on the Register or the last known address given by the member or the person entitled by transmission to which cheques and warrants are to be sent has been cashed and at least three dividends in respect of the shares in question have become payable and no dividend in respect of those shares has been claimed; the Company shall on expiry of the said period of six years have inserted advertisements in both a leading national daily 47.2 newspaper and in a newspaper circulating in the area in which the address referred to in paragraph 47.1 above is located giving notice of its intention to sell the said shares; and during the said period of six years and the period of three months following the publication of the said advertisements the 47.3 Company shall have received no communication from such member or person. 48 Executor and proceeds To give effect to any such sale the Company may appoint any person to transfer, as transferor, the said shares and such transfer shall be as effective as if it had been carried out by the registered holder of or person entitled by transmission to such shares and the title of the transferee shall not be affected by any irregularity or invalidity in the proceedings relating thereto. The net proceeds of sale shall belong to the Company which shall be obliged to account to the former member or other person previously entitled as aforesaid for an amount equal to such proceeds and shall enter the name of such former member or other person in the books of the Company as a creditor for such amount which shall be a permanent debt of the Company. No trust shall be created in respect of the debt, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments (other than shares of the Company or its holding company if any) as the Directors may from time to time think fit. General Meetings 49 Annual and Extraordinary General Meetings An Annual General Meeting shall be held not more than 18 months after the incorporation of the Company and subsequently once in every year, at such time (within a period of not

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document more than 15 months after the holding of the last preceding Annual General Meeting) and place as may be determined by the Directors. All other General Meetings shall be called Extraordinary General Meetings. 50 Convening of General Meetings The Directors may whenever they think fit, and shall on requisition in accordance with the Statutes, proceed with proper expedition to convene an Extraordinary General Meeting.

Notice of General Meetings 51 Notice of General Meetings An Annual General Meeting and any Extraordinary General Meeting at which it is proposed to pass a Special Resolution or (save as provided by the Statutes) a resolution of which special notice has been given to the Company, shall be called by 21 clear days’ notice in writing (including, subject to the provision of the Statutes and regulations of the London Stock Exchange, electronic mail) at the least and any other Extraordinary General Meeting by 14 clear days’ notice in writing (including, subject to the provision of the Statutes and regulations of the London Stock Exchange, electronic mail) at the least. The period of notice shall in each case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held and shall be given in manner hereinafter mentioned to all members other than such as are not under the provisions of these Articles entitled to receive such notices from the Company: provided that the Company may determine that only those persons entered on the Register at the close of business on a day determined by the Company, such day being no more than 21 days before the day that notice of the meeting is sent, shall be entitled to receive such a notice and provided also that a General Meeting notwithstanding that it has been called by a shorter notice than that specified above shall be deemed to have been duly called if it is so agreed: 51.1 in the case of an Annual General Meeting by all the members entitled to attend and vote thereat; and in the case of an Extraordinary General Meeting by a majority in number of the members having a right to attend and vote 51.2 thereat, being a majority together holding not less than 95 per cent in nominal value of the shares giving that right. 52 Contents of notice of General Meetings Every notice calling a General Meeting shall specify the place and the day and hour of the meeting, and there shall appear 52.1 with reasonable prominence in every such notice a statement that a member entitled to attend and vote is entitled to appoint a proxy or proxies to attend and vote instead of him and that a proxy need not be a member of the Company. 52.2 In the case of an Annual General Meeting, the notice shall also specify the meeting as such. The notice shall specify the general nature of the business to be transacted at the meeting and if any resolution is to be 52.3 proposed as an Extraordinary Resolution or as a Special Resolution, the notice shall contain a statement to that effect.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document For the purposes of determining which persons are entitled to attend or vote at a meeting and how many votes such person may cast, the Company may specify in the notice of the meeting a time, not more than 48 hours before the time 52.4 fixed for the meeting, by which a person must be entered on the Register in order to have the right to attend or vote at the meeting.

Overflow of General Meetings The Board may, notwithstanding that the notice of any General Meeting may specify the place of the meeting (the “Principal Place”), at which the chairman of the meeting shall preside, make arrangements for simultaneous attendance 53 and participation at other places by members and proxies entitled to attend the General Meeting but unable to do so at the Principal Place. Such arrangements for simultaneous attendance at the meeting may include arrangements regarding the level of attendance as aforesaid at the other places provided that they shall operate so that any members and proxies excluded 54 from attendance at the Principal Place are able to attend at one or more of the other places. For the purpose of all other provisions of these Articles any such meeting shall be treated as being held and taking place at the Principal Place. The Board may, for the purpose of facilitating the organisation and administration of any General Meeting to which such arrangements apply, from time to time make arrangements, whether involving the issue of tickets (on a basis intended to afford all members and proxies entitled to attend the meeting an equal opportunity of being admitted to the Principal Place) or the imposition of some random means of selection or otherwise as it shall in its absolute discretion consider to be 55 appropriate, and may from time to time vary any such arrangements or make new arrangements in their place and the entitlement of any member or proxy to attend a General Meeting at the Principal Place shall be subject to the arrangements as may be for the time being in force whether stated in the notice of meeting to apply to that meeting or notified to the members concerned subsequent to the provision of the notice of the meeting. Proceedings at General Meetings 56 Chairman The Chairman of the Directors, failing whom a Deputy Chairman, failing whom any Director present and willing to act and, if more than one, chosen by the Directors present at the meetings shall preside as chairman at a General Meeting. If no Director is present within five minutes after the time appointed for holding the meeting and willing to act as chairman, the Directors present shall choose one of their number (or, if no Director be present or if all the Directors present decline to take the chair, the members present and entitled to vote shall choose one of their number) to be chairman of the meeting. 57 Quorum No business other than the appointment of a chairman shall be transacted at any General Meeting unless a quorum is present at the time when the meeting proceeds to business.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Three members present in person or by proxy and entitled to vote shall be a quorum for all purposes. 58 Lack of quorum If within five minutes from the time appointed for a General Meeting (or such longer interval as the chairman of the meeting may think fit to allow) a quorum is not present, or if during the meeting a quorum ceases to be present, the meeting, if convened on the requisition of members, shall be dissolved. In any other case it shall stand adjourned to such other day and such time and place as may have been specified for the purpose in the notice convening the meeting or (if not so specified) as the chairman of the meeting may determine. 59 Adjournment The chairman of any General Meeting at which a quorum is present may with the consent of the meeting (and shall if so directed by the meeting) adjourn the meeting from time to time (or sine die) and from place to place, but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place. Where a meeting is adjourned sine die, the time and place for the adjourned meeting shall be fixed by the Directors. When a meeting is adjourned for 30 days or more or sine die, not less than seven days’ notice of the adjourned meeting shall be given in like manner as in the case of the original meeting. 60 Notice of adjourned meeting Save as hereinbefore expressly provided, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. 61 Amendments to resolutions If an amendment shall be proposed to any resolution under consideration but shall in good faith be ruled out of order by the chairman of the meeting the proceedings on the substantive resolution shall not be invalidated by any error in such ruling. In the case of a resolution duly proposed as a Special or Extraordinary Resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error) may in any event be considered or voted upon. 62 Polls At any General Meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before, or on the declaration of the result of, the show of hands) demanded by: 62.1 the chairman of the meeting; 62.2 not less than five members present in person or by proxy and entitled to vote; a member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of 62.3 all the members having the right to vote at the meeting; or a member or members present in person or by proxy and holding shares in the Company conferring a right to vote at the 62.4 meeting being shares on which an aggregate sum has

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right. 63 Demand for poll A demand for a poll may, before the poll is taken, be withdrawn only with the approval of the chairman of the meeting. A demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made. Unless a poll is taken a declaration by the chairman that a resolution has been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the minute book, shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded for or against such resolution. If a poll is demanded, it shall be taken in such manner (including by use of ballot, voting papers, tickets, electronic means, or any combination thereof) as the chairman of the meeting may direct, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The chairman of the meeting may (and if so directed by the meeting shall) appoint scrutineers (who need not be members) and may adjourn the meeting to some place and time fixed by him for the purpose of declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. 64 Voting on a poll On a poll votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way. Unless his appointment otherwise provides, the proxy may vote or abstain at his discretion on any matter coming before the meeting on which proxies are entitled to vote. 65 Chairman’s casting vote In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a casting vote in addition to any other vote he may have. 66 Timing of poll A poll demanded on the choice of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either immediately or at such subsequent time (not being more than 30 days from the date of the meeting) and place as the chairman may direct. No notice need be given of a poll not taken immediately. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the question on which the poll has been demanded.

Votes of Members 67 Votes attaching to shares Subject to Articles 10.2 and 52.4 and to any special rights or restrictions as to voting attached by or in accordance with these Articles to any class of shares, on a show of hands every member who is present in person or by proxy shall have one vote and on a poll every member who is present in person or by proxy shall have one vote for every share of which he is the holder.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 68 Votes of joint holders In the case of joint holders of a share the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the share. 69 Voting by guardian Where in England or elsewhere a guardian, receiver or other person (by whatever name called) has been appointed by any Court claiming jurisdiction in that behalf to exercise powers with respect to the property or affairs of any member on the ground (however formulated) of mental disorder, the Directors may in their absolute discretion, upon or subject to production of such evidence of the appointment as the Directors may require, permit such guardian, receiver or other person on behalf of such member to vote in person or by proxy at any shareholders’ meeting or to exercise any other right conferred by membership in relation to shareholders’ meetings. 70 Restrictions on voting if holding unpaid shares No member shall, unless the Directors otherwise determine, be entitled in respect of any share held by him to vote either personally or by proxy at a shareholders’ meeting or to exercise any other right conferred by membership in relation to shareholders’ meetings if any call or other sum presently payable by him to the Company in respect of that share remains unpaid. 71 Restrictions on voting in particular circumstances If any member, or any other person appearing to be interested in shares (within the meaning of Part 22 of the Companies Act 2006) held by such member, has been duly served with a notice under Section 793 of the Companies Act 2006 and is 71.1 in default for a period of 14 days from the date of service in supplying to the Company the information thereby required, then (unless the Directors otherwise determine) in respect of: the shares comprising the shareholding account in the Register which comprises or includes the shares in relation to which the default occurred (all or the relevant number as appropriate of such shares being the “default shares”, 71.1.1 which expression shall include any further shares which are issued in respect of such shares after the date of the notice under Section 793 of the Companies Act 2006); and 71.1.2 any other shares held by the member, the member shall (for so long as the default continues) not, nor shall any transferee to whom any of such shares are transferred (other than pursuant to an approved transfer or pursuant to paragraph 71.2.2 below) be entitled to attend or vote either personally or by proxy at a shareholders’ meeting or to exercise any other right conferred by membership in relation to shareholders’ meetings. Where the default shares represent at least 0.25 per cent of the issued shares of the class in question, the Directors may 71.2 in their absolute discretion by notice (a “direction notice”) to such member direct that:

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document any dividend or part thereof or other money which would otherwise be payable in respect of the default shares shall 71.2.1 be retained by the Company without any liability to pay interest thereon when such dividend or other money is finally paid to the member and the member shall not be entitled to elect to receive shares in lieu of dividend; and/or no transfer of any of the shares held by such member shall be registered unless the transfer is an approved transfer 71.2.2 or: (i) the member is not himself in default as regards supplying the information required; and the transfer is of part only of the member’s holding and, when presented for registration, is accompanied by a (ii) certificate by the member in a form satisfactory to the Directors to the effect that after due and careful enquiry the member is satisfied that none of the shares the subject of the transfer are default shares, provided that, in the case of shares in uncertificated form, the Directors may only exercise their discretion not to register a transfer if permitted to do so by the Regulations. Any direction notice may treat shares of a member in certificated and uncertificated form as separate holdings and either apply only to the former or to the latter or make different provision for the former and the latter. Upon the giving of a direction notice its terms shall apply accordingly. The Company shall send to each other person appearing to be interested in the shares which are the subject of any 71.3 direction notice a copy of the notice, but the failure or omission by the Company to do so shall not invalidate such notice. 71.4 Save as herein provided any direction notice shall have effect in accordance with its terms for so long as the default in respect of which the direction notice was issued continues and shall cease to have effect thereafter upon the 71.4.1 Directors so determining (such determination to be made within a period of one week of the default being duly remedied, with written notice thereof being given forthwith to the member). Any direction notice shall cease to have effect in relation to any shares which are transferred by such member by 71.4.2 means of an approved transfer or in accordance with paragraph 71.2.2 above. 71.5 For the purposes of this Article: a person shall be treated as appearing to be interested in any shares if the member holding such shares has been served with a notice under the said Section 793 and either (a) the member has named such person as being so 71.5.1 interested or (b) (after taking into account the response of the member to the said notice and any other relevant information) the Company knows or has reasonable cause to believe that the person in question is or may be interested in the shares; and 71.5.2 a transfer of shares is an approved transfer if:

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document it is a transfer of shares to an offeror by way or in pursuance of acceptance of a takeover offer (as defined in (i) Section 974 of the Companies Act 2006); or the Directors are satisfied that the transfer is made pursuant to a bona fide sale of the whole of the beneficial ownership of the shares to a party unconnected with the member or with any person appearing to be interested in such shares including any such sale made through a recognised investment exchange or (ii) through a stock exchange outside the United Kingdom on which the Company’s shares are normally traded. For the purposes of this sub-paragraph any associate (as that term is defined in Section 435 of the Insolvency Act 1986) shall be included amongst the persons who are connected with the member or any person appearing to be interested in such shares. 71.6 The provisions of this Article are in addition and without prejudice to the provisions of the Companies Acts. 72 Validity and result of vote No objection shall be raised as to the qualification of any voter or the admissibility of any vote except at the meeting or adjourned meeting at which the vote is tendered. Every vote not disallowed at such meeting shall be valid for all purposes. Any such objection shall be referred to the chairman of the meeting, whose decision shall be final and conclusive.

Proxies 73 Proxy need not be a member A proxy need not be a member of the Company. 74 Form of proxy The appointment of a proxy must be in writing in any usual or common form or in any other form which the Directors may approve and: in the case of an individual must either be signed by the appointor or his attorney or authenticated in accordance with 74.1 Article 154; and in the case of a corporation must be either given under its common seal or be signed on its behalf by an attorney or a duly 74.2 authorised officer of the corporation or authenticated in accordance with Article 154. Any signature on or authentication of such appointment need not be witnessed. Where an appointment of a proxy is signed or authenticated in accordance with Article 154 on behalf of the appointor by an attorney, the power of attorney or a copy thereof certified notarially or in some other way approved by the Directors must (failing previous registration with the Company) be submitted to the Company, failing which the appointment may be treated as invalid.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 75 Deposit of form of proxy The appointment of a proxy must be received at such address or one of such addresses (if any) as may be specified for that purpose in or by way of note to or in any document accompanying the notice convening the meeting (or, if no address is so specified, must be left at the Transfer Office) not less than forty-eight hours before the time appointed for the holding of the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or 75.1 adjourned meeting) for the taking of the poll at which it is to be used, and in default shall not be treated as valid. The appointment shall, unless the contrary is stated thereon, be valid as well for any adjournment of the meeting as for the meeting to which it relates. An appointment relating to more than one meeting (including any adjournment thereof) having once been so delivered for the purposes of any meeting shall not require again to be delivered for the purposes of any subsequent meeting to which it relates. Without limiting the foregoing, in relation to any shares in uncertificated form the Directors may permit a proxy to be appointed by electronic means and/or by means of a website in the form of an Uncertificated Proxy Instruction (that is, a properly authenticated dematerialised instruction, and/or other instruction or notification, sent by means of a relevant system to such participant in that system acting on behalf of the Company as the Directors may prescribe, in such form and subject to such terms and conditions as may from time to time be prescribed by the Directors (subject always to the 75.2 facilities and requirements of the relevant system)); and may permit any supplement to, or amendment or revocation of, any such Uncertificated Proxy Instruction to be made by a further Uncertificated Proxy Instruction. The Directors may in addition prescribe the method of determining the time at which any such instruction or notification is to be treated as received by the Company. The Directors may treat any such instruction or notification purporting or expressed to be sent on behalf of a holder of a share as sufficient evidence of the authority of the person sending the instruction to send it on behalf of that holder. 76 Differing proxy appointments When two or more valid but differing proxy appointments are delivered in respect of the same share for use at the same meeting, the one which is last delivered (regardless of its date or the date of its execution (if relevant)) shall be treated as replacing and revoking the others as regards that share and if the Company is unable to determine which was last delivered none of them shall be treated as valid in respect of that share. 77 Rights of proxy A proxy shall have the right to demand or join in demanding a poll but no further right to speak at the meeting, except with the permission of the chairman of the meeting. 78 Revocation of proxy A vote cast or demand for a poll made by proxy shall not be invalidated by the previous death or insanity of the member or by the revocation of the appointment of the proxy or of the authority under which the appointment was made unless notice in writing of such death, insanity or revocation shall have been received by the Company at the address or one of the addresses specified under Article 75 (subject to any conditions attached to the use of a particular address imposed under that Article) or, if no address was specified, at

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Transfer Office 48 hours or such lesser time as the Directors may determine before the commencement of the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) the time appointed for the taking of the poll at which the vote is cast. The Directors may establish such procedures as they deem appropriate to receive and verify the validity and acceptance of the revocation of proxy.

Corporations Acting by Representatives Any corporation which is a member of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any shareholders’ meeting. The person so authorised shall be 79 entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual member of the Company and such corporation shall for the purposes of these Articles be deemed to be present in person at any such meeting if a person so authorised is present thereat. Directors 80 Number of Directors Subject as hereinafter provided the Directors shall not be less than five nor more than 18 in number. The Company may by Ordinary Resolution from time to time vary the minimum number and/or maximum number of Directors. 81 Share qualification A Director shall not be required to hold any shares of the Company by way of qualification. A Director who is not a member of the Company shall nevertheless be entitled to receive notice of, attend and speak at shareholders’ meetings. 82 Directors’ fees Each of the Directors, other than those who hold executive office or are employees of the Company or any subsidiary, shall be paid a fee (which shall accrue from day to day) at such rate as may from time to time be determined by the Directors, provided that the aggregate of all such fees shall not in respect of any year exceed £1,000,000 or such other sum as shall be determined by Ordinary Resolution of the Company. 83 Other remuneration of Directors Any Director who holds any executive office (including for this purpose the office of Chairman, Deputy Chairman or Vice Chairman whether or not such office is held in an executive capacity), or who serves on any committee of the Directors, or who otherwise performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director, may be paid such extra remuneration by way of salary, commission or otherwise or may receive such other benefits as the Directors may determine.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 84 Directors’ expenses The Directors may repay to any Director all such reasonable expenses as he may incur in attending and returning from meetings of the Directors or of any committee of the Directors or shareholders’ meetings or otherwise in connection with the business of the Company. 85 Directors’ pensions and other benefits The Directors shall have power to pay and agree to pay gratuities, pensions or other retirement, superannuation, death or disability benefits to (or to any person in respect of) any Director or ex-Director of the Company or any of its subsidiaries and for the purpose of providing any such gratuities, pensions or other benefits to contribute to any scheme or fund or to pay premiums. 86 Directors’ interests Subject to the provisions of the Statutes and to any further restrictions contained in his contract of employment, and provided that he has disclosed to the Directors the nature and extent of any interest of his, a Director notwithstanding his office: may be a party to, or otherwise interested in, any contract, transaction or arrangement with the Company or in which the 86.1 Company is otherwise interested; may be a director or other officer of, or employed by, or a party to any contract, transaction or arrangement with, or 86.2 otherwise interested in, any body corporate promoted by the Company or in which the Company is otherwise interested; may (or any firm of which he is a partner, employee or member may) act in a professional capacity for the Company (other 86.3 than as Auditor) and be remunerated therefor; and shall not, save as otherwise agreed by him, be accountable to the Company for any benefit which he derives from any such contract, transaction or arrangement or from any such office or employment or from any interest in any such body 86.4 corporate or for such remuneration and no such contract, transaction or arrangement shall be liable to be avoided on the grounds of any such interest or benefit. 87 Appointment of executive Directors The Directors may from time to time appoint one or more of their body to be the holder of any executive office (including, where considered appropriate, the office of Chairman, Deputy Chairman, Vice Chairman or Group Chief Executive) on 87.1 such terms and for such period as they may (subject to the provisions of the Statutes) determine and, without prejudice to the terms of any contract entered into in any particular case, may at any time revoke or vary the terms of any such appointment. The appointment of any Director to the office of Chairman, Deputy Chairman, Vice Chairman or Group Chief Executive or Managing or Joint Managing or Deputy or Assistant Managing Director shall automatically determine if he ceases to be a 87.2 Director but without prejudice to any claim for damages for breach of any contract of service between him and the Company. The appointment of any Director to any other executive office shall not automatically determine if he ceases from any 87.3 cause to be a Director, unless the contract or resolution under which he holds office shall expressly state otherwise, in which event such

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document determination shall be without prejudice to any claim for damages for breach of any contract of service between him and the Company. 88 Powers of executive Directors The Directors may entrust to and confer upon any Director holding any executive office any of the powers exercisable by 88.1 them as Directors upon such terms and conditions and with such restrictions as they think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers.

Appointment and Retirement of Directors 89 Election or appointment of additional director The Company may by Ordinary Resolution elect any person to be a Director either to fill a casual vacancy or as an additional Director. Without prejudice thereto the Directors shall have power at any time so to do, but so that the total number of Directors shall not thereby exceed the maximum number (if any) fixed by or in accordance with these Articles. Any person so appointed by the Directors shall hold office only until the next Annual General Meeting and shall then be eligible for election. 90 Vacation of office The office of a Director shall be vacated in any of the following events, namely: 90.1 if he shall become prohibited by law from acting as a Director; if he shall resign by writing under his hand left at the Office or if he shall in writing offer to resign and the Directors shall 90.2 resolve to accept such offer; if he shall have a bankruptcy order made against him or shall compound with his creditors generally or shall apply to the 90.3 Court for an interim order under Section 253 of the Insolvency Act 1986 in connection with a voluntary arrangement under that act; if in England or elsewhere an order shall be made by any Court claiming jurisdiction in that behalf on the ground (however 90.4 formulated) of mental disorder for his detention or for the appointment of a guardian or for the appointment of a receiver or other person (by whatever name called) to exercise powers with respect to his property or affairs; if he shall be absent from meetings of the Directors for six months without leave and the Directors shall resolve that his 90.5 office be vacated; or if a notice in writing is served upon him, signed by at least 75 per cent of his co-Directors for the time being, to the effect that his office as Director shall on receipt of such notice ipso facto be vacated, but so that if he holds an appointment to an 90.6 executive office which thereby automatically determines such removal shall be deemed an act of the Company and shall have effect without prejudice to any claim for damages for breach of any contract of service between him and the Company.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 91 Retirement by rotation at Annual General Meetings Each Director shall retire at the Annual General Meeting held in the third calendar year following the year in which he was 91.1 elected or last re-elected but, unless he falls within paragraph 91.2 below, he shall be eligible for re-election. A Director shall also retire at any Annual General Meeting if he has agreed to do so (whether in accordance with the terms 91.2 of his appointment or otherwise) and, unless the Directors have agreed otherwise, he shall not be eligible for re-election. 92 Re-election of retiring Director The Company at the meeting at which a Director retires under any provision of these Articles may by Ordinary Resolution fill the office being vacated by electing thereto the retiring Director (if eligible for re-election) or some other person eligible for election. In the absence of such a resolution the retiring Director shall nevertheless be deemed to have been re-elected except in any of the following cases: where at such meeting it is expressly resolved not to fill such office or a resolution for the re-election of such Director is put 92.1 to the meeting and lost; where such Director is ineligible for re-election or has given notice in writing to the Company that he is unwilling to be re- 92.2 elected; 92.3 where a resolution to elect such Director is void by reason of contravention of the next following Article; or 92.4 where such Director has attained any retiring age applicable to him as Director. The retirement shall not have effect until the conclusion of the meeting except where a resolution is passed to elect some other person in the place of the retiring Director or a resolution for his re-election is put to the meeting and lost and accordingly a retiring Director who is re-elected or deemed to have been re-elected will continue in office without a break. 93 Election of two or more Directors A resolution for the election of two or more persons as Directors by a single resolution shall not be moved at any General Meeting unless a resolution that it shall be so moved has first been agreed to by the meeting without any vote being given against it. Any resolution moved in contravention of this provision shall be void. 94 Nomination of Directors for election No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any General Meeting unless not less than seven nor more than 42 days (inclusive of the date on which the notice is given) before the date appointed for the meeting there shall have been lodged at the Office notice in writing signed or authenticated in accordance with Article 154 by some member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also notice in writing signed or authenticated in accordance with Article 154 by the person to be proposed of his willingness to be elected.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 95 Power to remove Director The Company may in accordance with and subject to the provisions of the Statutes by Ordinary Resolution of which special notice has been given remove any Director from office (notwithstanding any provision of these Articles or of any agreement between the Company and such Director, but without prejudice to any claim he may have for damages for breach of any such agreement) and elect another person in place of a Director so removed from office. 96 Age Limit Any provision of the Statutes which, subject to the provisions of these Articles, would have the effect of rendering any person ineligible for appointment or election as a Director or liable to vacate office as a Director on account of his having reached any specified age or of requiring special notice or any other special formality in connection with the appointment or election of any Director over a specified age, shall not apply to the Company. 97 Article deleted by Special Resolution passed on 1 June 2007

Alternate Directors Any Director may at any time by writing under his hand and deposited at the Office, or delivered at a meeting of the Directors, appoint any person (including another Director) to be his alternate Director and may in like manner at any time 98 terminate such appointment. Such appointment, unless previously approved by the Directors or unless the appointee is another Director, shall have effect only upon and subject to being so approved. The appointment of an alternate Director shall determine on the happening of any event which if he were a Director would 99 cause him to vacate such office or if his appointor ceases to be a Director, otherwise than by retirement at a General Meeting at which he is re-elected. An alternate Director shall be entitled to receive notices of meetings of the Directors and shall be entitled to attend and vote as a Director at any such meeting at which the Director appointing him is not personally present and generally at such meeting to perform all functions of his appointor as a Director and for the purposes of the proceedings at such meeting the provisions of these Articles shall apply as if he (instead of his appointor) were a Director. If he shall be himself a Director or shall attend any such meeting as an alternate for more than one Director, his voting rights shall be cumulative but he shall 100 not be counted more than once for the purposes of the quorum. If his appointor is for the time being absent from the United Kingdom or temporarily unable to act through ill health or disability his signature to any resolution in writing of the Directors shall be as effective as the signature of his appointor. To such extent as the Directors may from time to time determine in relation to any committees of the Directors the foregoing provisions of this paragraph shall also apply mutatis mutandis to any meeting of any such committee of which his appointor is a member. An alternate Director shall not (save as aforesaid) have power to act as a Director, nor shall he be deemed to be the agent of his appointor. An alternate Director shall be entitled to contract and be interested in and benefit from contracts or arrangements or 101 transactions and to be repaid expenses and to be

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document indemnified to the same extent mutatis mutandis as if he were a Director but he shall not be entitled to receive from the Company in respect of his appointment as alternate Director any remuneration except only such part (if any) of the remuneration otherwise payable to his appointor as such appointor may by notice in writing to the Company from time to time direct.

Meetings and Proceedings of Directors 102 Governing of meetings of Directors Subject to the provisions of these Articles the Directors may meet together for the despatch of business, adjourn and otherwise regulate their proceedings as they think fit. At any time any Director may, and the Secretary at the request of a 102.1 Director shall, call a meeting of the Directors. Any Director may waive notice of any meeting and any such waiver may be retroactive. A notice of a meeting of directors convened in accordance with paragraph 102.1, or a copy of the text of any resolution proposed to be passed in accordance with Article 110, (each a “Communication”) shall be provided to each Director personally, by word of mouth, by notice in writing or by electronic means (in the case of a written notice or a notice sent by electronic means, sent to him at his last known address or such other address as may be notified to the Secretary from time to time), and each Director shall, on appointment, be taken to have agreed to the giving of notices in any such 102.2 manner. Any such Communication may be delivered by hand or sent by courier, fax, electronic mail or pre-paid first class post. If sent by fax or electronic mail such Communication shall conclusively be deemed to have been given or served at the time of despatch. If sent by post or courier such Communication shall conclusively be deemed to have been received 24 hours from the time of posting or despatch, in the case of inland mail and couriers in the United Kingdom, or 48 hours from the time of posting or despatch in the case of international mail and couriers. A Communication shall be deemed duly served under paragraph 102.2 if sent to the address, fax number or electronic mail address last provided by each Director to the Secretary. The non-receipt by any Director of any Communication served in 102.3 accordance with the provisions of this Article 102 shall not invalidate any meeting of directors, or any written resolution signed in accordance with Article 110, to which the Communication relates if such meeting or resolution is otherwise held or signed in accordance with the provisions of these Articles. 103 Quorum The quorum necessary for the transaction of business of the Directors may be fixed from time to time by the Directors and unless so fixed at any other number shall be three. A meeting of the Directors at which a quorum is present shall be competent to exercise all powers and discretions for the time being exercisable by the Directors. For the purposes of these Articles any Director who is able (directly or by telephonic or other communication equipment) to speak and be heard by each of the other Directors present or deemed to be present at any meeting of the Directors, shall be deemed to be present in person at such meeting and shall be entitled to vote or be counted in the quorum accordingly. Such meeting shall be deemed to take place where the largest group of those participating is

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document assembled, or, if there is no such group, where the chairman of the meeting then is, and the word “meeting” shall be construed accordingly. 104 Casting vote Questions arising at any meeting of the Directors shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have a second or casting vote. 105 Directors’ interests Save as herein provided, a Director shall not vote in respect of any contract or arrangement or any other proposal whatsoever in which he has any material interest otherwise than by virtue of interests in shares or debentures or other securities of, or otherwise in or through, the Company. A Director shall not be counted in the quorum at a meeting in relation to any resolution on which he is not entitled to vote. 106 Directors may have interests Subject to the provisions of the Statutes, a Director shall (in the absence of some other material interest than is indicated 106.1 below) be entitled to vote (and be counted in the quorum) in respect of any resolution concerning any of the following matters, namely: the giving of any security, guarantee or indemnity in respect of (i) money lent or obligations incurred by him or by any other person at the request of or for the benefit of the Company or any of its subsidiary undertakings or (ii) a 106.1.1 debt or other obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security; any proposal concerning an offer of shares or debentures or other securities of or by the Company or any of its 106.1.2 subsidiary undertakings in which offer he is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which he is to participate; any proposal concerning any other body corporate in which he is interested, directly or indirectly and whether as an officer or shareholder or otherwise, provided that he (together with persons connected with him within the meaning of the Companies Acts) does not have an interest (as that term is used in Part 22 of the Companies Act 2006) in 1 106.1.3 per cent or more of the issued equity share capital of any class of such body corporate (or of any third company through which his interest is derived) or of the voting rights available to members of the relevant body corporate (any such interest being deemed for the purpose of this Article to be a material interest in all circumstances); any proposal relating to an arrangement for the benefit of the employees of the Company or any of its subsidiary 106.1.4 undertakings which does not award him any privilege or benefit not generally awarded to the employees to whom such arrangement relates; and any proposal concerning (i) insurance which the Company proposes to maintain or purchase for the benefit of 106.1.5 Directors or for the benefit of persons who include Directors, or (ii) indemnities in favour of Directors, or (iii) the funding of expenditure

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document by one or more Directors on defending proceedings against him or them, or (iv) doing anything to enable such Director or Directors to avoid incurring such expenditure. Where proposals are under consideration concerning the appointment (including fixing or varying the terms of appointment) of two or more Directors to offices or employments with the Company or any body corporate in which the 106.2 Company is interested, the proposals may be divided and considered in relation to each Director separately and in such case each of the Directors concerned (if not debarred from voting under paragraph 106.1.3 of this Article) shall be entitled to vote (and be counted in the quorum) in respect of each resolution except that concerning his own appointment. If any question shall arise at any time as to the materiality of a Director’s interest or as to his entitlement to vote and such question is not resolved by his voluntarily agreeing to abstain from voting, such question shall be referred to the chairman 106.3 of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive except in a case where the nature or extent of the interest of such Director has not been fairly disclosed. The Company may by Ordinary Resolution suspend or relax the provisions of this Article to any extent or ratify any 106.4 transaction not duly authorised by reason of a contravention of this Article 106. 107 Directors’ interests — general For the purposes of Articles 86, 105 and 106: a general notice given to the Directors that a Director is to be regarded as having an interest of the nature and extent specified in the notice in any contract, transaction or arrangement in which a specified person or class of persons is 107.1 interested shall be deemed to be a disclosure that the Director has an interest in any such contract, transaction or arrangement of the nature and extent so specified; an interest of a person who is connected (as such expression is defined in the Companies Acts) with a Director shall be 107.2 treated as an interest of the Director; and an interest (whether of his or of such a connected person) of which a Director has no knowledge and of which it is 107.3 unreasonable to expect him to have knowledge shall not be treated as an interest of his. 108 Number of Directors below minimum The continuing Directors may act notwithstanding any vacancies, but if and so long as the number of Directors is reduced below the minimum number fixed by or in accordance with these Articles the continuing Directors or Director may act for the purpose of filling such vacancies or of summoning General Meetings, but not for any other purpose. If there be no Directors or Director able or willing to act, then any two members may summon a General Meeting for the purpose of appointing Directors. 109 Chairman The Directors may elect from their number a Chairman, a Deputy Chairman and/or a Vice Chairman (or two or more 109.1 Deputy Chairmen and/or Vice Chairmen) and determine the

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document period for which each is to hold office. If no Chairman, Deputy Chairman or Vice Chairman shall have been appointed or if at any meeting of the Directors no Chairman, Deputy Chairman or Vice Chairman shall be present within five minutes after the time appointed for holding the meeting, the Directors present may choose one of their number to be chairman of the meeting. If at any time there is more than one Deputy Chairman and/or Vice Chairman the right in the absence of the Chairman to 109.2 preside at a meeting of the Directors or of the Company shall be determined as between the Deputy Chairmen and/or Vice Chairmen present (if more than one) by seniority in length of appointment or otherwise as resolved by the Directors. 110 Written resolutions A resolution in writing of the Directors signed or approved in writing by 70 per cent of the Directors entitled to vote thereon (being not less in number than a quorum for the meetings of Directors) shall be as valid and effectual as a resolution duly passed at a meeting of the Directors and may consist of several documents in the same or similar form. A resolution in writing of the Directors shall be effective upon receipt by the Secretary of resolutions signed or approved in writing by the requisite number of Directors. 111 Appointment and constitution of committees The Directors may delegate any of their powers or discretions (including without prejudice to the generality of the foregoing all powers and discretions whose exercise involves or may involve the payment of remuneration to or the conferring of any other benefit on all or any of the Directors) to committees. Any such committee shall, unless the Directors otherwise resolve, have power to sub-delegate to sub-committees any of the powers or discretions delegated to it. Any such committee or sub-committee shall consist of one or more Directors and (if thought fit) one or more other named person or persons to be co-opted as hereinafter provided. Insofar as any such power or discretion is delegated to a committee or 111.1 sub-committee, any reference in these Articles to the exercise by the Directors of the power or discretion so delegated shall be read and construed as if it were a reference to the exercise hereof by such committee or sub-committee. Any committee or sub-committee so formed shall in the exercise of the powers so delegated conform to any regulations which may from time to time be imposed by the Directors. Any such regulations may provide for or authorise the co-option to the committee or sub-committee of persons other than Directors and may provide for members who are not Directors to have voting rights as members of the committee or sub-committee. The meetings and proceedings of any such committee or sub-committee consisting of two or more persons shall be 111.2 governed mutatis mutandis by the provisions of these Articles regulating the meetings and proceedings of the Directors, so far as the same are not superseded by any regulations made by the Directors under the last preceding Article. All acts done by any meeting of Directors, or of any such committee or sub-committee, or by any person acting as a Director or as a member of any such committee or sub-committee, shall as regards all persons dealing in good faith with 111.3 the Company, notwithstanding that there was some defect in the appointment of any of the persons acting as aforesaid, or that any such persons were disqualified or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document was qualified and had continued to be a Director or member of the committee or sub-committee and had been entitled to vote.

Borrowing Powers 112 Borrowing powers Subject as hereinafter provided and to the provisions of the Statutes, the Directors may exercise all the powers of the Company to borrow money, and to mortgage or charge its undertaking, property (present and future) and uncalled capital or any part or parts thereof and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party. 113 Borrowing restrictions The Directors shall restrict the borrowings of the Company and exercise all voting and other rights or powers of control exercisable by the Company in relation to its subsidiary companies (if any) so as to secure (so far, as regards subsidiaries, as by such exercise they can secure) that the aggregate amount for the time being remaining outstanding of all moneys 113.1 borrowed by the Group and for the time being owing to persons outside the Group shall not at any time without the previous sanction of an Ordinary Resolution of the Company exceed an amount equal to three times the share capital and consolidated reserves. No person dealing with the Company or any of its subsidiaries shall by reason of the foregoing provision be concerned to see or enquire whether the said limit is observed and no debt incurred or security given in excess of such limit shall be 113.2 invalid or ineffectual unless the lender or the recipient of the security had, at the time when the debt was incurred or security given, express notice that the said limit had been or would thereby be exceeded. General Powers of Directors 114 General powers The business and affairs of the Company shall be managed by the Directors, who may exercise all such powers of the Company as are not by the Statutes or by these Articles required to be exercised by the Company in General Meeting subject nevertheless to any regulations of these Articles, to the provisions of the Statutes and to such regulations, whether or not consistent with these Articles, as may be prescribed by Special Resolution of the Company, but no regulation so made by the Company shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Directors by any other Article. 115 Local boards The Directors may establish any local boards or agencies for managing any of the affairs of the Company, either in the United Kingdom or elsewhere, and may appoint any persons to be members of such local boards, or any managers or agents, and may fix their remuneration, and may delegate to any local board, manager or agent any of the powers,

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document authorities and discretions vested in the Directors, with power to sub-delegate, and may authorise the members of any local boards, or any of them, to fill any vacancies therein, and to act notwithstanding vacancies, and any such appointment or delegation may be made upon such terms and subject to such conditions as the Directors may think fit, and the Directors may remove any person so appointed, and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby. 116 Appointment of attorney The Directors may from time to time and at any time by power of attorney or otherwise appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in him. 117 Register of members in territories Subject to and to the extent permitted by the Statutes, the Company, or the Directors on behalf of the Company, may cause to be kept in any territory a branch register of members resident in such territory, and the Directors may make and vary such regulations as they may think fit respecting the keeping of any such register. 118 Signature on cheques etc. All cheques, promissory notes, drafts, bills of exchange, and other negotiable or transferable instruments, and all receipts for moneys paid to the Company, shall be signed, drawn, accepted, endorsed, or otherwise executed, as the case may be, in such manner as the Directors shall from time to time by resolution determine.

President The Directors may from time to time elect a President of the Company and may determine the period for which he shall hold office. Such President may be either honorary or paid such remuneration as the Directors in their discretion shall think 119 fit, and need not be a Director but shall, if not a Director, be entitled to receive notice of and attend and speak, but not to vote, at meetings of the Board of Directors only if so invited by the Directors. The President (unless he is a Director) shall not be an officer of the Company for the purposes of the Companies Acts.

Departmental, Divisional or Local Directors The Directors may from time to time appoint any person to be a Departmental, Divisional or Local Director and define, limit 120 or restrict his powers and duties and determine his remuneration and the designation of his office and may at any time remove any such person from such office. A Departmental, Divisional or Local Director (notwithstanding that

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the designation of his office may include the word “Director”) shall not by virtue of such office be or have power in any respect to act as a Director of the Company nor be entitled to receive notice of or attend or vote at meetings of the Directors nor be deemed to be a Director for any of the purposes of these presents.

Secretary The Secretary shall be appointed by the Directors on such terms and for such period as they may think fit. Any Secretary so appointed may at any time be removed from office by the Directors, but without prejudice to any claim for damages for 121 breach of any contract of service between him and the Company. If thought fit two or more persons may be appointed as Joint Secretaries. The Directors may also appoint from time to time on such terms as they may think fit one or more Deputy and/or Assistant Secretaries.

The Seal The Directors shall provide for the safe custody of the Seal and any Securities Seal and neither shall be used without the authority of the Directors or of a committee authorised by the Directors in that behalf. The Securities Seal shall be used only for sealing securities issued by the Company and documents creating or evidencing securities so issued. Every 122 instrument to which the Seal or the Securities Seal shall be affixed (other than a certificate for or evidencing shares, debentures or other securities (including options) issued by the Company) shall be signed autographically by one Director and the Secretary or Deputy or Assistant Secretary or by two Directors. Where the Statutes so permit, any instrument signed by one Director and the Secretary or by two Directors and expressed to be executed by the Company shall have the same effect as if executed under the Seal, provided that no instrument shall 123 be so signed which makes it clear on its face that it is intended to have effect as a deed without the authority of the Directors or of a committee authorised by the Directors in that behalf. The Company may exercise the powers conferred by the Statutes with regard to having an official seal for use abroad and 124 such powers shall be vested in the Directors.

Record Date Notwithstanding any other provision of these Articles but subject always to the Statutes the Company or the Directors may by resolution specify any date (the “record date”) as the date at the close of business (or such other time as the Directors may determine) on which persons registered as the holders of shares or other securities shall be entitled to receipt of any 125 dividend, distribution, interest, allotment, issue, notice, information, document or circular and such record date may be on or at any time before the date on which the same is paid or made or (in the case of any dividend, distribution, interest, allotment or issue) at any time after the same is recommended, resolved, declared or announced but without prejudice to the rights inter se in respect of the same of transferors and transferees of any such shares or other securities.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Authentication of Documents Any Director or the Secretary or any person appointed by the Directors for the purpose shall have power to authenticate any documents affecting the constitution of the Company and any resolution passed at a shareholders’ meeting or at a meeting of the Directors or any committee, and any books, records, documents and accounts relating to the business of the Company, and to certify copies thereof or extracts therefrom as true copies or extracts; and where any books, records, documents or accounts are elsewhere than at the Office the local manager or other officer of the Company having the 126 custody thereof shall be deemed to be a person appointed by the Directors as aforesaid. A document purporting to be a copy of any such resolution, or an extract from the minutes of any such meeting which is certified as aforesaid shall be conclusive evidence in favour of all persons dealing with the Company upon the faith thereof that such resolution has been duly passed or, as the case may be, that any minute so extracted is a true and accurate record of proceedings at a duly constituted meeting.

Reserves The Directors may from time to time set aside out of the profits of the Company and carry to reserve such sums as they think proper which, at the discretion of the Directors, shall be applicable for any purpose to which the profits of the Company may properly be applied and pending such application may either be employed in the business of the Company 127 or be invested. The Directors may divide the reserve into such special funds as they think fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided. The Directors may also without placing the same to reserve carry forward any profits. In carrying sums to reserve and in applying the same the Directors shall comply with the provisions of the Statutes.

Dividends 128 Final dividends The Company may by Ordinary Resolution declare dividends but no such dividend shall exceed the amount recommended by the Directors. 129 Fixed and interim dividends If and so far as in the opinion of the Directors the profits of the Company justify such payments, the Directors may pay the fixed dividends on any class of shares carrying a fixed dividend expressed to be payable on fixed dates on the half-yearly or other dates prescribed for the payment thereof and may also from time to time pay interim dividends on shares of any class of such amounts and on such dates and in respect of such periods as they think fit. Provided the Directors act in good faith they shall not incur any liability to the holders of any shares for any loss they may suffer by the lawful payment, on any other class of shares having rights ranking after or pari passu with those shares, of any such fixed or interim dividend as aforesaid.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 130 Ranking of shares for dividends Unless and to the extent that the rights attached to any shares or the terms of issue thereof otherwise provide, all dividends shall (as regards any shares not fully paid throughout the period in respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts paid on the shares during any portion or portions of the period in respect of which the dividend is paid. For the purposes of this Article no amount paid on a share in advance of calls shall be treated as paid on the share. 131 No dividend except out of profits No dividend shall be paid otherwise than out of profits available for distribution under the provisions of the Statutes. 132 Treatment of dividend Subject to the provisions of the Statutes, where any asset, business or property is bought by the Company as from a past date the profits and losses thereof as from such date may at the discretion of the Directors in whole or in part be carried to revenue account and treated for all purposes as profits or losses of the Company. Subject as aforesaid, if any shares or securities are purchased cum dividend or interest, such dividend or interest may at the discretion of the Directors be treated as revenue, and it shall not be obligatory to capitalise the same or any part thereof. 133 No interest on dividends No dividend or other moneys payable on or in respect of a share shall bear interest as against the Company. 134 Retention of dividends The Directors may retain any dividend or other moneys payable on or in respect of a share on which the Company has a 134.1 Iien and may apply the same in or towards satisfaction of the moneys payable to the Company in respect of that share. The Directors may retain the dividends payable upon shares in respect of which any person is under the provisions as to the transmission of shares hereinbefore contained entitled to become a member, or which any person is under those 134.2 provisions entitled to transfer, until such person shall become a member in respect of such shares or shall transfer the same. 135 Waiver of dividends The waiver in whole or in part of any dividend on any share by any document (whether or not executed as a Deed) shall be effective only if such waiver is in writing (whether or not executed as a deed), signed or authenticated in accordance with Article 154 by the shareholder (or the person entitled to the share in consequence of the death or bankruptcy of the holder or otherwise by operation of law) and delivered to the Company and if or to the extent that the same is accepted as such or acted upon by the Company.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 136 Unclaimed dividends The payment by the Directors of any unclaimed dividend or other moneys payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments (other than shares of the Company or its holding company if any) as the Directors may from time to time think fit. Any dividend unclaimed after a period of six years from the date of declaration of such dividend shall be forfeited and shall revert to the Company. 137 Distribution in specie The Company may upon the recommendation of the Directors by Ordinary Resolution direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid-up shares or debentures of any other company) and the Directors shall give effect to such resolution. Where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional certificates, may fix the value for distribution of such specific assets or any part thereof, may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of members and may vest any assets in trustees. 138 Manner of payment of dividends Any dividend or other moneys payable on or in respect of a share shall be paid to the member or to such other person as the member (or, in the case of joint holders of a share, all of them) may in writing direct. Such dividend or other moneys may be paid (i) by cheque sent by post to the payee or, where there is more than one payee, to any one of them, or (ii) by inter-bank transfer to such account as the payee or payees shall in writing direct, or (iii) (if so authorised by the holder of 138.1 shares in uncertificated form) using the facilities of a relevant system (subject to the facilities and requirements of the relevant system), or (iv) by such other method of payment as the member (or, in the case of joint holders of a share, all of them) may agree to. Every such payment shall be sent at the risk of the person or persons entitled to the money represented thereby, and payment of a cheque by the banker upon whom it is drawn, and any transfer or payment within (ii), (iii) or (iv) above, shall be a good discharge to the Company. Subject to the provisions of these Articles and to the rights attaching to any shares, any dividend or other moneys payable 138.2 on or in respect of a share may be paid in such currency as the Directors may determine, using such exchange rate for currency conversions as the Directors may select. The Company may cease to send any cheque, warrant or order by post for any dividend on any shares which is normally paid in that manner if in respect of at least two consecutive dividends payable on those shares the cheque, warrant or order has been returned undelivered or remains uncashed but, subject to the provisions of these Articles, shall 138.3 recommence sending cheques, warrants or orders in respect of the dividends payable on those shares if the holder or person entitled by transmission claims the arrears of dividend and does not instruct the Company to pay future dividends in some other way.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 139 Joint holders If two or more persons are registered as joint holders of any share, or are entitled jointly to a share in consequence of the death or bankruptcy of the holder or otherwise by operation of law, any one of them may give effectual receipts for any dividend or other moneys payable or property distributable on or in respect of the share. 140 Record date for dividends Any resolution for the declaration or payment of a dividend on shares of any class, whether a resolution of the Company in General Meeting or a resolution of the Directors, may specify that the same shall be payable to the persons registered as the holders of such shares at the close of business on a particular date, notwithstanding that it may be a date prior to that on which the resolution is passed, and thereupon the dividend shall be payable to them in accordance with their respective holdings so registered, but without prejudice to the rights inter se in respect of such dividend of transferors and transferees of any such shares.

Capitalisation of Profits and Shares The Directors may, with the sanction of an Ordinary Resolution of the Company, capitalise any sum standing to the credit of any of the Company’s reserve accounts (including any share premium account, capital redemption reserve or other undistributable reserve) or any sum standing to the credit of profit and loss account by appropriating such sum to the holders of Ordinary Shares on the Register at the close of business on the date of the Resolution (or such other date as may be specified therein or determined as therein provided) in proportion to their then holdings of Ordinary Shares and applying such sum on their behalf in paying up in full unissued Ordinary Shares (or, subject to any special rights previously conferred on any shares or class of shares for the time being issued, unissued shares of any other class) for allotment and 141 distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid. The Directors may do all acts and things considered necessary or expedient to give effect to any such capitalisation with full power to the Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the members concerned). The Directors may authorise any person to enter on behalf of all the members interested into an agreement with the Company providing for any such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned. 142 Scrip dividends Subject as hereinafter provided, the Directors may offer to ordinary shareholders the right to receive, in lieu of dividend (or 142.1 part thereof), an allotment of new Ordinary Shares credited as fully paid. The Directors shall not make such an offer unless so authorised by an Ordinary Resolution passed at any General Meeting, which authority may extend to dividends declared or paid prior to the Annual General Meeting of the Company 142.2 occurring thereafter, but no further provided that this Article shall, without the need for any further Ordinary Resolution, authorise the Directors to offer rights of election in respect of any dividend declared or

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document proposed after the date of the adoption of these Articles and at or prior to the Annual General Meeting which is held in the fifth year after the Ordinary Resolution is passed. The Directors may either offer such rights of election in respect of the next dividend (or part thereof) proposed to be paid; 142.3 or may offer such rights of election in respect of that dividend and all subsequent dividends, until such time as the election is revoked; or may allow shareholders to make an election in either form. The basis of allotment on each occasion shall be determined by the Directors so that, as nearly as may be considered convenient, the value of the Ordinary Shares to be allotted in lieu of any amount of dividend shall equal such amount. For such purpose the value of an Ordinary Share shall be either (i) the average of the closing price of an Ordinary Share on 142.4 the London Stock Exchange, as derived from the Daily Official List, on each of the first five business days on which the Ordinary Shares are quoted “ex” the relevant dividend; or (ii) established in such other manner as may be determined by the Directors. If the Directors determine to offer such right of election on any occasion they shall give notice in writing to the ordinary shareholders of such right and shall issue forms of election and shall specify the procedures to be followed in order to exercise such right provided that they need not give such notice to a shareholder who has previously made, and has not 142.5 revoked, an earlier election to receive Ordinary Shares in lieu of all future dividends, but instead shall send him a reminder that he has made such an election, indicating how that election may be revoked in time for the next dividend proposed to be paid. On each occasion the dividend (or that part of the dividend in respect of which a right of election has been accorded) shall not be payable on Ordinary Shares in respect whereof the share election has been duly exercised and has not been revoked (the “elected Ordinary Shares”), and in lieu thereof additional shares (but not any fraction of a share) shall be allotted to the holders of the elected Ordinary Shares on the basis of allotment determined as aforesaid. For such 142.6 purpose the Directors shall capitalise, out of such of the sums standing to the credit of reserves (including any share premium account or capital redemption reserve) or profit and loss account as the Directors may determine, a sum equal to the aggregate nominal amount of the additional Ordinary Shares to be allotted on that occasion on such basis and shall apply the same in paying up in full the appropriate number of unissued Ordinary Shares for allotment and distribution to and amongst the holders of the elected Ordinary Shares on such basis. The additional Ordinary Shares so allotted on any occasion shall rank pari passu in all respects with the fully-paid 142.7 Ordinary Shares then in issue save only as regards participation in the relevant dividend. 142.8 Article 141 shall apply (mutatis mutandis) to any capitalisation made pursuant to this Article. No fraction of an Ordinary Share shall be allotted. The Directors may make such provision as they think fit for any fractional entitlements including, without limitation, provision whereby, in whole or in part, the benefit thereof accrues to 142.9 the Company and/or fractional entitlements are accrued and/or retained and in either case accumulated on behalf of any ordinary shareholder. The Directors may on any occasion determine that rights of election shall not be made available to any ordinary 142.10 shareholders with registered addresses in any territory where in the absence of a registration statement or other special formalities the circulation of an

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document offer of rights of election would or might be unlawful, and in such event the provisions aforesaid shall be read and construed subject to such determination. In relation to any particular proposed dividend the Directors may in their absolute discretion decide (i) that shareholders shall not be entitled to make any election in respect thereof and that any election previously made shall not extend to 142.11 such dividend or (ii) at any time prior to the allotment of the Ordinary Shares which would otherwise be allotted in lieu thereof, that all elections to take shares in lieu of such dividend shall be treated as not applying to that dividend, and if so the dividend shall be paid in cash as if no elections had been made in respect of it.

Minutes 143 The Directors shall cause Minutes to be made in books to be provided for the purpose: 143.1 of all appointments of officers made by the Directors; 143.2 of the names of the Directors present at each meeting of Directors and of any committee of Directors; and of all resolutions and proceedings at all meetings of the Company and of any class of members of the Company and of the 143.3 Directors and of committees of Directors.

Accounts 144 Accounting records Accounting records sufficient to show and explain the Company’s transactions and otherwise complying with the Statutes shall be kept at the Office, or at such other place as the Directors think fit, and shall always be open to inspection by the officers of the Company. Subject as aforesaid no member of the Company or other person shall have any right of inspecting any account or book or document of the Company except as conferred by statute or ordered by a Court of competent jurisdiction or authorised by the Directors. 145 Copies of accounts for members A copy of every balance sheet and profit and loss account which is to be laid before a General Meeting of the Company (including every document required by law to be comprised therein or attached or annexed thereto) shall not less than 21 days before the date of the meeting be sent to every member of, and every holder of debentures of, the Company and to every other person who is entitled to receive notices of General Meetings from the Company under the provisions of the Statutes or of these Articles provided that this Article shall not require a copy of these documents to be sent to any member to whom a summary financial statement is sent in accordance with the Statutes and provided further that this Article shall not require a copy of these documents to be sent to more than one of joint holders nor to any person of whose postal address the Company is not aware, but any member or holder of debentures to whom a copy of these documents has not been sent shall be entitled to receive a copy free of charge on application at the Office.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Auditors 146 Validity of Auditor’s acts Subject to the provisions of the Statutes, all acts done by any person acting as an Auditor shall, as regards all persons dealing in good faith with the Company, be valid, notwithstanding that there was some defect in his appointment or that he was at the time of his appointment not qualified for appointment or subsequently became disqualified. 147 Auditor’s rights to attend General Meetings An Auditor shall be entitled to attend any General Meeting and to receive all notices of and other communications relating to any General Meeting which any member is entitled to receive and to be heard at any General Meeting on any part of the business of the meeting which concerns him as Auditor.

Communications with Members 148 Service of notices etc. Any notice to be given to or by any person pursuant to these Articles shall be in writing, except that notice calling a 148.1 meeting of the Directors may be given as provided for in Article 102. The Company may, subject to and in accordance with the Companies Acts and these Articles, send or supply all types of 148.2 notices, documents or information to members by electronic means, including by making such notices, documents or information available on a website. The Company Communications Provisions have effect for the purposes of any provision of the Companies Acts or these 148.3 Articles that authorises or requires notices, documents or information to be sent or supplied by or to the Company. Any notice, document or information (including a share certificate) which is sent or supplied by the Company in hard copy form or in electronic form but to be delivered other than by electronic means and/or by means of a website and which is sent by pre-paid post and properly addressed shall be deemed to have been received by the intended recipient at the 148.4 expiration of 24 hours (or, where second class mail is employed, 48 hours) after the time it was posted, and in proving such receipt it shall be sufficient to show that such notice, document or information was properly addressed, pre-paid and posted. Any notice, document or information which is sent or supplied by the Company by electronic means and/or by means of a website shall be deemed to have been received by the intended recipient at 9 a.m. on the day following that on which it 148.5 was transmitted, and in proving such receipt it shall be sufficient to show that such notice, document or information was properly addressed. Any notice, document or information which is sent or supplied by the Company by means of a website shall be deemed to 148.6 have been received when the material was first made available on the website or, if later, when the recipient received (or is deemed to have received) notice of the fact that the material was available on the website.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The accidental failure to send, or the non-receipt by any person entitled to, any notice of, or other document or information 148.7 relating to, any meeting or other proceeding shall not invalidate the relevant meeting or proceeding. The provisions of this Article shall have effect in place of the Company Communications Provisions relating to deemed 148.8 delivery of notices, documents or information. 149 Joint holders Anything which needs to be agreed or specified by the joint holders of a share shall for all purposes be taken to be agreed 149.1 or specified by all the joint holders where it has been agreed or specified by the joint holder whose name stands first in the Register in respect of the share. Any notice, document or information which is authorised or required to be sent or supplied to joint holders of a share may 149.2 be sent or supplied to the joint holder whose name stands first in the Register in respect of the share, to the exclusion of the other joint holders. The provisions of this Article shall have effect in place of the Company Communications Provisions regarding joint holders 149.3 of shares. 150 Deceased and bankrupt members A person who claims to be entitled to a share in consequence of the death or bankruptcy of a member or otherwise by 150.1 operation of law shall supply to the Company: (a) such evidence as the Directors may reasonably require to show his title to the share, (b) an address to which notices may be sent or supplied to such person, whereupon he shall be entitled to have sent or supplied to him at such address any notice, document or information to which the said member would have been entitled, and in so sending or supplying the relevant notice, document or information such notice, document or information shall for all purposes be deemed as sufficiently sent or supplied to all persons interested (whether jointly with or as claiming through or under him) in the share. Save as provided by paragraph 150.1, any notice, document or information sent or supplied to the address of any member pursuant to these Articles shall, notwithstanding that such member be then dead or bankrupt or in liquidation, and whether 150.2 or not the Company has notice of his death or bankruptcy or liquidation, be deemed to have been duly sent or supplied in respect of any share registered in the name of such member as sole or first-named joint holder. The provisions of this Article shall have effect in place of the Company Communications Provisions regarding the death or 150.3 bankruptcy or a holder of shares in the Company. 151 Overseas members Subject to the Statutes, the Company shall not be required to send notices, documents or information to a member who (having no registered address within the United Kingdom) has not supplied to the Company an address within the United Kingdom for the service of notices. If on three consecutive occasions notices have been sent through the post to any member at his registered address or his address for the service of notices but have been

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document returned undelivered, such member shall not thereafter be entitled to receive notices from the Company until he shall have communicated with the Company and supplied in writing to the Transfer Office a new registered address within the United Kingdom for the service of notices. 152 Suspension of postal services If at any time by reason of the suspension or curtailment of postal services within the United Kingdom the Company is unable to give notice by post in hard copy form of a shareholders’ meeting, such notice shall be deemed to have been given to all members entitled to receive such notice in hard copy form if such notice is advertised on the same date in at least two national daily newspapers with appropriate circulation and such notice shall be deemed to have been given on the day when the advertisement appears (or first appears). In any such case, the Company shall (i) make such notice available on its website from the date of such advertisement until the conclusion of the meeting or any adjournment thereof and (ii) send confirmatory copies of the notice by post to such members if at least seven days prior to the meeting the posting of notices again becomes practicable. 153 Statutory requirements as to notices Nothing in any of Articles 148-155 inclusive shall affect any requirement of the Statutes that any particular notice, document or information be served in any particular manner. 154 Signature or authentication of documents sent by electronic means Where these Articles require a notice or other document to be signed or authenticated by a member or other person then any notice or other document sent or supplied in electronic form is sufficiently authenticated in any manner authorised by the Company Communications Provisions or in such other manner approved by the Directors. The Directors may designate mechanisms for validating any such notice or other document, and any such notice or other document not so validated by use of such mechanisms shall be deemed not to have been received by the Company. 155 Article deleted by Special Resolution passed on 1 June 2007

Winding up 156 Directors’ powers to petition The Directors shall have power in the name and on behalf of the Company to present a petition to the Court for the Company to be wound up. 157 Distribution of assets in specie If the Company shall be wound up (whether the liquidation is voluntary, under supervision, or by the Court) the Liquidator may, with the authority of an Extraordinary Resolution, divide among the members in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds, and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document such division shall be carried out as between the members or different classes of members. The Liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the Liquidator with the like authority shall think fit, and the liquidation of the Company may be closed and the Company dissolved but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

Indemnity 158 Indemnity Subject to the provisions of, and so far as may be permitted by and consistent with, the Statutes, every Director and officer of the Company shall be indemnified by the Company out of its own funds against (a) any liability incurred by or attaching to him in connection with any negligence, default, breach of duty or breach of trust by him in relation to the Company in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers other than (i) any liability to the Company or any associated company (as defined in Section 309A(6) of the Companies Act 1985) and (ii) any liability of the kind referred to in Sections 309B(3) or (4) of the Companies Act 1985; and (b) any other 158.1 liability incurred by or attaching to him in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers and/or otherwise in relation to or in connection with his duties, powers or office. Such indemnity shall extend to liabilities arising after a person ceases to be a Director or an officer of the Company in respect of acts or omissions while he was a Director or an officer if such acts or omissions would have been indemnified had the relevant person remained a Director or officer, as the case may be. Where a Director or officer is indemnified against any liability in accordance with this paragraph 158.1, such indemnity shall extend to all costs, charges, losses, expenses and liabilities incurred by him in relation thereto. Without prejudice to paragraph 158.1 above, the Directors shall have power to purchase and maintain insurance for or for the benefit of (i) any person who is or was at any time a Director or officer of any Relevant Company (as defined in paragraph 158.3 below), or (ii) any person who is or was at any time a trustee of any pension fund or employees’ share scheme in which employees of any Relevant Company are interested, including (without prejudice to the generality of the 158.2 foregoing) insurance against any liability incurred by or attaching to him in respect of any act or omission in the actual or purported execution and/or discharge of his duties and/or in the exercise or purported exercise of his powers and/or otherwise in relation to his duties, powers or offices in relation to any Relevant Company, or any such pension fund or employees’ share scheme (and all costs, charges, losses, expenses and liabilities incurred by him in relation thereto). For the purpose of paragraph 158.2 above, “Relevant Company” shall mean the Company, any holding company of the Company or any other body, whether or not incorporated, in which the Company or such holding company or any of the 158.3 predecessors of the Company or of such holding company has or had any interest whether direct or indirect or which is in any way allied to or associated with the Company, or any subsidiary undertaking of the Company or of such other body. Subject to the provisions of and so far as may be permitted by the Statutes, the Company (i) may provide any current or 158.4 former Director or officer with funds to meet expenditure

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document incurred or to be incurred by him in defending any criminal or civil proceedings which relate to anything done or omitted or alleged to have been done or omitted by him as such a Director or officer of the Company in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers or in connection with any application under the provisions mentioned in Section 337A(2) of the Companies Act 1985 and (ii) may do anything to enable a Director or officer to avoid incurring such expenditure, but so that the terms set out in Section 337A(4) of the Companies Act 1985 shall apply to any such provision of funds or other things done provided that, for the purpose of this paragraph 158.4, references to “director” in Section 337A(4) of the Companies Act 1985 shall be deemed to include references to a former Director or a current or former officer of the Company.

Overriding Provisions 159 Overriding provisions If and for so long as the Company shall hold any class of security of Six Continents Hotels Inc. the provisions of this Article 159.1 shall apply and to the extent of any inconsistency shall have overriding effect as against all other provisions of these Articles. For the purposes of this Article the words and expressions set out below shall bear the meanings set opposite them 159.2 respectively: “Disqualified Person” means any holder of any class of shares of the Company whose holding of such shares, either individually or when taken together with the holding of any class of shares of the Company by any other holders, may result, in the opinion of the Directors, in the loss, or the failure to secure the reinstatement, of any licence or franchise from any United States’ governmental agency held by Six Continents Hotels Inc. or any subsidiary thereof to conduct any portion of the business of Six Continents Hotels Inc. or any subsidiary thereof. “Relevant Shares” means shares of the Company comprised in the interest or holding of a Disqualified Person. “Required Disposal” means the sale and transfer of Relevant Shares or of interests therein in such manner as may be required to cause such shares to cease to be Relevant Shares. 159.3 The Directors may at any time serve a notice upon any member requiring him to furnish the Directors with information (in the case of (ii) below, to the extent that such paragraph applies to any person other than the 159.3.1 member so far as such information lies within the knowledge of such member), supported by a declaration and by such other evidence (if any) in support as the Directors may require, for the purpose of determining: whether such member is a party to an agreement or arrangement (whether legalIy enforceable or not) (i) whereby any of the shares held by him are to be voted in accordance with some other person’s instructions (whether given by that other person directly or through any other person); or whether such member and/or any other person who has an interest in any shares held by such member is (ii) a Disqualified Person.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If such information and evidence is not furnished within a reasonable period (not being less than 14 days) from the date of service of such notice or the information and evidence provided is, in the opinion of the Directors, unsatisfactory for the purposes of so determining, the Directors may serve upon such member a further notice calling upon him, within 14 days after the service of such further notice, to furnish the Directors with such information and evidence or further information and evidence as shall (in their opinion) enable them so to determine. Any person holding any share of the Company shall notify the Directors forthwith in writing if he, or to his 159.3.2 knowledge any person controlling or beneficially owning or otherwise having an interest in such share, is likely to be or become a Disqualified Person. The Directors may assume without enquiry that a person is not or will not become a Disqualified Person unless the information obtained by them above or a notification under this paragraph 159.3 indicates to the contrary or the 159.3.3 Directors have reason to believe otherwise; in these circumstances the Directors shall use all reasonable endeavours to discover whether the person concerned is a Disqualified Person. 159.4 If any person becomes or is determined in accordance with paragraph 159.3.3 above to be a Disqualified Person the Directors shall serve a written notice (a “Disposal Notice”) on all those who (to the knowledge of the Directors) have interests in, and, if different, on the holder or holders of, the Relevant Shares. The Disposal Notice shall refer to the voting restrictions as set out in paragraph 159.6 below and shall call for a Required Disposal to be 159.4.1 made and for reasonable evidence that such Required Disposal shall have been effected to be supplied to the Company within 21 days from the date of such notice or such other period as the Directors may consider reasonable and which they may extend. The Directors may withdraw a Disposal Notice (whether before or after the expiration of the period referred to) if it appears to them that there is no Disqualified Person in relation to the shares concerned. If a Disposal Notice served under paragraph 159.4.1 above is not complied with to the satisfaction of the Directors and has not been withdrawn, the Directors shall, so far as they are able, sell the shares comprised in such Disposal Notice, at the best price reasonably obtainable in all the circumstances and shall give written notice of such disposal to those persons on whom the Disposal Notice was served. Except as hereinafter provided such a sale shall be completed as soon as reasonably practicable after expiry of the Disposal Notice as may in the opinion of the Directors be consistent with obtaining the best price reasonably obtainable and in any event within 30 days 159.4.2 of expiry of such notice provided that such a sale shall be postponed during the period when dealings by the Directors in the Company’s shares are not permitted either by law or by Regulations of the London Stock Exchange but any sale postponed as aforesaid shall be completed within 30 days after expiry of the period of such suspension and provided further that neither the Company nor the Director shall be liable to any holder or any person having an interest in any share or other person for failing to obtain the best price so long as the Directors act in good faith within the period specified above.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document For the purpose of effecting any Required Disposal, the Directors may authorise in writing an officer or employee of the Company to execute any necessary transfer on behalf of any holder and may issue a new certificate to the 159.4.3 purchaser. The net proceeds of such disposal shall be received by the Company, whose receipt shall be a good discharge for the purchase money, and shall be paid (without any interest being payable thereon) to the former holder upon surrender by him of the certificate in respect of the shares sold and formerly held by him. 159.5 The Directors shall not be obliged to serve any notice under the foregoing provisions of this Article upon any person if they do not know his identity or his address and the absence of service of such a notice in such 159.5.1 circumstances as aforesaid and any accidental error in, or failure to give any notice to any person upon whom notice is required to be served under the foregoing provisions shall not prevent the implementation of or invalidate any procedure thereunder. Any notice to be served under this Article upon a person who is not a member shall be deemed validly served if sent through the post to that person at the address, if any, at which the Directors believe him to be resident or 159.5.2 carrying on business. Any such notice shall be deemed served on the day following any day on which it was put in the post and, in proving service, it shall be sufficient to prove that the notice was properly addressed, stamped and put in the post. Any determination of the Directors under the foregoing provision of this Article shall be final and conclusive, but 159.5.3 without prejudice to the power of the Directors subsequently to vary or revoke such determination. 159.6 If in accordance with paragraph 159.3 above the Directors shall have assumed that any person is not a Disqualified Person, the exercise by that person and/or, if shares owned or controlled by such person are held by 159.6.1 another person or by other persons, by such other person or persons shall not be challenged or invalidated by any subsequent determination by the Directors that such person is a Disqualified Person. If any person becomes or is determined by the Directors to be a Disqualified Person the Directors shall serve 159.6.2 written notice on such person and, if different, on the holder or holders of the shares owned or controlled by such person to the effect that he has been determined to be a Disqualified Person. With effect from the expiration of such period as the Directors shall specify in the notice under paragraph 159.6.2 above (not being longer than 30 days from the date of service of such notice) the said person and, if different, the holder or holders of the shares owned or controlled by such person (to the extent that such holder or holders is/are 159.6.3 not able to prove to the satisfaction of the Directors that shares registered in his/their name(s) are not owned or controlled by such person) shall not be entitled to receive notice of, or to attend or vote at, any General Meeting of the Company or any meeting of the holders of any class of shares. Any member who has pursuant to paragraph 159.3.1 above been served with a further notice by the Directors 159.6.4 requiring him to furnish the Directors with information and evidence or further information or evidence within 14 days after the service of

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document such further notice shall not, with effect from the expiration of such period and until information or evidence is furnished to the satisfaction of the Directors, be entitled to receive notice of, or to attend or vote at, any General Meeting of the Company or meeting of the holders of any class of shares other than in respect of such of the shares held by such member as are shares in respect of which it shall have been established to the satisfaction of the Directors that they are not shares in which a Disqualified Person has an interest or shares in respect of which the Directors may require a disposal pursuant to the provisions of paragraph 159.4 above. No person shall be capable of being appointed or continuing as a Director if, in the opinion of the Directors, his directorship of the Company may result in the loss, or the failure to secure the reinstatement, of any licence or franchise from any 159.7 United States governmental agency held by Six Continents Hotels Inc. or any subsidiary thereof to conduct any portion of the business of Six Continents Hotels Inc. or any subsidiary thereof.

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Index

Article No. Page No. Accounts 144-145 45 Auditors 146-147 46 Authentication of Documents 126 40 Borrowing Powers 112-113 37 Capitalisation of Profits and Shares 141-142 43-45 Communications with Members 148-155 46-48 Corporations Acting by Representatives 79 28 Directors 80-88 28-30 Alternate 98-101 32-33 Appointment and Retirement of 89-97 30-32 Departmental, Divisional or Local 120 38-39 General Powers of 114-118 37-38 Meetings and Proceedings of 102-111 33-37 Dividends 128-140 40-43 Evidence of Title to Securities 17 11-12 Forfeiture and Lien 29-36 14-16 General Meetings 49-50 19-20 Notice of 51-52 20-21 Overflow of 53-55 21 Proceedings at 56-66 21-23 Indemnity 158 49-50 Minutes 143 45 Overriding Provisions 159 50-53 Preliminary 1-2 1-6 President 119 38 Proxies 73-78 26-28 Record Date 125 39 Reserves 127 40 Seal 122-124 39 Secretary 121 39 Share Capital 3-4 6-7 Alteration of 7-11 8-9

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Article No. Page No. Variation of Rights 5-6 7-8 Share Certificates 18-22 12-13 Shares 12-16 9-11 Calls on 23-28 13-14 Transfer of 37-43 16-18 Transmission of 44-46 18 Untraced Shareholders 47-48 19 Votes of Members 69-72 23-26 Winding Up 156-157 48-49

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Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exhibit 8

Name of Company Country of Incorporation American Commonwealth Assurance Co. Ltd. Bermuda Arabian Hotel Management Co. LLC Oman Asia Pacific Holdings Limited England Avendra LLC Delaware, USA Barclay Operating Corp. New York, USA BBJV Investments Limited England BHMC Canada Inc. Canada BHR Holdings B.V. The Netherlands BHR Luxembourg S.A.R.L. Luxembourg BHR Overseas (Finance) B.V. The Netherlands BHR Overseas (Finance) B.V. — Austrian Branch The Netherlands BHR Pacific Holdings, Inc. Delaware, USA BHR Services (France) S.A.S. France BHR US Holdings B.V. The Netherlands BHTC Canada Inc. Canada Brascan Imobiliaria Hotelaria e Turismo S.A. Brazil Bristol Oakbrook Tenant Company Delaware, USA C.A. Hotel Guayana Venezuela Café Biarritz Texas, USA Canabolas Caravan Motel Pty Ltd. Australia CDC San Francisco LLC Delaware & California Centrum Finance (Guernsey) Ltd. Channel Islands China Hotel Investment Ltd Barbados Compania Hotelera Nuevos Horizontes Venezuela Compania Inter-Continental de Hoteles El Salvador S.A. Venezuela Cooper Leasing Company Ltd England Corporacion Turistica Real BVI San Salvador Crowne Plaza (Asia Pacific) Ltd. Hong Kong Crowne Plaza Amsterdam (Management) BV The Netherlands Crowne Plaza LLC North Carolina, USA Culross Finance Ltd. Cayman Delta Hotels Limited Scotland Dessarrolladora Holiday Inn, S.A. de C.V. Mexico Edinburgh IC Limited England Emerald Bay Hotel Co. Ltd Thailand EMERO BV The Netherlands General Innkeeping Acceptance Corporation Tennessee, USA Gestion Hotelera Gestel, C.A. Venezuela Golden Prague Hotel Services s.r.o. Czech Republic Grand Hotel du Congo SZARL Rep of Congo, Zaire Grand Hotel Inter-Continental Paris SNC France Guangzhou SC Hotels Services Ltd. China H.I (Burswood) Pty Ltd. Australia H.I (Burswood) Trust Australia H.I. (Newcastle) Pty Ltd. Australia

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Name of Company Country of Incorporation H.I. Mexicana Servicios, SA de CV Mexico H.I. Sara Hospitality Sdn Bhd Malaysia H.I. Soaltee Hotel Co. (P) Ltd. Hong Kong H.I. Soaltee Management Company Ltd Hong Kong H.I. Sugarloaf LLC Georgia, USA Hale International Ltd. British Virgin Islands HC International Holdings, Inc. Delaware, USA HH France Holdings SARL France HH Hotels (EMEA) BV The Netherlands HH Hotels (EMEA) BV — Egyptian Branch Egypt HH Hotels (EMEA) BV — Russian Branch Russia HH Hotels (Romania) SRL Romania HH Hotels Tunisia SARL Tunisia HI (Ireland) Ltd. Eire HI Hotels Australia Trust Australia HIA (T) Pty Ltd. Australia HIA, Inc. Tennessee, USA HIM (Aruba) NV Aruba Holiday Hospitality Franchising, Inc. Delaware, USA Holiday Inn Cairns Pty Ltd. Australia Holiday Inn Mexicana S.A. Mexico Holiday Inns (Beijing) Ltd. Hong Kong Holiday Inns (Casablanca) Ltd Hong Kong Holiday Inns (China) Ltd. Hong Kong Holiday Inns (Chongging), Inc. Tennessee, USA Holiday Inns (Courtalin) Holdings SAS France Holiday Inns (Courtalin) SAS France Holiday Inns (Crowne Plaza Beijing), Inc. US Holiday Inns (Downtown Beijing) Ltd. Hong Kong Holiday Inns (Eindhoven) BV The Netherlands Holiday Inns (England) Ltd. England Holiday Inns (Germany) LLC Tennessee, USA Holiday Inns (Germany) LLC — German Branch Germany Holiday Inns (Guangzhou), Inc. Tennessee, USA Holiday Inns (Jamaica) Inc. Tennessee, USA Holiday Inns (Jamaica) Inc. — Jamaica Branch Jamaica Holiday Inns (Korea) Ltd. Hong Kong Holiday Inns (Macau) Ltd. Hong Kong Holiday Inns (Malaysia) Ltd. Hong Kong Holiday Inns (Middle East) Ltd. Hong Kong Holiday Inns (Nepal) Ltd. Hong Kong Holiday Inns (Philippines), Inc. Tennessee, USA Holiday Inns (Philippines), Inc. — Philippines Branch Philippines Holiday Inns (Saudi Arabia), Inc. Tennessee, USA Holiday Inns (Shanghai) Ltd. Hong Kong Holiday Inns (South East Asia) Inc. Tennessee, USA Holiday Inns (South East Asia) Inc. — Singapore Branch Singapore Holiday Inns (Suisse) SA Switzerland

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Name of Company Country of Incorporation Holiday Inns (Thailand) Ltd. Hong Kong Holiday Inns (The Netherlands) Inc. Tennessee, USA Holiday Inns (The Netherlands) Inc. — Dutch Branch The Netherlands Holiday Inns (UK), Inc. Tennessee, USA Holiday Inns (UK), Inc. — Malta Branch Malta Holiday Inns (UK), Inc. — UK Branch England Holiday Inns (Urumqi) Ltd. Hong Kong Holiday Inns (Xiamen) Ltd. Hong Kong Holiday Inns Australia Pty Ltd. Australia Holiday Inn (Birmingham Airport) Ltd England Holiday Inns Crowne Plaza (Hong Kong), Inc. Tennessee, USA Holiday Inns de Espana S.A. Spain Holiday Inns Holdings (Australia) Pty Ltd. Australia Holiday Inns Inc. Delaware, USA Holiday Inns Investment (Nepal) Ltd. Hong Kong Holiday Inns Mexico Holdings, Inc. Kentucky, USA Holiday Inns of America (UK) Ltd. England Holiday Inns of Belgium NV Belgium Holiday Inns of Belgium NV — Swedish Branch Sweden Holiday Pacific Equity Corporation Delaware, USA Holiday Pacific LLC Delaware, USA Holiday Pacific Partners, LP Delaware, USA Hospitality Network Corporation Japan Hotel del Lago C.A. Venezuela Hotel Forum Ltd. England Hotel Inter-Continental London Ltd. England Hotel InterContinental London (Holdings) Limited England Hoteles Estelar de Colombia S.A. Colombia Hoteles Y Centros Especializados S.A. Mexico Hoteles Y Turismo HIH Srl Venezuela IC Central Park South LLC New York, USA IC International Hotels Limited Liability Company Russia IC US (Holdings) LP Delaware, USA IHC (Thailand) Ltd. Thailand IHC Buckhead LLC Georgia, USA IHC Edinburgh (Holdings) Ltd. England IHC Hopkins (Holdings) Corp. Delaware, USA IHC Hotel Ltd. England IHC Inter-Continental (Holdings) Corp. Delaware, USA IHC London (Holdings) Ltd. England IHC May Fair (Holdings) Ltd. England IHC May Fair Hotel Ltd. England IHC M-H (Holdings) Corp. Delaware, USA IHC Overseas (U.K.) Ltd. England IHC UK (Holdings) Ltd England IHC United States (Holdings) Corp. New York, USA IHC Willard (Holdings) Corp. Delaware, USA IHG (Australasia) Limited Singapore

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Name of Company Country of Incorporation IHG ANA Hotels Group Japan LLC Japan IHG ANA Hotels Holdings Co. Japan IHG Bangkok Limited BVI IHG Cyprus Limited Cyprus IHG ECS (Barbados) SRL Barbados IHG Franchising Brasil Ltda Brazil IHG Franchising DR Corporation Delaware, USA IHG Franchising DR Corporation — Dominican Republic Branch Delaware, USA IHG Franchising LLC Delaware, USA IHG Holdings (Australia) Pty Limited Australia IHG Hotels (New Zealand) Limited New Zealand IHG Hotels Management (Australia) Pty Limited Australia IHG IT Services (India) Private Limited India IHG Japan (Management) LLC Japan IHG Management (Maryland) LLC Delaware, USA IHG Management (Netherlands) B.V. The Netherlands IHG (Marseille) SAS France IHG Nominees (Australia) Pty Ltd Australia IHG Operations (NZ) Limited New Zealand IHG Queenstown Limited New Zealand IHG Systems Pty Ltd Australia IHG Szalloda Budapest Szolgaltato Kft Hungary IHG (Victoria Park) Pty Ltd Australia Illinois Hotels Corp. Delaware, USA Delaware & California, IND East Village SD Holdings LLC USA Insurance Resource Services, Inc. Delaware, USA InterContinental (Branston) 1 Ltd England Inter-Continental Central Park South LLC New York, USA Inter-Continental D.C. Operating Corp. Delaware, USA Inter-Continental Europe Finance BV The Netherlands Inter-Continental Europe Holdings BV The Netherlands Inter-Continental Florida Investment Corp. Delaware, USA Inter-Continental Florida Partner Corp. Delaware, USA InterContinental Gestion Hotelera S.L. Spain InterContinental Hong Kong Ltd. Hong Kong Intercontinental Hospitality Corporation Delaware, USA InterContinental Hotelbetriebsfuhrungs GmbH Austria Inter-Continental Hotel Investment (S) Pte. Ltd. Singapore InterContinental Hoteleira Limitada Brazil Inter-Continental Hotels (Montreal) Operating Corp. Quebec, Canada Inter-Continental Hotels (Montreal) Owning Corp. Quebec, Canada Inter-Continental Hotels (Overseas) Ltd. England InterContinental Hotels (Puerto Rico) Inc Puerto Rico Inter-Continental Hotels (Singapore) Pte. Ltd. Singapore Inter-Continental Hotels Corporation Delaware, USA Inter-Continental Hotels Corporation — Cairo Branch Egypt Inter-Continental Hotels Corporation — Jordan Branch Jordan

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Name of Company Country of Incorporation Inter-Continental Hotels Corporation — Malta Branch Malta Inter-Continental Hotels Corporation — Philippines Branch Philippines Inter-Continental Hotels Corporation — Poland Branch Poland Inter-Continental Hotels Corporation — Portugal Branch Portugal Inter-Continental Hotels Corporation — Tel Aviv Branch Israel Inter-Continental Hotels Corporation de Venezuela C.A. Venezuela Intercontinental Hotels Corporation Limited Bermuda Intercontinental Hotels Corporation Limited — Egypt Branch Egypt Intercontinental Hotels Corporation Limited — Saudi Branch Saudi Inter-Continental Hotels Corporation Pty Ltd. Australia InterContinental Hotels Group (Asia Pacific) Pte Ltd Singapore InterContinental Hotels Group (Australia) Pty Limited Australia InterContinental Hotels Group (Canada) Inc. Canada InterContinental Hotels Group (Espana) SA Spain InterContinental Hotels Group (Greater China) Limited Hong Kong InterContinental Hotels Group (Japan) Inc. Tennessee InterContinental Hotels Group (Japan) Inc. — Japan Branch Japan InterContinental Hotels Group (Management Services) Ltd England InterContinental Hotels Group (New Zealand) Limited New Zealand InterContinental Hotels Group (Shanghai) Ltd China InterContinental Hotels Group Customer Services Ltd. England InterContinental Hotels Group de Brasil Limitada Brazil InterContinental Hotels Group Finance (CI) Ltd. Jersey InterContinental Hotels Group Healthcare Trustee Ltd England InterContinental Hotels Group (India) Pvt. Ltd. India InterContinental Hotels Group Operating Corp. USA InterContinental Hotels Group PLC England InterContinental Hotels Group Resources Inc Delaware, USA InterContinental Hotels Group Resources Inc — Guam Branch Guam InterContinental Hotels Group Services Company England InterContinental Hotels Group Services Company — Spanish Branch Spain InterContinental Hotels Italia, SrL Italy InterContinental Hotels Limited England Intercontinental Hotels Management GmbH Germany InterContinental Hotels Nevada Corporation Nevada Inter-Continental Hotels of San Francisco Inc. Delaware, USA Inter-Continental Hotels Saudi Arabia Ltd. Saudi Arabia

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Name of Company Country of Incorporation Inter-Continental Management (Australia) Pty Limited Australia InterContinental Overseas Holding Corporation Delaware, USA InterContinental Overseas Holding Corporation - Azerbaijan Branch Azerbaijan InterContinental Overseas Holding Corporation — Bermuda Branch Bermuda InterContinental Overseas Holding Corporation — Czech Republic Branch Czech Republic InterContinental Overseas Holding Corporation — Egyptian Branch Egypt InterContinental Overseas Holding Corporation — Jamaican Branch Jamaica InterContinental Overseas Holding Corporation - Kazakhstan Branch Kazakhstan InterContinental Overseas Holding Corporation — Slovakia Branch Slovakia InterContinental Overseas Holding Corporation — Ukraine Branch Ukraine Inthotel SA Spain Kenya Hotel Properties Ltd. Kenya Kumul Hotels Ltd. Papua New Guinea Louisiana Acquisitions Corp. Delaware, USA Maya Baiduri Sdn Bhd Malaysia Mifala Holdings (Vanuatu) Ltd. Vanuatu Netherlands International Hotels BV The Netherlands Nuevas Fronteras S.A. Argentina Orbis Polish Travel Bureau, Inc. New York, USA Openworld Ltd England OSPR Pty Ltd. Australia Panacon Louisiana, USA Parkroyal Motor Hotels Pty Ltd. Australia Perseus Holding Corp. Delaware, USA Pershing Associates District of Columbia Pollstrong Limited England Powell Pine, Inc. Delaware, USA Premier Hotels (Christchurch) Ltd. New Zealand President Hotel & Tower Co Ltd. Singapore Priscilla Holiday of Texas, Inc. Delaware, USA PT Jakarta International Hotels & Development Indonesia PT SC Hotels & Resorts Indonesia Indonesia Resort Services International (Cayo Largo) L.P. Georgia, USA SC Cellars Ltd. England SC ESOP Trustee (Jersey) Ltd. Jersey England SC Hotels & Resorts (Jamaica) Ltd Jamaica SC Hotels International Services, Inc. Delaware, USA SC Investment Minorities Ltd. England SC Investments Number 2 Ltd. England SC Investments Number 3 Ltd. England

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Name of Company Country of Incorporation SC Leisure Group Ltd. England SC Luxembourg Investments SARL Luxembourg SC NAS 2 Ltd. England SC NAS 3 England SC QUEST Ltd England SC Racing Gibraltar Gibraltar SC Reservations (Philippines) Inc Tennessee, USA SC Reservations (Philippines) Inc — Philippines Branch Phillippines SC Trademarks Ltd. England SC Wine Bars Ltd. England SCH (Barbados) Ltd. Barbados SCH (China) Investments Ltd. Hong Kong SCH Insurance Company Vermont, USA SCH Minority Holdings LLC Delaware, USA SCHIL (Jamaica) Ltd Jamaica SCHIL Investment (Barbados) Ltd Barbados SCIH Branston 1 England SCIH Branston 2 England SCIH Branston 3 England SFH Associates L.P. California, USA Six Continents Corporate Services England Six Continents Holdings Ltd. England Six Continents Hotels de Colombia SA Colombia Six Continents Hotels International Ltd. England Six Continents Hotels, Inc. Delaware Six Continents International Holdings BV The Netherlands Six Continents Investments Ltd. England Six Continents Limited (formerly PLC) England Six Continents Overseas Holdings Ltd. England Six Continents Restaurants Ltd. England SixCo Financing 1 England SixCo Financing 2 England SixCo North America, Inc. Delaware Soaltee Hotel Ltd. Nepal Societe des Grands Hotels du Liban Lebanon Societe des Hotels InterContinental France SNC France Societe Immobiliere Kinoise SZARL Rep of Congo, Zaire Societe Nouvelle du Grand Hotel SA France Southern Pacific Hotel Corp. (BVI) Ltd. British Virgin Islands Southern Pacific Hotel Corporation Sdn Bhd Malaysia Southern Pacific Hotels (Vanuatu) Ltd Vanuatu Southern Pacific Hotels Ltd. Australia Southern Pacific Hotels Properties Limited British Virgin Islands Southwick Ltd. Cayman SPHC (Asia) Limited Hong Kong SPHC (IP) Pty Ltd. Australia

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Name of Company Country of Incorporation SPHC Group Pty Ltd. Australia SPHC Management Ltd. Papua New Guinea SSABCO Ltd. England Tahiti Beachcomber SA Tahiti TAK How Investment Limited Hong Kong TH Management Ltd. New Zealand The GL Hotels Limited India The Hotel Clearing Corp. Delaware, USA THISCO Delaware, USA Tian An Hotels International Limited Hong Kong New Zealand/Cook TLCI Limited Islands Top of the Cross Pty Ltd. Australia TotRusUs (Russian Branch of HH Hotels (EMEA) BV Russia Travel Holdings (Australia) Pty Ltd. Australia Travlex Systems Pty Ltd. Australia Trifaith Investments Ltd. British Virgin Islands Union Leasing Company Ltd. England Universal de Hoteles SA Colombia Victoria Hotels (Christchurch) Ltd. New Zealand White Shield Insurance Company Ltd. Gibraltar Willard Associates District of Columbia World Trade left Montreal Hotel Corp. Quebec, Ontario Xenia Hotel Abwicklungs GmbH (in liquidation) Austria Yokohama Grand Intercontinental Hotel Co. Ltd. Japan

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302 CERTIFICATION

I, Andrew Cosslett, certify that:

1. I have reviewed this annual report on Form 20-F of InterContinental Hotels Group PLC;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to 2. make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material 3. respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as 4. defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our (a) supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under (b) our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted principles;

Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about (c) the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered (d) by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial 5. reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are (a) reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s (b) internal control over financial reporting.

Date: March 28, 2008 By: /s/ Andrew Cosslett Name: Andrew Cosslett Title: Director and Chief Executive Officer

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302 CERTIFICATION

I, Richard Solomons, certify that:

1. I have reviewed this annual report on Form 20-F of InterContinental Hotels Group PLC;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to 2. make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material 3. respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as 4. defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our (a) supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under (b) our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted principles;

Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about (c) the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered (d) by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial 5. reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are (a) reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s (b) internal control over financial reporting.

Date: March 28, 2008 By: /s/ Richard Solomons Name: Richard Solomons Title: Finance Director

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906 CERTIFICATION

The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended December 31, 2007 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code. Andrew Cosslett, the Chief Executive Officer and Richard Solomons, the Finance Director of InterContinental Hotels Group PLC, each certifies that, to the best of his knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of 2. InterContinental Hotels Group PLC.

Date: March 28, 2008 By: /s/ Andrew Cosslett Name: Andrew Cosslett Title: Chief Executive Officer

By: /s/ Richard Solomons Name: Richard Solomons Title: Finance Director

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