Annual review and summary financial statement 2004 Financial highlights

Operating profit up 17% Dividend† up 6% Disposals £1.75bn announced Return of funds £2bn committed 296 331 39 119 262 283 92 19

03 04 03 04 03 04 03 04 Group Americas EMEA* Asia Pacific Operating profit Operating profit Operating profit Operating profit (£m) ($m) (£m) ($m)

Note: Operating profit is shown before exceptional items; 2003 comparatives are unaudited pro forma figures for the 12 months ended 31 December 2003.

† Full year dividend per share, excluding special interim dividend paid in December 2004.

* EMEA – Europe, Middle East & Africa.

Contents

1 Chairman’s review 18 Brand innovation 3 Chief Executive’s statement 19 Britvic soft drinks 4 Global overview 20 Corporate social responsibility 5 The business model 23 Summary directors’ report 6 Brand ownership 24 Summary financial statement 7 Brand management: 26 The Board 8 InterContinental Hotels & Resorts 28 Corporate governance and 10 Crowne Plaza Hotels & Resorts summary audit committee report 12 Holiday Inn Hotels & Resorts 29 Summary remuneration report 14 Holiday Inn Express 32 Investor information 16 Staybridge Suites 33 Financial calendar and contacts 17 Candlewood Suites

Front cover photo Gerard Rodriguez, Restaurant Server, Au Pied de Cochon, InterContinental Buckhead, Atlanta. InterContinental Hotels Group 2004 1

Chairman’s review

InterContinental Hotels Group (IHG) made considerable progress in achieving its vision and goals in 2004. We delivered strong operational performance, with growth right across our hotel operations.

ACHIEVING OUR VISION AND GOALS We saw a change of leadership of the Group during the year, with Richard North stepping down as Chief Executive on 30 September 2004, having led the Group through its early life as a new and separate business. He was the right man for that role and achieved notable success, and he goes with our good wishes and thanks.

Andrew Cosslett, our new Chief Executive, joined the Group on 3 February 2005. He comes to IHG with an impressive track record with two of the world’s most respected brand-focused companies. I would like to welcome Andrew to the Group and very much look forward to working with him. He brings great expertise in global brand management and a wealth of international experience at a time when we are concentrating on developing our world-leading brands and growing our managed and franchised operations.

STRONG OPERATING RESULTS 2004 was a year of much improved performance. Adjusted earnings per share increased 56 per cent, to 32.5p* per share. Operating profit before exceptional items increased 17 per cent to £331 million. With recovery continuing in our hotel operations across the US, UK and Asia Pacific, Hotels operating profit (before exceptional items) increased 26 per cent to £251 million, despite the impact of a weak US dollar. Had the US dollar not lost value, Hotels operating profit would have increased by 36 per cent.

DRIVING REVENUE We continued to drive revenues in 2004 with considerable success. We increased membership of our loyalty programme, Priority Club Rewards, by 23 per cent to 23.7 million, making it the largest in the industry. Our call centre revenues increased 14 per cent to $1.5 billion, while internet revenues grew by over 44 per cent, and now account for 13 per cent of total rooms revenues. Rooms revenue delivered to hotels through our own reservation channels increased by nearly 23 per cent from $3.3 billion to $4.0 billion. We added approximately 24,000 rooms to our system, and grew our pipeline of new rooms by 16 per cent to 83,000 rooms. Our continued focus on quality accounted for over 10,000 of the 26,000 rooms that left our system during the year.

* Compared with 20.8p pro forma adjusted earnings per share for the 12 months ended 31 December 2003. Note: 2003 comparatives are unaudited pro forma figures for the 12 months ended 31 December 2003. 2 InterContinental Hotels Group 2004

Chairman’s review

During the year we increased further the global distribution of our flagship InterContinental

8.9 brand, opening new hotels in Atlanta, US; Kigali, Rwanda; Cairo, Egypt; and Makkah, Saudi Arabia, with Beijing, China; Paphos, Cyprus; Dusseldorf and Berchtesgaden, Germany due to open in 2005. We also signed eight new InterContinental hotels in 2004, 7.0 and a further three since the year end, which will continue to increase our brand distribution. In addition, we launched a new lifestyle hotel brand, Hotel Indigo, in the US, our new Holiday Inn prototype in Atlanta, US, and have now opened our first Express 4.5 by Holiday Inn in China.

BRITVIC Britvic Soft Drinks, in which we have a controlling interest, continued to increase revenues, despite the lower demand for soft drinks experienced in 2004 due to wetter and cooler summer weather. During the year we secured an agreement with Britvic’s other shareholders which will allow us to make an Initial Public Offering of shares in the company at any time before 31 December 2008. 02 03 04 CREATING STRONGER RETURNS During 2004, we announced further planned ROOM NIGHTS VIA disposals of hotel assets, taking to £2.1 billion the total value of assets we have put on IHG WEBSITES the market since the Group separated from Six Continents in April 2003. We have now (per cent) announced agreements to sell £1.75 billion of these hotel assets, with proceeds approximately equalling net book value. This is strong evidence of our determination to deliver on our promise, made at the time of Separation, to optimise our deployment of capital and increase our return on invested capital. In 2004 we also announced the return of £1 billion of funds to shareholders, of which £767 million has been completed to date, £266 million through a share repurchase programme and £501 million through a special dividend. Since the year end we have announced the planned return of a further £1 billion of funds

23.7 to shareholders, which will take total returns to £2 billion, just over half the net book value of our hotel assets at Separation. The Group’s debt facilities were also refinanced in October 2004,

19.2 reducing our borrowing costs and providing us with additional financial flexibility. In line with our policy of increasing our dividend by more than inflation, the Board 15.6 has recommended a final dividend of 10.0p per share, making a full year dividend (excluding the special dividend) of 14.3p, a 6 per cent increase over 2003. Subject to approval at the Annual General Meeting, the final dividend will be paid on 3 June 2005 to shareholders on the register on 1 April 2005.

SENIOR INDEPENDENT DIRECTOR David Kappler joined the Board as Senior Independent non-executive Director and Chairman of the Audit Committee on 21 June 2004. David recently retired as Chief Financial Officer of Cadbury Schweppes plc and his extensive financial experience makes him ideally suited for these important roles. 02 03 04 A TALENTED AND MOTIVATED TEAM Our people are our greatest asset. We are PRIORITY CLUB fortunate to have a strong team of committed employees and franchisee partners. REWARDS MEMBERSHIP It is the efforts of the people who work for and with the Group across the world that will (million) allow us to achieve our ambition of becoming the world’s most preferred, admired and respected hotel company. In particular, I pay tribute to those of our people affected by the Asian tsunami at the very end of 2004, who have responded so magnificently. We believe in looking after all our employees, and I offer them my sincere thanks for their dedication and hard work in 2004, and a commitment to continue to offer them every opportunity to achieve their potential in the future.

David Webster Chairman InterContinental Hotels Group 2004 3

Chief Executive’s statement

I am delighted to be leading the Group in what promises to be an exciting period for its development.

FIRST THOUGHTS Since joining the Group, I have spent most of my time getting to know the senior management, local management teams, and some of our hotel owners and operators.

I have been able to visit our operations in Asia, the US and Europe. The people who work for IHG across the globe are central to our success and I was particularly impressed with how our employees in Asia have coped with the impact of the tsunami.

We are an ambitious company and we have much to be confident about. We operate in a growth industry, have strong market positions globally and a powerful brand family, including Holiday Inn, one of the most popular brands in the hotel industry. Our infrastructure network, including our reservation call centres, internet sites, and loyalty programme, allows us to drive revenues to our hotels, benefiting our franchisees and owners, which is fundamental to our continued growth.

PRIORITIES FOR 2005 My priorities for 2005 are to continue our focus on generating shareholder value through further disposals of hotel assets, returning additional funds to shareholders, and retaining and enhancing our powerful brand positions and infrastructure. We will also maintain our focus on corporate social responsibility, where we seek to be an industry leader.

Our business is well positioned to prosper from an expected continued industry recovery in 2005, and we can look to the future with confidence.

Andrew Cosslett Chief Executive 4 InterContinental Hotels Group 2004

Global overview

We are the world’s largest hotel operator, represented in nearly 100 countries and territories with seven brands spanning the upscale and midscale markets.

The Americas

Over 70 per cent of our total rooms are concentrated in the Americas which has 2,783 hotels and 386,327 rooms, with a further 55,339 rooms planned. Franchising is most developed in this region with around 86 per cent of hotel profits* generated from franchised properties. We are seeking to develop franchise and management contracts still further and signed 307 franchise agreements during the year. We placed 20 hotels with a net book value of approximately £500 million on the market for disposal in 2004. Since then, we have announced the sale of 15 of these properties, which IHG will continue to manage. In 2004 we introduced our new lifestyle concept, Hotel Indigo, opened a new Holiday Inn prototype, fully integrated Candlewood Suites into our estate, opened a new flagship InterContinental hotel in Atlanta, and developed the world’s first Nickelodeon Family Suites by Holiday Inn.

Europe, Middle East & Africa

We operate 608 hotels with 105,750 rooms in Europe, Middle East & Africa (EMEA), and have a further 86 properties in the pipeline. Whilst the concentration of owned and leased hotels is highest in this region, we are increasing our network of managed and franchised hotels rapidly. A total of 76 hotels, with a combined net book value of approximately £1.3 billion, most in the UK, were placed on the market in 2004. In March 2005, we announced the sale of 73 of these properties for £1 billion, the majority of which will continue to be managed by IHG. We are also developing new properties as we implement these divestments with a total of 32 hotels and 4,608 rooms opened in EMEA during the year. 2004 saw the launch of the Express by Holiday Inn brand in the Middle East and we also continue to develop Holiday Inn across the region.

Asia Pacific

Our region with the fastest growth rate has a total of 149 hotels and a further 42 properties in the pipeline. With 42,125 rooms, we are the biggest international operator in the region. Most of our hotels are operated under management contract and we have established a reputation for being partner of choice in developing new properties. The dynamic Greater China market remains our focus in the region. In 2004 we celebrated 20 years of operating in Greater China and now have 44 hotels there, with a further 53 in the pipeline or under negotiation. We have now opened the first Express by Holiday Inn in mainland China, in Zhengzhou, and increased our presence in key South Asian countries, including Malaysia, where a Crowne Plaza opened in Kuala Lumpur.

* Hotel profits is hotel operating profit before regional overheads and exceptional items. InterContinental Hotels Group 2004 5

3,540 HOTELS AROUND THE WORLD

Americas 2,783 hotels – 386,327 rooms

Europe, Middle East & Africa (EMEA) 608 hotels – 105,750 rooms

Asia Pacific 149 hotels – 42,125 rooms

% OF GROUP’S HOTEL ROOMS

InterContinental 8.3% Crowne Plaza 11.5% Holiday Inn 52.2% Holiday Inn Express 23.6% Staybridge Suites 1.7% Candlewood Suites 2.3% Other* 0.4%

* Includes Hotel Indigo.

The business model

Building on our expertise in managing and franchising leading hotel brands.

For more than 50 years, with our InterContinental and Holiday Inn brands, we have led the way in managing and franchising hotels all over the world. In recent years, we have successfully used this expertise to grow Crowne Plaza, Holiday Inn Express, Staybridge Suites and, most recently, Candlewood Suites and Hotel Indigo.

We continue to use our skills in hotel management and franchising to grow the business. By focusing on this strength, we will offer shareholders an earnings stream that is stable, requiring low capital investment and offering considerable scope for growth.

We therefore expect the majority of our hotels to be owned and run by independent operators. We will only consider long-term ownership of properties if they support the strategic development of our brands in key markets, such as the InterContinental Hong Kong and the next generation Holiday Inn in Atlanta.

During the year we began a major programme to sell hotels, converting many of these properties to management or franchise agreements. This will reduce capital invested while maintaining our brand presence. Creating value for our shareholders remains the main test of when to sell an asset. Hotels will only be sold when competitive prices can be achieved. 6 InterContinental Hotels Group 2004

Brand ownership

Our hotels fall into one of three categories: franchised, managed or owned.

HOTELS BY OWNERSHIP TYPE AS AT 31 DECEMBER 2004

Managed 403

Owned 166

Franchised 2,971

Franchised

We now license 2,971 hotels under franchise which account for 74.3 per cent of our total rooms and 51.3 per cent of our total hotel profits*. Franchisees benefit from our powerful brands, our global infrastructure and our reservations system. We earn steady fee income from the properties and are less exposed to the volatility that is common to other business models in our industry. Managed

Just over 400 of our hotels are operated under management contract, accounting for 18.5 per cent of our total rooms and 11.9 per cent of our hotel profits*. We are often seen as the partner of choice for owners, for whom we frequently manage multiple hotels.

Owned

We own hotels where this helps the strategic development of our brands. At the end of 2004, 166 of our hotels were owned or leased, accounting for 7.2 per cent of our total rooms and 36.8 per cent of hotel profits*. Since the Separation of Six Continents PLC in April 2003, IHG has disposed of, or agreed to dispose of 121 hotels with proceeds of approximately £1.75 billion. Sixteen properties remain on the market with a net book value of £0.4 billion.

Our objective is to maintain a sharp focus on quality, in order to maintain the long-term value of our brands. This commitment sometimes obliges us to terminate franchise or management agreements where the hotel does not meet our rigorous standards and this led to an overall reduction in the total number of rooms in our system in 2004. This reduction was primarily due to actions initiated by IHG to remove sub-standard hotels from our portfolio. However, more than 24,000 rooms were added to our system size globally in the year, demonstrating the underlying power of our brands.

* Hotel profits is hotel operating profit before regional overheads and exceptional items. InterContinental Hotels Group 2004 7

Brand management

Harnessing the strengths of our brand portfolio and global infrastructure.

Brand Overview

We own a portfolio of well recognised and differentiated hotel brands, spanning the upscale and midscale markets. With more hotels in more countries than any other hotel group, we rely on an efficient and sophisticated infrastructure to deliver excellent service to our customers, real value to our hotel owners and steady returns for our shareholders.

Pricing and Reservations

We want to make it as easy as possible for our customers to book a stay at our hotels and to understand what each of our brands has to offer.

In 2004 we introduced a simple pricing structure to make it easier for customers to get the right room at the right price. This allows us to guarantee that the prices we quote on our websites are the best available. If a customer finds a better rate online, we will match that price with a further 10 per cent discount.

Bookings through our websites grew by a record 50 per cent last year, generating more than $1 billion of revenue for the first time and making our online business equivalent in turnover to many publicly quoted internet businesses. We now offer end-to-end online booking in seven languages, including Chinese and Japanese. Our Priority Club Rewards website now offers highly personalised booking tools, including simplified booking for favourite hotels, online redemption of points and booking through a secure personal account. For the third year running Priority Club Rewards won a prestigious Freddie Award for best international website.

During the year, we extended our commitment to the Asia Pacific region by opening a new service centre in the Philippines. We now have call centre operations in the Americas, Europe, the Middle East, Asia and Australasia. We are introducing new, specially trained teams to handle reservations for all our hotels – whether owned, managed or franchised – in selected key cities so we can further market our full portfolio of brands.

We want to protect our customers, whether they book through us or an agency. We therefore insist that third-party organisations meet our stringent customer service guarantees. Last year we took the lead in making a stand against confusing and misleading marketing on the internet. As a result, we ended relationships with a number of online travel agents that would not meet our standards and developed new partnerships with many others including Travelocity and Lastminute.com to promote our brands.

Priority Club Rewards

Our loyalty programme, Priority Club Rewards, is the biggest in the industry. During 2004 it grew by over 4 million members to reach 23.7 million members worldwide. Priority Club Rewards now has more members than the population of Australia, with members spending more than $3.2 billion in our hotels during the year. 8

NUMBER OF HOTELS 132 Americas 44 EMEA* 62 Asia 26

NUMBER OF ROOMS 44,516 Americas 15,088 EMEA 20,292 Asia 9,136

BUSINESS MODEL Owned 24 Managed 76 Franchised 32

Did you know?

In 2005 we will open InterContinental hotels in Paphos, Cyprus; in Beijing, China; and in Berchtesgaden and Dusseldorf in Germany.

In 2004 we also broke ground on a new InterContinental hotel in Boston, Massachusetts.

InterContinental Hotels & Resorts was named the ‘world’s leading hotel group’ by the World Travel Awards in 2004. Eighteen individual InterContinental properties also won awards for excellence.

*EMEA Europe, Middle East & Africa

www.intercontinental.com InterContinental Hotels Group 2004 9

Brand management ‘One hotel understands you’

A prestigious and global brand in 63 countries and territories, with 132 stylish and elegant hotels in key cities and resorts, offering high-quality comfort and excellent service to the international traveller.

INTERCONTINENTAL HOTELS AND RESORTS are designed to meet the needs 1 2 3 4 and tastes of the international traveller. At the top end of the Group’s portfolio of brands, we are located in major gateway cities and key resorts across the world 1 Each of our hotels offer the and provide high quality, individual amenities that reflect both local culture and discerning traveller consistent, superior service across the globe consistent global service standards. 2 We take care of every little detail Our 132 hotels account for 44,516 rooms and 8.3 per cent of the Group’s total 3 Whether travelling on business or rooms. Location is a real advantage for the brand. In Rome we are located at the leisure, a wide range of amenities top of the Spanish Steps, in Paris next to the Opera House and in Hong Kong on is on offer the magnificent harbour front. 4 Our chefs create a choice of cuisine, from local specialities We were ranked in the top three brands in a leading 2004 guest satisfaction survey to gourmet delights for the luxury segment (JD Power Associates, North America). Brand standards and superior service are vital to our success and during the year we launched a new operating standards manual for our team members to instil our ‘One hotel understands you’ ethos and to create consistent high standards of service in all our hotels.

We continue to expand the brand across the world, particularly in key markets such as China, where we plan to open in Beijing in 2005. In 2004 we unveiled the InterContinental Buckhead, Atlanta – which houses the first Au Pied de Cochon restaurant in the US – as well as InterContinental properties in Kigali, Rwanda, Makkah in Saudi Arabia and Cairo in Egypt.

Refurbishment remains a key priority in the maintenance of high standards. Following the restoration of the InterContinental Le Grand in Paris in 2003, the hotel is now recognised as one of the finest in Europe. Condé Nast Traveller UK recently awarded it second place in the best leisure hotel in Europe category. The InterContinental London is next on the schedule to be renovated, recognising its position as one of the brand’s flagship properties.

In keeping with our focus on the international traveller, InterContinental sponsored the CNN Business Traveller programme in 2004, helping towards a doubling of our brand awareness with CNN viewers during the year. We are also running this programme during the in-flight broadcasting of major airlines such as American Main photo The recently opened Airlines, United Airlines, British Airways and Singapore Airlines and so are InterContinental Heliopolis Cairo, Egypt promoting InterContinental to the critical frequent traveller customer group. 10 InterContinental Hotels Group 2004

Brand management ‘The place to meet’

An upscale brand with over 200 hotels worldwide in principal cities, offering high levels of comfort and excellent amenities for business and leisure travellers and those who need a meetings venue.

CROWNE PLAZA, our core brand for business guests and groups, continues to establish itself as the ideal hotel choice for executive meetings and business events. With an estate of 215 hotels worldwide, Crowne Plaza accounts for 11.5 per cent of our total hotel rooms.

Positioning Crowne Plaza as ‘the place to meet’ has enabled us to increase our income and revenue per available room, to gain share against our competitors and to plan for significant further growth of the brand. Currently, about 60 per cent of our Crowne Plaza hotels are franchised while the remainder are owned or managed.

Our hotels benefit from excellent business amenities. A range of specialised services is supplied as standard, such as a highly trained meetings director, high quality meetings facilities, technology and related services.

In the US, at one of America’s busiest airports, we opened the Crowne Plaza Chicago O’Hare, which houses extensive meeting facilities and opened the 410-room Crowne Plaza San Antonio Riverwalk, located in this major US meetings and convention destination. The 257-room Crowne Plaza in 1 2 Minneapolis was opened after a multi-million dollar renovation. In Europe, we also added Brussels Airport and London – 3 4 The City to our Crowne Plaza estate in 2004.

The Crowne Plaza brand’s new positioning as ‘the place to 1 Wireless high-speed internet meet’ was launched in 2002 and, across the estate, a wide access is available in the lobby range of business-to-business initiatives and marketing 2 An excellent choice of restaurants... programmes have helped to establish our position in this key 3 ... and bars market. In the Asia Pacific region alone, Crowne Plaza has 4 Our Sleep Advantage programme achieved nearly 35 per cent growth in meetings revenue and helps guests enjoy a good night’s sleep an increase in average room rate compared to 2003. Marketing activity in the region included becoming the first hotel brand to sponsor an Asian Tour professional golf tournament, the Crowne Plaza Open Shanghai 2004. Our first new Crowne Plaza opening in Asia in 2005 will be in Shanghai, China.

During the year we rolled out our Sleep Advantage programme in North America, which aims to help guests enjoy a better night’s sleep in a restful environment using new products and services. These include new bedding, guaranteed wake-up calls, designated quiet zones, night lights, curtain clips, sleep CDs and accessories such as eye masks, ear plugs and lavender spray. Main photo Crowne Plaza London – The City, UK 11

NUMBER OF HOTELS 215 Americas 116 EMEA* 63 Asia 36

NUMBER OF ROOMS 61,627 Americas 33,645 EMEA 15,747 Asia 12,235

BUSINESS MODEL Owned 24 Managed 64 Franchised 127

Did you know?

In 2004 we added more Crowne Plaza hotels in the Americas than in each of the past five years.

We established a deeper presence in Asia Pacific with the launch of the Crowne Plaza Mutiara in Kuala Lumpur, the capital of Malaysia, and with another in Norwest, Sydney, Australia.

Crowne Plaza is already a successful and recognised brand in China where we have 13 hotels.

*EMEA Europe, Middle East & Africa www.crowneplaza.com 12

NUMBER OF HOTELS 1,484 Americas 1,074 EMEA* 329 Asia 81

NUMBER OF ROOMS 278,787 Americas 205,500 EMEA 53,568 Asia 19,719

BUSINESS MODEL Owned 103 Managed 132 Franchised 1,249

Did you know?

During 2004, Holiday Inn was for the third time voted Business Traveller magazine’s ‘best mid- market hotel’ in both the Asia Pacific region and the world.

We also won the ‘best hotel chain promotion’ award from Travel Weekly magazine.

In addition, we were recognised as one of the best-known brands in the US lodging market.

*EMEA Europe, Middle East & Africa

www.holiday-inn.com InterContinental Hotels Group 2004 13

Brand management ‘Relax, it’s Holiday Inn’

One of the world’s most recognised hotel brands with a global reputation for service, comfort and value.

HOLIDAY INN HOTELS AND RESORTS, which celebrated its 50th anniversary in 2002, is our most established and best-known brand worldwide. We have 1,484 hotels, predominantly franchised, with 278,787 rooms, representing 52.2 per cent of our total room count.

We are enhancing the brand with innovation and marketing, while maintaining our reputation for excellent service and value and pursuing our core position as the first choice among leisure travellers.

During the year, we signed franchise agreements for 40 hotels to be built as ‘next-generation’ Holiday Inn hotels, based on our prototype in Atlanta. The new design allows properties to be built, operated and maintained more easily and offers our franchise partners and Holiday Inn far higher earnings potential. Guests benefit from a host of new services including wireless electronic menus, a new restaurant concept and WiFi enabled guest rooms and public areas.

Our expansion programme continued during the year with particular emphasis on the burgeoning Asia Pacific market where we launched new hotels in Korea, New Zealand, China and Taiwan. China remains one of the fastest growing Holiday Inn markets while in the Americas alone there are a further 104 new hotels in the pipeline.

To ensure we offer excellent guest service, we continued to stage ‘Can Do’ employee service training across the EMEA region which, since its launch in 2002, has become part of the fabric of the business. This complements the ‘People Notice’ initiative, a new recruitment, training and guest service programme in the Americas.

In 2004, Holiday Inn linked with British interior designer and TV personality Laurence Llewelyn-Bowen to create the concept for the potential Holiday Inn hotel bedroom of the future, marrying technology with nature.

We continue to invest in the brand to ensure it is seen as the first choice for families. In the US, Holiday Inn and Nickelodeon announced a partnership to create the world’s first Nickelodeon Family Suites by Holiday Inn. This is a multi-million dollar 1 renovation of our existing Family Suites Resort to create a unique vacation destination in Florida. We also extended the partnership to Kids Eat and Stay Free 2 marketing schemes across the US and Canada.

Additionally, our Holiday Inn SunSpree Resorts, found in more than 26 locations in 3 the US, Canada, the Caribbean, and Mexico, offer families coordinated activities, recreation and events, themed gateway entrances and guest activity desks. 1 A warm welcome awaits at over 1,400 destinations around the world 2 Enjoy flat screen TV and games at our ‘next generation’ Holiday Inn hotels 3 Dependable, friendly service and modern, attractive facilities at excellent value

Main photo The first choice for families and leisure travellers 14 InterContinental Hotels Group 2004

Brand management ‘Stay smart’

A fast growing fresh, clean and uncomplicated brand, offering comfort, convenience and good value.

HOLIDAY INN EXPRESS is one of the fastest growing hotel brands ever.

We are almost entirely franchised and, with 1,512 hotels at the end of 2004, our 126,035 rooms represent 23.6 per cent of Group accommodation. Now in our fourteenth year of development, nearly 90 per cent of Express rooms are located in the Americas and the brand is earning an increasing reputation as a leader in this market.

During 2004, the brand broke some important records. Holiday Inn Express in the US recorded its highest occupancy since breaking the 1,000-hotel barrier; we earned our highest revenue per available rooms ever; we gained our highest room rate ever; and we sold the most room nights in our trading history.

Across all our brands, Express has consistently achieved the most new openings every year in each of the past six years, opening, on average, two new properties every week. In 2004, we opened a total of 114 new hotels.

The brand is supported by strong marketing via our Stay Smart campaign, which has continued to win awards in the US and earned its fifth gold American Marketing Association EFFIE in six years for sustained achievement. We were also recognised as a finalist in the Worldwide Hospitality Awards for best communication campaign in 2004.

In the US, we followed up the success of last year’s Express Start breakfast bar initiative, with the introduction of the Simply Smart guest bathroom. This features a proprietary Kohler showerhead, upgraded towels and a new line of bathroom accessories. Approximately 120,000 showerheads were installed and more than a million towels replaced at our properties throughout the US and Canada. The roll- out is supported by a national US marketing campaign, including TV advertising.

We also broke new ground elsewhere. We announced the launch of the brand in the Middle East and we have now made our debut in mainland China, in Zhengzhou. With four of the Group’s brands now established in China, we expect the Express brand to expand rapidly in this most promising growth region of the world. 1

2

3

1 High-speed internet access is available at Holiday Inn Express hotels in the US and Canada 2 Hotels offer complimentary breakfast and spacious public areas 3 The contemporary guest bathroom

Main photo Holiday Inn Express is now established in China 15

NUMBER OF HOTELS 1,512 Americas 1,357 EMEA* 153 Asia 2

NUMBER OF ROOMS 126,035 Americas 109,882 EMEA 15,921 Asia 232

BUSINESS MODEL Owned 11 Managed 11 Franchised 1,490

Did you know?

We open an average of two Holiday Inn Express hotels a week, making this our fastest growing brand in each of the last six years.

In 2004 we opened 114 new hotels.

*EMEA Europe, Middle East & Africa www.hiexpress.com 16 InterContinental Hotels Group 2004

Brand management ‘Make it your place’

An innovative upscale brand serving the Americas’ extended-stay sector with close to 80 hotels, offering guests versatile accommodation in a contemporary all-suite environment.

STAYBRIDGE SUITES invites extended-stay guests to choose their own suite layout and mix of facilities within an upscale environment that offers a home away from home.

Most hotels offer three suite options: deluxe studios and one- bedroom, both with a bathroom, and two-bedrooms with two bathrooms. All include fully equipped kitchens as well as work stations with complimentary high-speed internet access. We also provide spacious public areas and other amenities such as workout facilities and business services.

Staybridge Suites entered the extended-stay market in December 1998. It reached the critical mass of 50 hotels in just under four years, is the fastest growing of any extended stay brand, and has consistently ranked highly in guest satisfaction surveys.

Following our 2003 deal with Hospitality Properties Trust (HPT), to convert 14 Summerfield Suites by Wyndham to Staybridge Suites hotels, we renovated all 14 in 2004. With the addition of eight new hotels to the brand, bringing the total to 79, we have also signed agreements for a further 52 hotels in the development pipeline.

NUMBER OF HOTELS 79 Americas 79

NUMBER OF ROOMS 9,189 1 Americas 9,189 2

BUSINESS MODEL Owned 4 1 The versatile accommodation offers Managed 36 guests a choice of three suite options Franchised 39 www.staybridge.com 2 The ‘Great Room’, the perfect place to unwind InterContinental Hotels Group 2004 17

‘Our place, your space’

A newly acquired midscale extended-stay brand in the US, offering uncomplicated amenities and good value in more than 100 modern purpose-built hotels.

CANDLEWOOD SUITES hotels illustrate our strategy to develop high quality brands that extend our franchise and management network, with minimum capital commitment. We acquired the brand in 2003 from Candlewood Hotel Corporation for $16.8 million and are the licensor for all current and future franchise agreements.

We have now fully integrated 109 Candlewood Suites into our portfolio and have a further 46 in the pipeline. Located throughout North America, guests will find spacious studio and one-bedroomed suites each with its own fully equipped kitchen, desk, chair, VCR, CD player, dataport and two-line telephones with dataport.

The brand provides good growth opportunity for our franchise community at an accessible cost, and allows us to reduce the operating cost base and accelerate distribution through our infrastructure. For example, our Priority Club Rewards scheme was introduced in March 2004 and already contributes around 23 per cent of the brand’s room nights.

NUMBER OF HOTELS 109 Americas 109

NUMBER OF ROOMS 12,407 Americas 12,407 2 1

BUSINESS MODEL Owned – Managed 76 1 Guests benefit from a dedicated work area with two-line telephone www.candlewoodsuites.com Franchised 33 and dataport 2 Each suite has its own fully equipped kitchen 18 InterContinental Hotels Group 2004

Brand innovation

NEXT-GENERATION We are taking our most established and well-known brand into the future with a new blueprint for Holiday Inn properties. In 2004 we opened the prototype in Atlanta for a new generation of Holiday Inn hotels and now have 40 hotels in our development pipeline that will be built to this design, of which nine are already opened or under construction.

This new design gives owners and managers the opportunity to combine Holiday Inn comfort and value in a more modern setting whilst guests benefit from a host of new services and facilities.

The blueprint features an 80,000 sq ft property that is more cost-effective to build, operate and maintain, with 70 per cent of space dedicated to revenue generation. It features guest rooms and social spaces in smaller, more intimate and convenient developments, whilst also maintaining the brand’s hallmark amenities such as a pool, Kids Eat and Stay Free, meeting spaces, restaurant, lounge and room service.

NICKELODEON FAMILY SUITES BY HOLIDAY INN In 2004, Holiday Inn joined forces with Nickelodeon, the world’s number one kids’ entertainment brand, for a two-year promotional partnership surrounding The SpongeBob SquarePants™ movie.

The partnership – across all Holiday Inn hotels in the Americas – complements the development of the world’s first Nickelodeon Family Suites by Holiday Inn, in Orlando, Florida, scheduled to open in spring 2005. A multi-million dollar renovation will transform the existing Holiday Inn Family Suites Resort into a world class resort 1 where ‘kids rule’ and ensure that Holiday Inn remains a first choice with families.

Nickelodeon Family Suites by Holiday Inn will feature two- and three-bedroom 2 themed KidSuites with bunk beds and video games, Nicktoon character breakfasts, live entertainment and two water park-style pools. 3

1 Guests enjoy the use of high-speed internet access in the bar, Holiday Inn 2 ‘Kids rule’ at Nickelodeon Family HOTEL INDIGO A new brand for the InterContinental Hotels Group – Hotel Indigo – Suites by Holiday Inn was launched during 2004 with a first, partner-owned, 140-room hotel conversion 3 The stylish and contemporary which opened in Atlanta, Georgia. The second Hotel Indigo opens in Chicago lobby, Hotel Indigo during 2005.

Hotel Indigo is a lifestyle concept aimed at midscale hotel guests who want to trade up to affordable luxury and service, whilst still seeking value. Offering guests a new experience every time they visit, the brand provides everything from café dining to stylish rooms, changing murals and a seasonal menu.

The brand’s growth is targeted at hotels that are failing to reach their potential but are prime for a profitable rebranding to the Hotel Indigo name. 19

Britvic soft drinks

Higher volume sales and revenue and market share gains in 2004 for Britvic – the UK’s second largest soft drinks manufacturer – reinforced its reputation for leading brands, new product development and effective marketing.

Our controlling interest in this strong business continued to yield results, despite a wetter and cooler summer in 2004 than the previous year.

With a recognised portfolio of brands to satisfy all types of soft drinks occasions, we sold 1.4 billion litres during 2004, an increase of 1.5 per cent on 2003. Turnover of £706 million was up 4.7 per cent on the previous year. Our brands are now stocked in more than 250,000 outlets across the UK.

Overall capital investment was £70 million, which included the acquisition of the Ben Shaw’s water business. This acquisition will enable us to take advantage of the UK’s expanding water market, as well as leveraging our proven track record in brand development and the operational capabilities of the business.

The carbonates market remained competitive, especially in colas. However, with a significant boost in marketing spend, Pepsi achieved a UK take home cola market share of 20 per cent.

Pleasing headway was achieved in the grocery sector with established brands such as

Robinsons, in particular Fruit Shoot, and the successful launch of Robinsons for Milk and J2O.

MAJOR BRANDS Fruit Shoot, the 78 million litre children’s brand was bought by 19 per cent of all UK households and became number one in consumer spend in the kids’ market over the period.

J2O continued to build on its on-premise strength with strong growth in the grocery sector, where it showed an 82 per cent year-on-year increase in consumer spend. This makes J2O the number one adult brand, in consumer spend terms, in the soft drinks grocery sector.

In March 2004 we signed a new bottling agreement with PepsiCo, giving us a further 15-year 1 2 3 contract to market the brand in the UK.

During the year, the shareholders of Britvic secured an agreement for an Initial Public Offering 1 J2O rolls off the of the business, at any time before December 2008. This important development may provide production line the opportunity, should market conditions allow, to realise a very valuable asset in full and to 2 Fruit Shoot: The first choice for active kids focus wholly on hotels. 3 Just add ‘Robinsons for Milk’ to milk 20 InterContinental Hotels Group 2004

Corporate social responsibility

As the world’s largest hotel operator we are conscious of our responsibilities as global corporate citizens. We believe that sustainable business practice adds value to our shareholders and encourages the commitment of our employees to deliver the outstanding service that our customers expect.

PROCEDURES Corporate social responsibility makes sound business sense, and we seek to embed good practice and procedures into our operations at every level in the Company. We benchmark our performance with external agencies, such as the Dow Jones Sustainability Indexes and the FTSE4Good Index Series.

The Board takes regular account of the significance of social, environmental and ethical matters to the business of the Company, receiving at least one formal report on corporate social responsibility each year which reviews, analyses and prioritises issues affecting the business and its reputation and recommends improvement where necessary. As part of that process, during 2004, the Company undertook a comprehensive review and audit of its corporate social responsibility activities. The directors also require the assessment of social, environmental and ethical impacts 1 to be taken into account in the course of business decisions. 3

The Board has identified and assessed significant risks to the short and long term 2 value of the Company’s business (including those arising from social, environmental and ethical matters) as well as the opportunities to enhance value. The Board has satisfied itself that it has received adequate information to assess the most 4 significant issues and that directors and senior executives are sufficiently knowledgeable about relevant social, ethical and environmental matters. 1 UNICEF supplies for victims of The Board also ensures that the Company has in place effective systems for the tsunami disaster are unloaded from an ECHO-funded flight at the managing any such significant issues. Members of the Group’s Risk Management international airport in Male, capital function are required to meet key performance objectives in this area which of the Maldives contribute to overall individual annual remuneration. 2 HRH The Prince of Wales, greets Dee Cayhill, IHG, at the launch There are clearly set out policies, standards and guidelines for each of the areas of of the International Tourism risk that the business faces. All these procedures are part of IHG’s commitment to Partnership’s ‘Sustainable Hotel Siting, Design & Construction its high management standards and are applied throughout our owned and Guidelines’ managed business by means of suitable work-based strategies and programmes. 3 Peter Gowers, IHG (third from Training materials are also provided to the business to enable appropriate training right), presents bicycles to children to be conducted. Our franchisee partners are encouraged to follow our lead and are from orphanages around Beijing given access to our materials. Our internal programme of verification continues and 4 Vicki Gordon, IHG (far left), meets is achieved through a system of control, self assessment and audit. the children of Cusco, Lima who are benefiting from our charitable partnership with UNICEF InterContinental Hotels Group 2004 21

BUSINESS CONDUCT Our ethics are governed by Guidelines for Proper Business Conduct to ensure that everyone in the Group understands the high standards we set ourselves as a business. Our values include a commitment to act with integrity and to respect both the communities in which we operate and the people who work for us. All employees are made aware of the Guidelines and there is a confidential disclosure procedure for them to report any unethical behaviour. We make no party political donations and deal with the government of the day on industry issues.

PEOPLE Our business relies on the people we employ. The Company Secretary and all other members of the Executive Committee take responsibility on behalf of the Board for Human Rights across the Group. Our employment policies are designed to comply with all local labour laws and we seek to enforce the principles of the UN Declaration of Human Rights and the core conventions of the International Labour Organisation.

We have a diverse workforce and we want everyone within the Company to feel they have the opportunity to thrive. This is vital if we are to achieve our strategic goal of creating ‘one team’ within such a diverse Company. We continue to support Investors in People (IIP). A number of UK and European hotels have accreditation against the rigorous IIP standard set for communicating goals and objectives to employees and for ensuring that they are given the skills required to deliver business strategies. In 2004 we won recognition for our work on diversity, reflecting initiatives within the Company and with customers, partners and suppliers. In the US, we were ranked 14th on Diversity Inc magazine’s ‘Top 50 Companies For Diversity’ list, for our success in establishing diversity in the workplace, with customers and suppliers.

We respect the needs of our customers, including equal access for guests. For example, in the UK we set aside more than £12 million last year to develop a programme of reasonable physical adjustments to owned and leased properties. As part of this strategy we implemented a major training initiative called ‘Confidence to serve all’ to give our employees the knowledge and skills to treat all guests and fellow employees fairly. The Company received accreditation to use the ‘Positive about Disabled People’ symbol, recognising dedication and commitment to working with people with disabilities. 22 InterContinental Hotels Group 2004

Corporate social responsibility

TRAINING AND DEVELOPMENT At Group level, we are involved in a three year partnership Managing talent in the Company, personal development and with UNICEF to help fund school and youth development employee engagement remain priorities for us. In 2004 we projects in the Philippines, Romania and Peru. We have invested over £300,000 in developing and implementing a pledged £300,000 to the scheme over three years to the end leadership programme and another £200,000 in systems to of 2005. We also supported the Give Kids the World charity help us improve the management of our people across the which aims to offer children with life threatening diseases and world. We began a three-stage assessment, training and their families (from the US, Canada, South America, Europe, development programme in 2004 aimed at our top 500 Middle East & Africa) the chance to visit the Give Kids the managers and 220 people went through the initial stages World Villages in Florida and Disneyland Paris. of the scheme in the year. In the aftermath of the Asian tsunami, we channelled We also conducted an on-line survey of employee attitudes fundraising into supporting UNICEF’s work in the region and in 2004, called the Employee Satisfaction Pulse Survey which our own affected employees and their families. Employees was produced in 37 languages. We are running the survey raised $12,000 and Priority Club Rewards members were also four times a year to make sure as many people as possible offered the chance to donate reward points to help the relief are involved. Initial participation rates were good with 71 per effort. We have set aside $125,000 to match their donations. cent of our people responding. This business management We also encourage a wide range of local fundraising and system is intended to help engage employees in improving volunteering initiatives by our employees around the world. morale and loyalty, customer satisfaction, profitability and By way of example, last year these included a Breast Cancer ultimately shareholder value. We intend to link it to customer Awareness campaign run by employees of the Crowne Plaza and other stakeholder research to get a better picture of our in Canberra, Australia and a scheme introduced by the total performance. InterContinental in Kigali, Rwanda to promote employment, ENVIRONMENT economic self-reliance, food hygiene and links with local Our industry has clear impacts on the environment which producers. Other initiatives included the donation of 75 we try to minimise. As a founder member of the International children’s bicycles and gift bags as part of a Beijing Hotels Environment Initiative (IHEI) we worked closely in 2004 conference of hotel managers, the delivery of meals to senior with the IHEI to produce the Sustainable Hotel Siting, Design citizens in Atlanta as part of Meals on Wheels Thanksgiving & Construction Guidelines, launched by The Prince of Wales’ celebrations and fundraising in the UK for Hospitality Action. International Business Leaders’ Forum to leaders of the global From October 2003 through to October 2004, Britvic donated leisure and tourism industry. Our hotels take steps to conserve over £20,000 to charities chosen by employees. Three Britvic resources, including energy and water, and to manage waste sites (Norwich factory, Widford factory and National and recycling effectively. Distribution Centre in Lutterworth) also raised almost £20,000 through site open days. Britvic Soft Drinks has gained ISO 14001 certification for its Environmental Management System, covering all production OBJECTIVES sites and its technical centre. The company also attained the We believe that corporate social responsibility underpins the second milestone of the Climate Change Levy which tasks global reputation of IHG and the continued future growth of companies with energy reduction. Britvic achieved a 16.3% our successful business. For this reason, we are committed to reduction in energy consumption against a requirement of 4%. a process of constant improvement in the management of its Total effluent discharge was reduced by 13.7% across social, environmental and ethical behaviour which recognises Britvic’s production sites during its 2003/04 financial year. our wider obligations to the many communities we serve, so that we can remain in step with the expectations of our COMMUNITY stakeholders around the world. We support the communities we work in through charitable giving and the active involvement of our employees. In 2004 An explanation of our corporate social responsibility policies our cash and in-kind donations amounted to £1.1 million and and further information about the community and focused on five priority areas of investment – children, environmental activities undertaken by our employees around diversity, education, environment and well-being. the world can be found on our website www.ihgplc.com. InterContinental Hotels Group 2004 23

Summary directors’ report

PRINCIPAL ACTIVITIES HEALTH AND SAFETY The principal activities of InterContinental Hotels Group (IHG) are The Group strives to provide and maintain a safe environment for in hotels and resorts, worldwide, and in branded soft drinks in the all employees, customers and other visitors to its premises and to United Kingdom. A review of the performance of the Group is comply with relevant health and safety legislation. contained in the Chairman’s Review and the business reviews presented on pages 1 to 19 and in the Summary Financial CORPORATE SOCIAL RESPONSIBILITY Statement on pages 24 and 25. The Board has adopted a Code of Ethics for senior financial officers, consistent with the Company’s Guidelines for Proper RETURN OF SHAREHOLDERS’ FUNDS AND Business Conduct. IHG seeks to embed good corporate practices SHARE CONSOLIDATION throughout the Group and publishes its corporate social During the year, the Company completed a £250m share responsibility policies on its website www.ihgplc.com repurchase programme. A further £250m share repurchase programme began in December 2004 and is planned for DONATIONS completion during 2005. Additionally, £501m was returned to IHG continues to support community initiatives and charitable shareholders on 17 December 2004 by way of a special interim causes and in the year ended 31 December 2004 donated dividend of 72.0p per share. This special dividend was £1.1m, including donations in kind. No payments were made accompanied by a consolidation of the Company’s ordinary share for political purposes. capital on the basis of 25 new ordinary shares for every 28 existing ordinary shares, effective from 13 December 2004. GOING CONCERN The nominal value of the new shares is 112p per share. The financial statements for the year ended 31 December 2004 have been prepared on a going concern basis. SHARE CAPITAL At 31 December 2004, the Company’s issued share capital AUDITORS consisted of 622,068,047 ordinary shares of 112p each. The reappointment of Ernst & Young LLP as auditors of the A resolution to renew the Company’s authority to purchase its Company will be put to members at the Annual General Meeting. own shares will be put to shareholders at the forthcoming Annual General Meeting. ANNUAL GENERAL MEETING The Notice of the Annual General Meeting to be held at 10.30am RESULTS AND DIVIDENDS on Wednesday, 1 June 2005 is contained in a circular, which is The profit on ordinary activities before taxation was £210m. An sent to shareholders with this Review. interim dividend of 4.3p per share was paid on 18 October 2004. The directors are recommending a final dividend of 10.0p per share to be paid on 3 June 2005 to shareholders on the Register on 1 April 2005.

DIRECTORS Details of current Board members are shown on pages 26 and 27. Andrew Cosslett, David Kappler, Robert C Larson, Richard Hartman, Ralph Kugler and Richard Solomons are standing for appointment or reappointment at the Annual General Meeting on 1 June 2005. All the executive directors have service contracts. The non- executive directors have letters of appointment. The Company maintains insurance cover for its directors and officers, as permitted by the Companies Act 1985.

EMPLOYEES IHG employed an average of 29,659 people worldwide in the year ended 31 December 2004. The Group is committed to providing them with equality of opportunity, without discrimination. Great emphasis is placed on employee communication, and employee participation in the Group’s success through share ownership is supported. 24 InterContinental Hotels Group 2004

Summary financial statement

On 15 April 2003, following shareholder and regulatory approval, Exceptional items before tax netted to a charge of £99m and there Six Continents PLC separated into two new groups, InterContinental was an exceptional tax credit of £167m. These operating and non- Hotels Group PLC (IHG) comprising the Hotels and Soft Drinks operating exceptional items, together with their related tax credits, businesses, and Mitchells & Butlers plc (MAB), comprising the have been excluded in the calculation of adjusted earnings per Retail and Standard Commercial Property Development businesses share. (the Separation). Also in 2003, IHG changed its financial year The net interest charge for the year (pre-exceptionals) was £22m end from 30 September to 31 December. To assist shareholders, compared to a £39m pro forma interest charge for the 12 months unaudited pro forma comparatives for the 12 months ended ended 31 December 2003. The reduction was principally due to 31 December 2003 are provided and the statement below lower average debt levels and the weaker US dollar. The tax charge principally comments on the performance of IHG for the 12 months on ordinary activities, excluding exceptional items, was 16% for 2004. ended 31 December 2004 compared with pro forma IHG results for 12 months ended 31 December 2003. Adjusted earnings per share was 32.5p, compared with 20.8p pro forma adjusted earnings per share for the 12 months ended IHG turnover for the 12 months ended 31 December 2004 was 31 December 2003. The total dividends for 2004 were 86.3p £2,204m compared with £2,161m for the pro forma 12 months including a 72.0p special dividend paid in December 2004. ended 31 December 2003. In Hotels, all regions reported revenue In addition to the special dividend, in the 12 months ended and profit growth in US dollar terms over 2003 as the hotel industry 31 December 2004, IHG repurchased 46.4 million shares showed some recovery from the impact of global insecurity, returning £255m to shareholders. Severe Acute Respiratory Syndrome (SARS) and depressed travel experienced in 2003. However, the relative strength of sterling against the US dollar (weighted average US dollar exchange rate INDEPENDENT AUDITORS’ STATEMENT TO THE to sterling for the year was $1.82 against $1.63 for 2003) converted MEMBERS OF INTERCONTINENTAL HOTELS GROUP PLC a 13.0% growth in Hotels turnover expressed in US dollars to a We have examined the Group’s Summary Financial Statement 0.7% growth when expressed in sterling. If currency exchange for the 12 months ended 31 December 2004 which comprises rates had been the same in 2004 as in the 12 months ended the profit and loss account, cash flow statement and balance 31 December 2003, Hotels turnover growth would have been 5.9%. sheet. This report is made solely to the Company’s members, In the Americas, turnover grew by 5.6% to $902m, driven by as a body, in accordance with section 251 of the Companies strong growth in franchised turnover. EMEA turnover was up by Act 1985. To the fullest extent required by the law, we do not 2.7% to £829m with trading conditions varied across the region. accept or assume responsibility to anyone other than the UK hotels experienced strong RevPAR growth but Continental Company and the Company’s members as a body, for our Europe was more mixed with Paris in particular being slow to audit work, for this report, or for the opinions we have formed. recover. Asia Pacific turnover increased significantly, up 32% The directors are responsible for preparing the Annual Review to $244m as the region made a recovery from the impacts of and Summary Financial Statement, in accordance with the war in Iraq, SARS and the 2003 terrorist bombing in Bali. applicable law. Our responsibility is to report to you our opinion on the consistency of the Summary Financial Statement within Soft Drinks turnover increased by 4.7% to £706m despite the the Annual Review and Summary Financial Statement with summer of 2004 seeing poorer weather than the very favourable the full financial statements, Directors’ report and Directors’ summer conditions of 2003. This growth was boosted by Soft remuneration report, and its compliance with the relevant Drinks financial year for 2004 incorporating 53 weeks trading. requirements of section 251 of the Companies Act 1985 and IHG operating profit before exceptional items was £331m the regulations made thereunder. We also read the other compared with £283m for the pro forma 12 months ended information contained in the Annual Review and Summary 31 December 2003. Hotels operating profit increased by 25.5% to Financial Statement and consider the implications for our report £251m while Soft Drinks fell by £3m to £80m. At constant currency if we become aware of any apparent misstatements or material exchange rates the Hotels operating profit increase would have inconsistencies with the Summary Financial Statement. We been 36%. In Hotels, Americas operating profit rose by 13.0% to conducted our examination in accordance with Bulletin 1999/6 $296m driven by franchise growth, whilst EMEA operating profit ‘The auditors’ statement on the Summary Financial Statement’ rose by 29% to £119m helped particularly by the InterContinental issued by the Auditing Practices Board for use in the United Le Grand Paris returning from refurbishment, which boosted Kingdom. In our opinion the Summary Financial Statement is operating profit by £12m. Asia Pacific more than doubled its consistent with the full financial statements, Directors’ report operating profit to $39m helped particularly by the recovery and Directors’ remuneration report of InterContinental Hotels at the InterContinental Hong Kong. Group PLC for the 12 months ended 31 December 2004 and complies with the applicable requirements of section 251 of Soft Drinks operating profit was £3m down on 2003. Poorer the Companies Act 1985, and regulations made thereunder. summer weather conditions than 2003 and increased costs negated any benefit from an extra week’s trading from Ernst & Young LLP, Registered Auditor, London 9 March 2005 Soft Drinks’ 53 week financial year. InterContinental Hotels Group 2004 25

Audited Unaudited Audited 12 months 12 months 15 months ended ended ended 31 Dec 2004 31 Dec 2003 31 Dec 2003 PROFIT AND LOSS ACCOUNT £m £m £m This Summary Financial Statement was Turnover approved by the Board on 9 March Hotels 1,498 1,487 1,870 2005 and signed on its behalf by Richard Soft Drinks 706 674 820 Solomons. It does not contain sufficient Continuing operations 2,204 2,161 2,690 information to provide as full an Discontinued operations – MAB – – 793 understanding of the results and state 2,204 2,161 3,483 of affairs of the Group as that contained in Operating profit the Annual Report and Financial Statements Hotels 251 200 251 Soft Drinks 80 83 95 2004. That report may be obtained, free of Operating exceptional items (19) – (51) charge, by completing the relevant section Continuing operations 312 283 295 of the enclosed Form of Proxy and returning Discontinued operations – MAB – – 137 it to Lloyds TSB Registrars. 312 283 432 The auditors have issued an unqualified Non-operating exceptional items: report on the financial statements Continuing (69) – (170) Discontinued – – (43) containing no statement under Section Net interest payable (16) (39) (47) 237(2) or 237(3) of the Companies Act 1985. Premium on early settlement of debt (17) – (136) Information concerning directors’ Profit before tax 210 244 36 emoluments is shown on pages 29 to 31. Tax 117 (61) 17 Profit after tax 327 183 53 Pro forma results Minority interest (28) (30) (34) The unaudited pro forma results for 2003 Earnings 299 153 19 comprised the businesses that formed Dividends (592) – (156) IHG following Separation. The results were Retained (loss)/profit (293) 153 (137) adjusted for items that do not form part Earnings per share of IHG’s ongoing business. Interest was Pro forma – 20.8p – Basic 42.1p – 2.6p calculated to reflect the post Separation Adjusted 32.5p – 39.1p* capital structure, the tax charge was Dividend per share 86.30p – 21.15p based on a rate of tax for IHG of 25%

* Restated to show exceptional tax credits on a basis consistent with 2004. and EPS was calculated on unaudited pro forma earnings divided by 734 million 2004 2003 12 months 15 months shares. CASH FLOW STATEMENT £m £m Operations 515 795 Net capital expenditure (151) (248) Operating cash flow 364 547 Interest and other financing costs (24) (50) Separation costs – (66) Dividends (626) (321) Taxation (35) 4 Premium on early settlement of debt (17) (136) Net cash flow (338) (22) Opening net debt (569) (1,177) Net cash flow (338) (22) Separation of MAB – (10) Exchange and other movements (209) 640 Closing net debt (1,116) (569)

31 Dec 2004 31 Dec 2003 BALANCE SHEET £m £m Fixed assets 4,017 4,281 Current assets 757 999 Short-term creditors (1,013) (1,085) Net current liabilities (256) (86) Total assets less current liabilities 3,761 4,195 Long-term creditors (1,252) (1,085) Provisions (382) (393) Minority interests (150) (163) Net assets/shareholders’ funds 1,977 2,554 26 InterContinental Hotels Group 2004

The Board

1 2

3 4 5 6

7 8 9 10

Executive Committee

11 12 13 14 InterContinental Hotels Group 2004 27

1 DAVID WEBSTER (60) 2 ANDREW COSSLETT (49) * A non-executive director Non-executive Chairman* Chief Executive† and a member of the Nomination Appointed Deputy Chairman and Appointed Chief Executive in Committee Senior Independent Director of February 2005. He joined the Group † A member of the Executive InterContinental Hotels Group on the from Cadbury Schweppes plc where Committee Separation of Six Continents PLC in he was most recently President, # An independent non-executive April 2003. Appointed non-executive Europe, Middle East & Africa. During director and a member of the Chairman on 1 January 2004. He is his career at Cadbury Schweppes Audit, Remuneration and also non-executive Chairman of he held a variety of senior regional Nomination Committees Makinson Cowell Limited, a capital management and marketing roles ‡ markets advisory firm. He was in the UK and Asia Pacific. An independent non-executive formerly Chairman of Safeway plc He has over 11 years’ previous director and a member of the and a non-executive director of experience in brand marketing with Remuneration and Nomination Reed Elsevier PLC. Chairman of Unilever. Also non-executive Committees the Nomination Committee. Chairman of Duchy Originals Limited. § Not a main Board director

3 RICHARD SOLOMONS (43) 4 RICHARD HARTMAN (59) 5 STEVAN PORTER (50) 6 DAVID KAPPLER (57) Finance Director† Managing Director, EMEA† President, the Americas† Non-executive director# Qualified as a chartered accountant Has over 38 years’ experience in Previously 13 years with Hilton Appointed a director and Senior in 1985, followed by seven years the hotel industry including 30 years Corporation in a variety of senior Independent Director in June 2004. in investment banking, based in with Sheraton. He joined the Group management positions. He joined He is non-executive Chairman of London and New York. He joined the in 1999 as Managing Director, the Group in 2001 as Chief Premier Foods plc and a non-executive Group in 1992 and held a variety of Asia Pacific. Subsequently, as Operating Officer, the Americas. director of Shire Pharmaceuticals senior finance and operational roles. Managing Director, Europe, Middle Subsequently, as President, the Group plc and HMV Group plc. Appointed Finance Director of the East & Africa, he was appointed Americas, he was appointed an A qualified accountant and formerly Hotels business in October 2002 in an executive director in April 2003. executive director in April 2003. Chief Financial Officer of Cadbury anticipation of the Company’s listing Responsible for the business of all Responsible for the business of all Schweppes plc until April 2004, in April 2003. Responsible for finance the Hotel brands and properties in the Hotel brands and properties in he also served as a non-executive and asset management, tax, treasury the EMEA region. Australian citizen. the Americas region. US citizen. director of Camelot Group plc. and central shared services. Also Chairman of the Audit Committee. Chairman of Britvic Soft Drinks.

7 RALPH KUGLER (49) 8 ROBERT C LARSON (70) 9 DAVID PROSSER (60) 10 SIR HOWARD STRINGER (63) Non-executive director# Non-executive director‡ Non-executive director# Non-executive director‡ Appointed a director in April 2003, Appointed a director in April 2003, Qualified actuary with 40 years’ Has over 35 years’ experience in the he is President, Unilever Home and he is Managing Director of Lazard experience in financial services. media and entertainment industries. Personal Care, and has been Frères & Co LLC, Chairman of Appointed a director in April 2003, He was appointed a director in April nominated to join the Board of Lazard Frères Real Estate Investors, he is Group Chief Executive of 2003. He is a director of the Sony Unilever in May 2005. He has held LLC and non-executive Chairman Legal & General Group Plc. He is Corporation and Chairman and a variety of senior positions globally of United Dominion Realty Trust Inc. Chairman of the Financial Services Chief Executive Officer of Sony for Unilever and has experience of He served as a non-executive Skills Council and a director of the Corporation of America and has been regional management in Asia, Latin director of Six Continents PLC Royal Automobile Club Limited and nominated to be Group Chairman America and Europe (including as (formerly Bass PLC) from 1996 until of Epsom Racecourse Limited. and Chief Executive Officer of President of Unilever Latin America April 2003. US citizen. Served as Senior Independent Sony Corporation. He served as and, more recently, President of Director from January to June 2004. a non-executive director of Unilever Europe, Home and Chairman of the Remuneration Six Continents PLC from 2002 until Personal Care) with over 25 years’ Committee. April 2003. US and British citizen. involvement in brand marketing.

11 RICHARD WINTER (56) 12 PETER GOWERS (32) 13 A PATRICK IMBARDELLI (44) 14 JIM LARSON (52) Executive Vice President, Corporate Executive Vice President, Global Managing Director, Asia Pacific†§ Executive Vice President, Human Services, Group Company Brand Services†§ Has over 23 years’ experience in Resources†§ Secretary and General Counsel†§ Has previous international experience the hotel industry including 12 years Has over 25 years’ experience in Solicitor, qualified in 1973 with 20 in management consultancy based with Southern Pacific Hotels human resources, most recently years’ commercial law experience in London and Singapore. He Corporation. He joined the Group in with the Kellogg Company. He in private practice. He joined the joined the Group in 1999 and was 2000 and was appointed Managing joined the Group in 2002 as Group in 1994 as Director of Group appointed Executive Vice President, Director, Asia Pacific in January Executive Vice President, Human Legal. Now responsible for corporate Global Brand Services in January 2003. Responsible for the business Resources. Responsible for global governance, risk management, 2003. Responsible for group of all the Hotel brands and reward strategy and implementation, internal audit, data privacy, company strategy, worldwide marketing and properties in the Asia Pacific region. talent management and leadership secretariat, group legal services and distribution, reservations and loyalty Italian citizen. development. US citizen. corporate social responsibility. programmes.

The notice of Annual General Meeting provides further information about the directors standing for appointment or reappointment. 28 InterContinental Hotels Group 2004

Corporate governance

COMBINED CODE COMPLIANCE A performance evaluation of the Board, its Committees and The Board is committed to compliance with the principles set out individual directors was undertaken by the Chairman and the in the Combined Code on Corporate Governance and, in the Senior Independent Director shortly after the year end. This opinion of the Board, the Company has complied with Code concluded that the range of experience and skills of the current requirements as they apply for the year ended 31 December 2004 directors provides a sound basis for an effective and unified with the exception only of the item highlighted in this report. Board, and that all main Board Committees and individual directors continue to perform effectively. As required for a Company listed on the New York Stock Exchange, a statement outlining the differences between IHG’s corporate COMPANY SECRETARY governance practices and those followed by US companies may All directors have access to the advice and services of the be found on the Company’s website at www.ihglpc.com/investors Company Secretary. His duties include responsibility for advising the Board on corporate governance, and for ensuring good INTERNAL CONTROL information flows to the Board and its Committees and between The Board is responsible for the Group’s system of internal control senior management and the non-executive directors. and risk management and for reviewing its effectiveness. In order to discharge that responsibility, the Board has established the SHAREHOLDER RELATIONS procedures necessary to apply the Code, including clear The Company reports formally to shareholders twice a year and operating procedures, lines of responsibility and delegated releases quarterly results. In addition, regular meetings are held authority. with major institutional shareholders to discuss progress of the For the year ended 31 December 2004, the Board has conducted business, its performance, plans and objectives. The Chairman, a review of the effectiveness of the system of internal control. The the Senior Independent Director and other non-executive directors system is designed to manage, rather than eliminate, the risk of are available to meet with major shareholders to discuss failure to achieve business objectives and it can only provide governance and strategy, and to understand any issues reasonable and not absolute assurance against material and concerns. misstatement or loss. In that context, the review, in the opinion The Annual General Meeting provides an additional useful of the Board, did not indicate that the system was ineffective opportunity to meet private shareholders. Information of interest or unsatisfactory. to investors is also maintained on the Company’s website.

BOARD AND COMMITTEES The Board is responsible to the shareholders for the strategic SUMMARY AUDIT COMMITTEE REPORT direction, development and control of the Group. It also ensures The Audit Committee assists the Board in observing its that the necessary financial and human resources are in place for responsibilities in relation to the integrity of the Group’s financial the Group to meet its objectives. There are seven regular Board statements and associated announcements, the adequacy of meetings a year and further meetings as needed. internal control and risk management systems and the appointment and work of the internal and external auditors. David Webster was non-executive Chairman throughout the year. He assumed the additional role of interim Chief Executive on the The Committee commissions reports from external advisers, resignation of Richard North as Chief Executive in September 2004. the Head of Internal Audit, or Company management after For the remainder of 2004, the roles of Chairman and Chief Executive consideration of the Company’s major risks or in response to were not fulfilled by separate individuals, as required by the developing issues. The external auditor and the Head of Internal Combined Code. However, this was a temporary situation and Audit both have the opportunity to meet privately with the David Webster stood down as interim Chief Executive on the Committee. appointment of Andrew Cosslett as Chief Executive with effect During the year, the Committee’s deliberations included a wide from 3 February 2005. range of matters addressing all its main areas of responsibility. Detailed induction programmes are in place for new directors and The Audit Committee also maintained its policy of pre-approval ongoing training needs for all directors are kept under review. of non-audit services by the external auditor, the overriding consideration being to ensure that the provision of non-audit In addition to the Executive Committee, the following main services does not impact the external auditor’s independence Committees of the Board have been established: Audit Committee, and objectivity. Remuneration Committee and Nomination Committee. The Audit, Remuneration and Nomination Committees consist wholly of non-executive directors. The Chairman of the Company is a member of the Nomination Committee only. The terms of reference of these Committees are available on the Company’s website www.ihgplc.com or from the Company Secretary’s office on request. InterContinental Hotels Group 2004 29

Summary remuneration report

INTRODUCTION In addition to base salary, the main components of remuneration are: The Summary Remuneration Report is an extract of information Annual performance bonus from the full Remuneration Report contained in the Annual Report Challenging performance goals are set and these must be and Financial Statements 2004, a copy of which is available on achieved before the maximum bonus of 100% of salary becomes request and can be viewed on the Company’s website at payable. These goals include both personal objectives and www.ihgplc.com/investors. The Remuneration Report will be put targets linked to the Group’s financial performance. Executive to the vote at the forthcoming Annual General Meeting 2005. bonuses will normally be paid in IHG PLC shares and deferred. Matching shares may also be awarded up to 0.5 times the THE REMUNERATION COMMITTEE deferred amount. Awards will normally be released in equal The Remuneration Committee advises the Board on overall amounts at the end of each of the three years following deferral. remuneration policy and determines on behalf of the Board, with Executive directors will be expected to hold all shares earned the benefit of advice from external consultants and internal Human from the Group’s remuneration plans while the value of their Resources professionals, the remuneration of the executive holding is less than twice their basic salary or three times directors and other members of the Executive Committee. in the case of the Chief Executive.

REMUNERATION POLICY Executive share options Non-executive directors, including the Chairman, have letters of The Committee believes that share ownership by executive appointment. They are paid fees approved by the full Board on directors and senior executives strengthens the link between the the recommendation of the executive directors. individual’s personal interest and that of the shareholders. Grants of options are normally made annually and, except in exceptional For executive directors and for senior executives, the following circumstances, will not, in any year, exceed three times annual policy has applied throughout the year and will apply in future salary for executive directors. A performance condition set years, subject to ongoing review. by the Remuneration Committee has to be met before options The Remuneration Committee aims to ensure that remuneration can be exercised. packages have the ability to attract and retain high quality Performance restricted shares executives in a highly competitive global environment and to The Performance Restricted Share Plan aims to encourage reward achievements that are aligned with business objectives. continuing improvement in the Group’s performance over the The Committee also has regard to internal levels of remuneration longer term, through the award of shares (normally made and to salary levels in the wider employment market. annually) subject to the satisfaction of a performance The Group has performance-related reward policies, designed condition, measured over three years. to provide the appropriate balance between fixed remuneration Generally, a separate performance cycle will commence each and variable ‘risk’ reward. The normal policy for executive directors year, at the end of which the Company’s Total Shareholder Return is that using ‘target’ or ‘expected value’ calculations, their is measured against a comparator group of 10 other competitor performance-related incentives will equate to approximately companies. Graded awards are made for median performance or 70% of total annual remuneration (excluding benefits). better. The increase in IHG’s Return on Capital Employed (ROCE) Contracts of service over the performance period is also taken into account. The grant The Remuneration Committee’s policy is for executive directors of awards is restricted to recognise any awards of executive share to have rolling contracts with a notice period of 12 months. options made to individuals. The Remuneration Committee is Throughout the year, all executive directors’ contracts complied currently reviewing the appropriateness of the ROCE performance with this policy. Following the year end, Andrew Cosslett was measure for the future. appointed as Chief Executive with an initial notice period of All-employee share schemes 24 months. This is reducing on a monthly basis and will become Executive directors are entitled to participate in the Company’s fully compliant with the Committee’s policy 12 months after his all-employee share plans on the same basis as other employees. initial date of appointment. No grants were made under these plans during the year. Richard North resigned as Chief Executive and as a director of Pension arrangements the Company on 30 September 2004. His severance arrangements Executive directors participate in the relevant Group pension provided for him to receive a payment of one month’s basic salary schemes either in the UK or in the US. in each month up to September 2005, subject to mitigation in the event of his taking up alternative employment. 30 InterContinental Hotels Group 2004

Summary remuneration report

Throughout the year, the Company was a member of the FTSE 100 index. The following graph measures the total shareholder return performance of the Company against that achieved by the FTSE 100 companies.

Total Shareholder Return: InterContinental Hotels Group v FTSE 100

IHG PLC shares listed 15.4.03 200

180

160

140

120

100

80

60

40

20 (Mean average index for the month – October 1999=100) 0 Oct Oct Oct Oct Jan Jan 1999 2000 2001 2002 2004 2005

InterContinental Hotels Group PLC – total shareholder return index FTSE 100 – total shareholder return index Source: Datastream (Six Continents PLC up to 14 April 2003)

DIRECTORS’ EMOLUMENTS 2004 The emoluments shown below represent salary, fees and cash bonuses (excluding bonus awards paid in shares) and tax assessable benefits and allowances. Comparative figures are for the 15 month period ended 31 December 2003. Total emoluments excluding pensions Basic salaries Performance 1.1.04 to 1.10.02 to and fees payments Benefits 31.12.04 31.12.03 £000 £000 £000 £000 £000 Executive directors Richard North1 638 553 57 1,248 1,183 Richard Hartman 476 – 299 775 663 Stevan Porter2 360 – 8 368 510 Richard Solomons 372 – 28 400 497 David Webster3 148––148 – Non-executive directors David Kappler4 35––35 – Ralph Kugler5 42––42 30 Robert C Larson6 42––42 53 David Prosser7 50––50 35 Sir Howard Stringer6 42––42 53 David Webster8 275 – 1 276 57 Former directors9 –––– 2,987 Total 2,480 553 393 3,426 6,068

1 Resigned as a director and as Chief Executive on 30 September 2004 and ceased employment with the Group on 31 December 2004. The emoluments shown are for the full year. Richard North’s performance payment relates to his participation in the Short Term Deferred Incentive Plan which, in accordance with plan rules, must be paid in cash due to his employment ending. He remains eligible to participate in the Short Term Deferred Incentive Plan for the 2005 performance year. Any award will be made in cash and pro-rated to 30 September 2005. 2 Emoluments for Stevan Porter include £10,731 that were chargeable to UK income tax. 3 Fees paid to David Webster represent £41,667 per month payable to him in his capacity as interim Chief Executive with effect from 15 September 2004. 4 Became Senior Independent Director and Chairman of the Audit Committee on 21 June 2004 for which a fixed fee of £65,000 pa was paid. With effect from 1 January 2005, David Kappler receives a total annual fee of £80,000. 5 All fees due to Ralph Kugler are paid to Unilever. With effect from 1 January 2005, Ralph Kugler’s fee as a non-executive director is £50,000 pa. 6 Both Robert C Larson and Sir Howard Stringer served as non-executive directors of Six Continents PLC during the period up to 15 April 2003 for which they each received a fee of £23,000. With effect from 1 January 2005, Robert C Larson and Sir Howard Stringer each receive an annual fee of £50,000. 7 Fees paid to David Prosser included a £7,500 pa fee payable to the Chairman of the Remuneration Committee in recognition of the additional responsibilities of this role. With effect from 1 January 2005, David Prosser receives a total annual fee of £65,000. 8 Became non-executive Chairman on 1 January 2004 for which a fixed fee of £275,000 pa was paid. With effect from 1 January 2005, David Webster’s fee as non-executive Chairman is £350,000 pa. 9 The total emoluments earned by former directors of Six Continents PLC and IHG PLC during the period 1.10.02 to 31.12.03 are shown. InterContinental Hotels Group 2004 31

LONG TERM REWARD Performance restricted share plan (PRSP) Awards held by directors who served during the year ended 31 December 2004 in respect of the performance cycles ending on 31 December 2004, 31 December 2005 and 31 December 2006 and the maximum pre-tax number of shares due if performance targets are achieved in full are: PRSP Value shares based awarded on share PRSP during PRSP price of shares the year shares 647.50p at held at 1.1.04 to held at 31.12.04 Directors 1.1.04 31.12.04 31.12.045 £ Richard Hartman 111,9301 111,930 724,747 167,9002 167,900 1,087,153 165,1303 165,130 1,069,217 Total 444,960 2,881,117 Richard North 188,7601 188,760 1,222,221 283,1402 259,5454 1,680,554 248,5603 144,9934 938,830 Total 593,298 3,841,605 Stevan Porter 113,8101 113,810 736,920 170,7102 170,710 1,105,347 142,2903 142,290 921,328 Total 426,810 2,763,595 Richard Solomons 110,1101 110,110 712,962 165,1602 165,160 1,069,411 144,9903 144,990 938,810 Total 420,260 2,721,183 Total 12,207,500

1 This ‘transitional’ award is based on performance to 31 December 2004 where the performance measure relates to the Company’s total shareholder return against a group of 11 other comparator companies. The number of shares released is graded, according to where the Company finishes in the comparator group. The Company finished in fourth place and accordingly 60% of the award will vest on 11 March 2005. 2 This award is based on performance to 31 December 2005 where the performance measure relates to both the Company’s total shareholder return against a group of 11 other comparator companies and growth in return on capital employed. 3 This award is based on performance to 31 December 2006 where the performance measure relates to both the Company’s total shareholder return against a group of 10 other comparator companies and growth in return on capital employed. 4 Richard North’s awards were pro-rated to reflect his contractual service during the applicable performance periods. 5 In the case of Richard North, who resigned as a director of the Company on 30 September 2004, the figures shown are as at cessation of employment.

Executive share options Short term deferred incentive plan (STDIP) Under the terms of the Separation, directors and other executives Messrs Hartman, Porter and Solomons participated in the STDIP with outstanding options under the Six Continents Executive Share during the year ended 31 December 2004 and are expected to Option Schemes were permitted to roll over those options into receive an award on 16 March 2005. The awards, inclusive of options of equivalent value over IHG PLC shares. In 2003 and 2004 matching shares, are expected to be in the range of 120% to grants of options were made under the IHG Executive Share Option 150% of base salary. Plan. Directors’ executive share options at 31 December 2004 are summarised as follows: PENSIONS Executive Granted Option Weighted UK plan (final salary) options held during the grant average The increases in transfer value over the year (less directors’ Directors at 1.1.04 year* price option price contributions) and accrued pensions at the year end were: Richard Hartman 615,072 218,950 494.17p 435.70p

Richard North 1,122,975 394,840 494.17p 433.87p Accrued Stevan Porter 433,059 225,260 494.17p 449.47p Age at Increase in pension Directors 31.12.04 transfer value at 31.12.04 Richard Solomons 597,271 230,320 494.17p 426.52p Richard Hartman 58 £522,400 £63,200 * Exercisable between 3 and 10 years subject to satisfaction of the performance Richard North 54 £1,142,400 £240,300 condition. Richard Solomons 43 £249,600 £96,800 No options over IHG PLC shares were exercised by directors during the year (aggregate gain in the period ended US and International plans (defined contribution) 31 December 2003 £69,491). The Company contributions made in respect of Stevan Porter during the year were £62,500. 32 InterContinental Hotels Group 2004

Investor information

REGISTRAR SIX CONTINENTS SEPARATION Enquiries concerning individual shareholdings and notification The share and cash entitlements received by former shareholders of a holder’s change of address should be referred to the of Six Continents PLC on the Separation of its Hotels and Retail Company’s Registrar, Lloyds TSB Registrars, at the address businesses into InterContinental Hotels Group PLC and shown on the opposite page. Mitchells & Butlers plc, together with a summary of the UK capital gains tax treatment of those entitlements, were included in the ELECTRONIC COMMUNICATION Company’s Interim and Annual Reports 2003 and are set out The Company has given e-mail notification, to those shareholders on the Company website at www.ihgplc.com/cgt who have requested it, of the availability of this Annual Review and Summary Financial Statement, the Annual Report and SPECIAL DIVIDEND AND SHARE CONSOLIDATION Financial Statements and the Notice of Annual General Meeting On 17 December 2004 the Company paid a special dividend (AGM), on the Company’s website: www.ihgplc.com/shareholders of 72.0p per share to shareholders on the Register at the close of business on 10 December 2004. As approved by shareholders The website contains a link to enable shareholders to register on 10 December 2004, the special dividend was accompanied for future electronic communication, view details of their own by a consolidation of the Company’s share capital, effective from shareholding or appoint electronically a proxy to vote on their 13 December 2004, whereby shareholders received 25 new behalf on any poll that may be held at the forthcoming AGM. ordinary shares of 112p each for every 28 existing ordinary Shareholders who hold their shares through CREST may appoint shares of £1 each held on 10 December 2004. proxies through the CREST electronic proxy appointment service, for the Company’s forthcoming AGM, by using the procedures AMERICAN DEPOSITARY RECEIPTS (ADRs) described in the CREST manual. The Company’s shares are listed on the New York Stock Exchange in the form of American Depositary Shares, evidenced by ADRs SHARE DEALING SERVICES and traded under the symbol ‘IHG’. Lloyds TSB Registrars offer a postal dealing facility for Each ADR represents one share. All enquiries regarding ADR InterContinental Hotels Group PLC (IHG PLC) shares, telephone holder accounts and payment of dividends should be directed to 0870 242 4244. They also offer a telephone and internet dealing The Bank of New York, the authorised depositary bank, at the service, Shareview, which provides a simple and convenient way address shown opposite. ADR holders wishing to view their of buying and selling shares. For telephone dealings call balance and a range of general information about holding ADRs 0870 850 0852 between 8.30am and 4.30pm Monday to Friday, should visit www.adrbny.com and for internet dealings log on to www.shareview.co.uk/dealing

DIVIDEND PAYMENTS TO ADR HOLDERS INDIVIDUAL SAVINGS ACCOUNTS (ISAs) Dividend payments to ADR holders are made in US dollars by the Lloyds TSB Registrars offers ISAs in IHG PLC shares. Further authorised depositary. Payment of the final dividend for the year information may be obtained from the address shown opposite, ended 31 December 2004 will be made on 13 June 2005 to holders or through the helpline, telephone 0870 242 4244. of record on 1 April 2005. ADR holders should consult their tax advisers with respect to the US tax treatment of dividends. OTHER SERVICES Shareholders who wish dividends to be paid directly into a bank or FORM 20-F building society account or who wish to amalgamate their shareholder The Company is subject to the reporting requirements of the accounts in order to avoid duplicate mailings of shareholder Securities and Exchange Commission (SEC) in the US and files communications should contact the Registrar at the address shown. with the SEC an Annual Report on Form 20-F. Copies of the Form 20-F can be obtained in the US by contacting The Bank SHARE PRICE INFORMATION of New York’s ADR Department. The latest IHG PLC share price is available in the financial press, on Ceefax and Teletext and also on the Financial Times Cityline PRIORITY CLUB REWARDS Service, telephone 0906 003 1772 or 0906 843 1772 Interest has been expressed by some shareholders in joining (calls charged at 60p per minute). Priority Club Rewards, IHG’s loyalty programme for frequent travellers. If you wish to enquire about the benefits of SHAREGIFT membership, or to join, please go to www.priorityclub.com or The Orr Mackintosh Foundation operates this charity share telephone: +44 (0) 870 607 2582 (from Europe, Middle East donation scheme for shareholders with small holdings of shares, and Africa); 1 (888) 211 9874 (from US and Canada); the value of which makes them uneconomic to sell. Details can be 1 (801) 975 3013 (from Central and South America); obtained from Lloyds TSB Registrars or the ShareGift website 65 6245 2716 (from Asia Pacific). www.ShareGift.org or by calling ShareGift on 020 7337 0501. InterContinental Hotels Group 2004 33

For further investor information visit REGISTERED OFFICE 67 Alma Road, Windsor www.ihgplc.com/investors Berkshire SL4 3HD Telephone +44 (0) 1753 410 100

Fax +44 (0) 1753 410 101 SUMMARY FORWARD-LOOKING STATEMENT For general information about the This Annual Review and Summary Financial Statement contains Group’s business please contact certain forward-looking statements as defined under US legislation the Corporate Affairs department (Section 21E of the Securities Exchange Act of 1934). By their and for all other enquiries please nature, such statements involve uncertainty; as a consequence, contact the Company Secretary – actual results and developments may differ materially from those both at the above address. expressed in or implied by such statements. A more detailed REGISTRAR explanation of the risks and uncertainties related to forward-looking Lloyds TSB Registrars statements is set out on page 77 of the Annual Report and The Causeway, Worthing West Sussex BN99 6DA Financial Statements 2004, copies of which are available from the Registered Office of the Company. Telephone 0870 600 3957* (UK callers)

+44 121 415 7047 (non-UK callers)

www.shareview.co.uk

*For those with hearing difficulties a text phone is available on 0870 600 3950 for UK callers with compatible equipment.

ADR DEPOSITARY The Bank of New York Investor Services PO Box 11258 Church Street Station New York NY10286, USA

Telephone Financial calendar 1 (888) 269 2377 (US callers) 2004 +1 610 382 7836 (non-US callers) Payment of interim dividend of 4.3p per share 18 October [email protected]

Payment of special interim dividend of 72.0p per share 17 December STOCKBROKERS J P Morgan Cazenove Limited Financial year end 31 December Merrill Lynch International

2005 AUDITORS Ernst & Young LLP Preliminary announcement of annual results 10 March INVESTMENT BANKERS Final dividend of 10.0p per share Ex-dividend date 30 March Citigroup Record date 1 April SOLICITORS Announcement of first quarter results May Linklaters Annual General Meeting 1 June Final dividend of 10.0p per share Payment date 3 June ADR payment date 13 June Announcement of interim results September Interim dividend Payment date October Announcement of third quarter results November Design and production Financial year end 31 December Corporate Edge www.corporateedge.com

Photography James Bell 2006 Print Royle Corporate Print

Preliminary announcement of annual results March At least 30% of the fibre used in making this paper comes from well-managed forests independently certified according to the rules of the Forest Stewardship Council, and 30% is from post-consumer recycled waste paper www.ihgplc.com

INTERCONTINENTAL BRITVIC SOFT DRINKS LIMITED HOTELS GROUP PLC Britvic House 67 Alma Road Broomfield Road Windsor Chelmsford Berkshire SL4 3HD Essex CM1 1TU T +44 (0) 1753 410 100 T +44 (0) 1245 261 871 F +44 (0) 1753 410 101 F +44 (0) 1245 267 147